As Wall Street struggles to appease regulators and repair reputational damage, it’s become clichéd to point to the frenzied recruitment of risk management and compliance staff in investment banking. Banks are paying their middle office staff more and competing for talent, but with this comes increased pressure and, it seems, a more volatile job market.
While front office recruitment in investment banking appears to be stabilising in 2015, those working in middle functions are facing more extreme prospects. Yes, there's that hiring, but an increasing number of employers are also looking to make deep cuts.
In a wide-ranging global survey of 3,100 finance professionals by executive search firm The Options Group – where around 60% of respondents were based in the US – 18% of managers in compliance departments said that they thought headcount would decrease by more than 5% in 2015. In risk management, 14% of managers are expecting headcount reductions of that magnitude.
At the other end of the scale, however, risk and compliance professionals should expect more recruitment than most investment banking divisions this year - 36% of risk managers expect headcount to rise by more than 5% this year, and 32% of compliance professionals said the same.
Risk management and compliance are becoming more important business areas, but they’re also more pressured as scrutiny increases. Compensation is on the up and for this reason it's likely that investment banks want to see results. 30% of risk management managing directors earned total comp of $1.1-2m, suggests Options Group research.
Amazingly, an identical proportion of senior traders in the front office are making that kind of money. 30% of equity derivatives MDs said they earned $1m-$2m, for example, while 33% of senior FX professionals said they were paid in that range. Weirdly, compliance now looks more lucrative than rates, where just 15% of MDs said they earned this amount.
Investment banks’ FICC divisions have been decimated by job cuts in recent years. Figures tracked by research firm Coalition suggest that headcount went from 23,500 across all investment banks’ FICC divisions in 2010, to 17,500 in 2014 – and 1,800 jobs were lost last year alone
This appears to be steadying. Most respondents said they expected headcount to remain stable, but there were still a few hot spots. Macro products professionals were most bullish, with 20% of respondents saying they expected an increase in staffing levels of more than 5% and a further 23% anticipating some sort of rise.
Equities divisions still look a safer bet. In equity derivatives, for example, 49% of respondents said they expected some sort of increase in headcount this year, while in cash equities this figure was 55%.
The real place to be, perhaps predictably, is within a technology role in the financial sector. A massive 40% of technology respondents said they expected headcount to increase by more than 5% this year and a further 19% were anticipating some sort of rise.