You’re unemployed, underemployed or just simply sick of your role in banking and are looking for a change. You’re not alone. Bankers burn out and leave the industry all the time, and they’re never funneled into one particular second-career path. One recently opened a food truck, another is designing violin-shaped pools, while a third launched a bakery.
But there’s another career path outside of Wall Street that still has deep ties to the business – connections that may give you an advantage over others in the industry. You can become a recruiter.
Many of Wall Street’s most successful recruiters have, at one point in their career, worked in banking in some capacity. Others have tried and not found success. As anyone can tell you, it’s a tough business where you have to kill what you eat. But if you’re great, you can make a nice life for yourself.
It’s more what you know than who you know
The key advantage former bankers have over anyone else looking to become a Wall Street recruiter is obvious. You understand an incredibly complicated business and how it operates.
“It makes it far easier to explain the subtleties of a role to candidates, and also to understand mandates from clients who don't have time to write formal job descriptions,” said Chris Apostolou, a former analyst and economist who’s now the managing director at London-based Arbitrage Search and Selection.
However, one common misconception is that a former bankers’ relationships with ex-colleagues will help pave the golden road.
“Existing contacts and a network are never big enough – all of my clients have been developed from scratch,” Apostolou said. Plus different sectors come in and out of vogue, downsizing occurs and your network is soon washed away, he said.
Moreover, bankers who are mulling jumping into recruitment tend to be more junior, meaning their Rolodex is limited and rarely filled with decision makers, said Richard Lipstein, managing director at Gilbert Tweed International, a former M&A analyst.
Plus, knowing someone only gets you a phone call back, Lipstein said. It’s another thing to jump all the hurdles necessary to make a placement.
What you’ll need to succeed
Being a successful recruiter requires a load of soft skills that may not be a prerequisite for some banking roles, making it a fit for only some Wall Street experience.
“To go as I did from staring at excel and equations all day to becoming a cold-caller is a huge change,” Apostolou said. “I doubt very few well-educated analysts can overcome the analytical steps ingrained in their thinking to start dealing with a non-intellectual high-volume repetitive role.”
However, report writing and analytical skills can still be helpful, although it’s a second-order skill requirement, he added. Recruiting is a people-first business, requiring a warm personality, the fearlessness of a sales person and the negotiating skills of a lawyer, but the best are also highly organized and analytically savvy, particularly if they are starting up on their own.
Another prerequisite is a willingness to take constant rejection, Lipstein said. People say no to you – a lot. My old boss told me that if you fail 99 out of 100 times, you had a great year.
“People who take things personally tend to have shorter careers,” said Jim Schroeder, executive vice president at search firm DHR International.
You also need to be comfortable without the consistent gratification that comes with daily work accomplishments. It’s like being a real estate broker, Lipstein said. A lot of the work that you do won’t result in something tangible. You can spend a week working on an opening with the hope of finding one good candidate.
“I often tell my clients: ‘I waste a good deal of my time so you don’t have to,’” Lipstein said with a chuckle.
Apostolou feels that brokers can make the best headhunters, as it’s a similar style of sales. “Most headhunting is like ‘slow motion broking’ with far better fees, so for those with a high work-rate it can be very rewarding,” he said.
Recruiting is a difficult business, there’s no doubt, but it does have a number of benefits that you can’t find in banking. One is the work-life balance. You’ll work hard, but no recruiter has ever pulled an all-nighter and then had to jump on a plane to present something the next day.
“You’re more able to set your own time and tempo, and relax and enjoy life, spending more time on your personal hobbies before it is too late,” Jens Soderlund, a former Chase Manhattan banker who is now managing partner at Hong Kong search firm Sirius Partners, told us last year.
You can also work from anywhere that has a phone and internet connection, outside of needing to meet with clients. And you can be your own boss, even if you decide to join an existing firm. While you will have superiors, all anyone ever cares about is your earnings. If those are strong, people will leave you be.
And then there is the money, which is both a pro and a con. The biggest downside of starting your own practice or joining an existing headhunter is the initial pay.
If you launched your own firm, there’s obviously none. At established search firms, recruiters are often paid either a tiny base salary – say $20k to $40k – or are given a draw that sits in the same range. A draw simply means you are paid each week, but, in effect, it’s just a loan. Your earnings will first go toward repaying the firm before finding their way into your bank account. It takes a good, long while to ramp up, so you’ll likely need to dip into your savings to get started.
However, recruiters often charge 20% to 25% of a candidate’s starting salary, so single fees can equal tens of thousands of dollars. A great recruiter can make six-figures during a hot quarter.
The bottom line about recruiting is that if you are good at it – meaning your smart, hard working and able to handle rejection – it can provide a good living without needing to burn the candle at both ends. But if you are just average, recruiting can be a headache that’s not particularly lucrative.