Investment banking is not the future. 30-something investment bank employees are a bit depressed. They're not exactly renting their clothes, but they're not too happy either. “People are desperate, of course they want to get out,” one investment banking headhunter informed us only yesterday.
Things are far sunnier in investment banks' asset management arms. Now seems to be the time to exit banking and enter asset management. If not, you may regret it in 20 years' time. If you require further persuasion, avail yourself of these points:
Once upon a time, Michael Faissola was global head of Deutsche Bank's rates business, with a 'passion for derivatives.' But that was when rates and derivatives were hot. Now that rates and (credit) derivatives are as warm as the Atlantic, Faissola no longer has anything to do with them. In 2012, he became head of Deutsche Bank's asset and wealth management business. That is what is known as being ahead of the curve.
As we pointed out earlier, Morgan Stanley CEO James Gorman proclaimed that asset management has a great future in a Wall Street Journal piece yesterday. As populations age and the middle class grows, Gorman is predicting a bigger pool of savings and a greater need for asset managers to invest those savings for retirement. Meanwhile, Faissola also popped up at Deutche and said that the bank's asset management business, having achieved €1 trillion of assets under management, has now become a core pillar of the bank and is a 'growth engine' (his words).
Deutsche Bank wants to hire 300 people in asset management, in London, by 2020. Having added over 1,400 employees to its asset management business last year, JPMorgan is currently advertising 273 asset management jobs globally. Morgan Stanley is said to be doing some big recruiting too - the U.S. bank has recruited 69 people for its U.S. asset management business this year alone according to headhunters. These include several senior distribution staff. Morgan Stanley declined to comment.
Once upon a time, people working in investment banks got paid more than people working in asset management firms. But investment banking pay is falling, while asset management pay is rising. In Europe, asset management firms have to defer their compensation, like investment banks (unless they can get exemption from the rules on the grounds of comparative smallness), but they don't have to restrict bonuses as a percentage of salaries.
"There are big limitations on pay in banks," says Chris Manfield at London-based alternatives search firm Curtis-Murray. "People are moving into asset management to get away from that."
If you shift into asset management now, you won't exactly be a first mover (see Faissola), but you will at least be moving with the tide. "We're getting a lot of people coming out of investment banks and trying to find jobs in asset management," says Manfield. It's not that easy, however. "You need the transferable skills," Manfield adds. He says asset managers in Europe are particularly looking to boost their infrastructure and real estate teams as pension funds look to diversify their portfolios.
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