It’s 2016, investment banks are cutting headcount, and hedge funds are floundering. In such an uncertain market, making the move to pursue another opportunity could be risky. But there are still reasons for pursuing a new finance job. Here’s how you should make the decision.
1. Don’t just move for money
Financial services professionals often decide to move for the opportunity to earn more money, or the promise of a bigger bonus (although guarantees are much rarer these days). But eyeing up dollar signs can often blind you to the downsides of a new role.
“If you’re making the job change simply for money, then it’s probably not the right job, and I can almost guarantee that it’s not going to work out,” said Mitchell Peskin, partner and executive vice president in the financial services recruiting division at The Execu|Search Group.
Money is still the primary driver, however. A new survey by Robert Half suggests that 54% of financial services professionals will ask for a pay rise this year. If they’re turned down, 24% said they would look for a new role.
2. Know which role you want and which company you want to work for
It’s easy to be swayed by a big brand name, or the possibility of a career switch into, say, a start up hedge fund. But you really need to find something that works for you. It could be that you’re accepting a lower salary for a better platform and therefore greater bonus potential, or the promotion opportunities are simply more attractive.
““If you’re going to make a change, then you want to go to a better company,” Peskin says. “It should be for more money and more responsibility or a better job description, or a more interesting role, or a role where you can pick up additional knowledge that you didn’t have previously.”
The reputation of the company you are considering going to should be first and foremost. Is it an established household name with credibility or a startup nobody’s ever heard of? Is it a resume-builder? Bigger isn’t always better, but candidates should certainly size up the potential scope of the opportunity.
3. Assess the stability of the new company
In the trigger-happy world of finance, it’s difficult to know when to make the right move. Morgan Stanley, for instance, included some recent senior hires in its latest cuts to its fixed income division. Something may appear to be stable, but this could turn around swiftly.
How to gauge a bank’s stability is a nuanced question since the credit crisis. By and large, the sell side is experiencing large secular changes that are being driven by regulation – proprietary trading desks are being shut down. Do you research on the attrition at large investment banks
As for ways to assess a buy-side fund’s stability, for long-only investment vehicles such as mutual funds, there is a lot of disclosure and information available via the fund’s prospectus and the firm’s website. The onus is on candidates to do the research, said Reshma Ketkar, director and the head of the long-only investment professionals recruiting practice at Glocap Search.
“Take a look at fund performance over multiple years and investment cycles, comparing it to relevant benchmarks and peers when appropriate, investment team bios, top holdings and assets under management, looking at year-over-year growth,” Ketkar said.
Healthy funds have solid investment performance, continued AUM growth, low turnover and a strong investment team at both the junior and senior level.”
4. Realise when you’ve reached career stasis
It possible to be at the same employer for too long. This could, and should, be an impetus for moving. This is not as easy as it sounds – there are vast swathes of VPs and director level employees in investment banks who fail to make the step up to managing director – but switching jobs doesn’t have to be about moving up in rank. It could just as easily be about an opportunity to learn something new.
“Generally, where we are in today’s market, if you’ve spent 10 or 15 years at the same company, and that’s your one and only job out of school, then it could be looked at negatively if you haven’t shown progression,” Peskin says.
5. Be wary of being perceived as a job-hopper
The tenure of financial services professionals in one organisation averages out at five years. If your career is going nowhere in your current employer after this time, then it may be time to look for progression elsewhere. But there’s a flip side to this, of course, moving too often – layoffs aside – can be perceived as a big negative.
If somebody is job-hopping every couple of years, let’s say in the first 10 years of their career, then that’s going to be looked upon negatively. Hiring managers want to hire someone who will want to stay at their firm long term.
While two years is standard for a first job out of school, your second job should be a three-to-five-year stint, give or take, for gaining a solid base of on-the-job experience and serving as an effective stepping stone to further career success.
“At that point, if it’s working well, then you stay, but if not, then that’s certainly a good time to look for your third job,” Peskin said.
6. Don’t move for FOMO
Sometimes people suffer from the “grass is always greener” syndrome, where they decide to leave a good situation because they have a fear of missing out (FOMO) or they believe a better opportunity is out there, even if that isn’t necessarily the case.
Millennials don’t seem to have tremendous loyalty to their employer, as Peskin said many are happy to move on to the next employer to earn more money – although that phenomenon certainly transcends any particular age group or demographic. However, he doesn’t think that’s necessarily a bad thing.
“You always need to be pursuing the next opportunity to keep your compensation current, work with new people and challenge yourself,” Peskin said. “If you stay too long, then you’re getting more experience in terms of years, but you’re not getting more experience in terms of knowledge or maximizing your earning potential.”