Negotiating compensation is all about leverage. For the past five years, financial services employees haven’t had much of it, and for good reason. Banks and other financial firms have been doing more firing than hiring, making it difficult for job seekers to find work at a price tag that they believe is equitable.
The landscape has changed in recent months though. While firms still aren’t hiring in droves, many are starting to add talent in pockets. If you have the right skillset and are capable of eliciting demand from hiring managers, you no longer need to fear asking for a bit more. The fact is, the person sitting across from you is probably expecting it.
A recent survey found that nearly half of all candidates accept the first job offer without negotiating, despite the fact that 45% of employers are willing to haggle over salary. A separate study that focused solely on finance workers found similar results. Employers are more willing to negotiate salary (39%) over supplementary benefits like employee development (14%), vacation time (11%), flex-time (11%), device benefits (7%) and title (4%).
For some, saying “yes” to the first offer is likely a smart decision. Others who have more leverage may want to think about playing hardball when it comes to compensation and benefits. We reached out to some Wall Street experts to find out what types of workers are well-positioned to negotiate and who should just nod their head and say thank you.
If You’re Unemployed: Perhaps the best leverage one can have in salary negotiations is a full-time job. Unless you’re a former big-wig who’s on gardening leave, aggressively negotiating salary while unemployed can be a dangerous move, said Richard Lipstein, managing director at Gilbert Tweed Associates. Studies confirm that companies still prefer to hire passive candidates who are gainfully employed.
One possible exception is Cantor Fitzgerald. The brokerage firm said earlier this summer that it is looking to take advantage of the talent made available by mass layoffs at bulge bracket banks.
If You’re Right Out of School: Wall Street is getting younger, but the pool of candidates is still much larger than the number of open seats. Moreover, most top banks have fairly rigid salary guidelines for associates coming out of an MBA program, for instance. You’re more likely to burn bridges than earn more compensation. In investment banking in particular, compensation often “is what it is” for fresh hires, Lipstein said.
If You’re Changing Roles/Industries: If you are looking to move from the buy side to the sell side or from investment banking to asset management, you’ll be hard-pressed finding a suitor who is willing to go through heavy negotiations, said Lipstein. When you’re biggest asset is your potential – not your experience – tread lightly.
If You’re Applying to Goldman Sachs: “Have a benchmark to presume what the position will bear,” said Roy Cohen, career coach and author of The Wall Street Professional’s Survival Guide. And know the firm in question. “Goldman Sachs, for instance, will tell you to go take a hike” if you press them too much, Cohen said. “They’re not as receptive to negotiation.”
If you’re thinking about pushing back on an offer, make sure you’re not in one of the situations identified above. If you’re currently working and have sufficient experience, here are a few situations where you should feel confident pushing back on an offer.
Wealth Management: Now is as good a time as any to elicit a big offer in wealth management, if of course you have the book of business. Bulge bracket banks that are pulling resources from riskier business units are investing heavily in financial advisors and private bankers. Wells Fargo, Morgan Stanley and Merrill Lynch are all hiring, as are smaller firms that are seeing their best talent poached.
For superstars, some firms are paying advisors an upfront payment worth 125% of the revenue they generated during the last 12 months, said Paul Werlin president of Human Capital Resources, a Florida-based financial services recruiting firm. “We’re seeing deals and money that we have never seen before,” said Werlin. “It’s never been as competitive for bottom-end players.”
If you are going to leave, now is as good a time as any. A new regulation requiring financial advisors to disclose signing bonuses to clients is on its way. Successful private bankers, meanwhile, are well-positioned to negotiate base and bonus.
Associate Research Analysts: “They’re in great demand on the equity side,” Lipstein said of junior research analysts at top banks. They’re being recruited by other bulge brackets banks as well as by asset managers that want to hire someone with the analytical and writing skills but not an excess of “sell side” experience, he said.
Hedge funds/traders: It’s pretty simple. If you’re outperforming the S&P, you likely have leverage. If you’re not, well, you get the idea. Employees in particular demand include those working at successful activist investment firms as well as smaller houses specializing on MLP strategies and even macro funds. Those firms are actively looking for talent.