Juniorization is over. So say front office markets recruiters in London: if 2016 was all about finding high-performing vice presidents who could do the work of directors and managing directors, 2017 is all about hiring the best. Precocious 27 year-olds are out. Brilliant 35 year-olds are back.
"Last year's push towards juniorization was about cutting costs while maintaining breadth," says Russell Clarke at fixed income-focused Figtree Search. "This year, it's about finding the headcount that will bring the most value to the franchise."
In the front office at least, this means banks' recruitment in 2017 will be about hiring the best. Most banks are still keeping a close lid on costs. - There's no "outright growth story in a region or sector or asset class and most banks still aren't rightsized for issues such as Brexit", says Clarke. When hiring happens, they therefore want to ensure they're spending wisely: "Everyone's chasing the number one or two. The top salesperson in a region or sector to make relationships meaningful, the strongest traders who really understand market sentiment and the best e-commerce professionals to be the smartest, most relevant and capable counterparty to trade size with."
In trading, this is being accentuated by the move to electronic platforms. Although J.P. Morgan's Daniel Pinto said yesterday that electronic trading flows only accounted for 12% of the bank's total in 2016, platforms are where the growth is. "You have a lot of flow and noise across the platforms and you need traders who've got smart ideas and have perspective," says Clarke. "You don't get that by having juniors with their heads focused in a vertical groove." Similarly, in sales banks need the best people to work with their most demanding and lucrative "high touch" clients. And in research, they need the top ranked researchers whose output clients will actually pay for under new MiFID II requirements in Europe.
In markets at least, 2017 will therefore be the year of the elite. If you're an experienced professional at the top of your game, you'll get hired. If not, forget it.
The same doesn't necessarily apply in investment banking divisions (IBD). Here, headhunters are universally gloomy: there won't be much hiring at all. M&A got off to a shaky start this year and although banks like J.P. Morgan are talking about hiring top rainmakers, M&A headhunters say there's not much going on: "Fewer people are resigning post-bonuses. There's nowhere for them to go and this is creating less movement as a result," says one, speaking anonymously.
Another IBD headhunter, focused on debt capital markets (DCM) roles, says 2017 is set to be the quietest year for hiring on record in London: "There's no hiring sign-off on the sell-side. It's not that people don't want to move - you have huge bonus disparities between U.S. banks which are up 10% and European banks which are down 10% to 30%, but banks just won't sign the hires off. - Even at the junior end. It's cost control year, plus there's Brexit in the background."
Hiring hesitancy is also evident in infrastructure roles. Here, David Leithead, chief operations officer at recruitment firm Morgan McKinley, says there's "unprecedented scrutiny" of potential recruits. Whether because of Brexit or cost savings, or both, banks like Goldman Sachs are looking at shifting "federation" positions to Poland, while others like Citi are looking at shifting them to Dublin. The exception in London may still be compliance, where Chad Lawson at Robert Walters says banks are still looking for junior and mid-ranking regulatory specialists and salaries are likely to rise by 5%+.