By Hannah Levitt, with assistance from Sridhar Natarajan and Michelle F. Davis.
The trading desk was just embarking on a
second banner year when senior executives started defecting to
the likes of Bank of America Corp., Citigroup Inc. and
Millennium Management. By this fall, many of the team’s heaviest
hitters had gone.
The setting wasn’t some struggling investment bank. It was
the equity derivatives desk inside the mighty JPMorgan Chase &
Co. — one of many pockets of employee turnover that have
erupted there in recent months, keeping the company’s recruiters
busy. Pan out, and it’s part of a trend sweeping across
Manhattan’s financial industry.
Signs of a surge in Wall Street job-hopping are emerging
everywhere: An independent recruiter said he’s never seen so
many eight-figure hiring packages. A career coach said his
banker clients aren’t basing decisions solely on money —
they’re fed up with working so much they can’t even date. An
industry veteran said moves are becoming so common that some
people left behind are anxious: Are they making a mistake by
staying?
The trend coincides with the easing of a pandemic that
bottled up job changes and prompted many in the industry to
question whether they want to resume old commutes, or even stay
in the same city. Now, rival firms are dangling money or, in
some cases, more flexible lifestyles to lure talent and
capitalize on the trading and dealmaking boom. There’s also more
competition for women and members of minority groups after
virtually every major firm promised to improve diversity in the
wake of last year’s racial equity protests.
While numbers are hard to come by, JPMorgan is by no means
alone. What’s notable is that such a profitable, marquee name
isn’t immune to the burst of circular poaching. Departure rates
in many of JPMorgan’s businesses are up at least a few
percentage points from pre-pandemic levels, according to people
with direct knowledge of the matter. That translates to
thousands of seats to fill, which then adds to yet more turnover
at other banks — and so on.
In fact, JPMorgan’s hiring machine has been reeling in
replacements and then some. Despite elevated departures, its
corporate and investment banking division has managed to
increase staffing by 4,500 people in this year’s first nine
months. And the equity derivatives desk used promotions to fill
vacancies and ended up boosting revenue by more than 20%
compared with last year, one person said.
“We’ve been able to retain top talent even in this unique
environment,” said Brian Marchiony, a JPMorgan spokesman. “We’ve
also welcomed some outstanding new hires to JPMorgan, given our
performance and market leadership.”
The problem for banks is that defending and recruiting
talent is costly. JPMorgan and Bank of America were among major
firms that warned shareholders last month that compensation
costs may rise in the coming year. Goldman Sachs Group Inc.
Chief Executive Officer David Solomon told analysts there’s
pressure on compensation and wage inflation, but that it’s
manageable. Days later, Goldman’s board awarded special long-
term bonuses to both him and a deputy, giving them more reason
to stick around.
Worries about the “war for talent” have crept into other
boardrooms. Citigroup’s directors recently offered incentives of
up to $5 million to a group of senior executives who are
overhauling internal systems to appease regulators.
In fact, scores of senior executives are using the moment
to explore ways to get more money, more prominent roles or a
potentially more lucrative job on the buy-side. Many of the
eight-figure hiring packages are coming from investment firms,
such as hedge funds and private equity shops, said Mike Karp,
CEO of recruiting firm Options Group. He’s also seeing more
counteroffers and sometimes full-blown auctions.
“There were a lot of unfilled jobs where the bids just kept
going higher and higher,” he said.
Frustrations Below
That’s the scene on Wall Street’s upper echelons. Lower
down, legions are also leaving in frustration.
For traders and investment bankers, the pandemic meant
longer hours, often while working remotely, juggling child care
and rising costs.
While banks saw market activity and revenue soar in 2020,
they showed restraint when setting year-end rewards. Some
managers told staff that their improved performance had more to
do with external forces, and that it would be ugly to dole out
higher bonuses in a pandemic. Besides, banks’ lending arms had
set aside billions of dollars to cover potential defaults. Then
this year, much of those reserves were reabsorbed into their
bottom lines.
The result is that many employees are feeling overworked
and under-appreciated.
“These people are exhausted and really need to have a life
— and that’s why they are quitting,” said Claudio Antonini, who
set up a business last year as a career coach for unfulfilled
investment-banking professionals. “They can’t date, they can’t
have a romantic life or even interact with other people.”
Junior bankers, at least, scored significant raises and
other concessions in the first half of this year after some at
Goldman Sachs made their frustrations known with a slide deck
that leaked and put a harsh spotlight on the industry.
JPMorgan recently surpassed Wells Fargo & Co. in commanding
the largest workforce in U.S. banking with some 265,800 people,
roughly the population of Buffalo, New York. Because of that
size, the company offers a microcosm of other issues at play
within the financial industry and the broader labor market.
CEO Jamie Dimon has been leading the firm for more than 15
years, and recently received an incentive package to stay
another five. The lengthening tenures of Dimon and other heads
of big U.S. banks have put a damper on upward mobility,
prompting some rising stars to consider opportunities outside
their own companies.
JPMorgan was among the most aggressive in requiring U.S.
employees to return to offices, leaving some staffers stewing
and creating a hiring opportunity for firms offering more
flexibility. In some outposts, such as San Francisco, returning
JPMorgan workers initially found it hard to buy lunch because so
few local companies were summoning people back that restaurants
stayed shut.
Some business lines are under particular pressure.
Virtually every major global bank has singled out wealth
management as a priority for investment and growth. And at
JPMorgan, that competitive pressure has fueled an increase in
adviser defections, with firms such as UBS Group AG recruiting
more aggressively. Some advisers are even striking out on their
own.
JPMorgan is hiring in that area too. The bank has said it
aims to double adviser headcount in the private bank over the
next five years, and it’s on track to do so, according to a
person with knowledge of the plan.
Estimating Raises
The job hunters’ market may not hold up for long, at least
in New York’s hub. Almost a quarter of financial-services firms
are planning to reduce their workforces in the city within the
next half-decade, according to a survey published this week by
Partnership for New York City. At least some of those jobs are
being moved to cheaper locales, such as Florida and Texas.
For now, industry veterans examining their options have
found they have more alternatives than before. A growing number
of financial-technology companies, crypto-currency ventures and
so-called blank-check companies are interested in enlisting
their experience.
So how much can a banker get by jumping ship? It depends.
The standard bump of at least 10% that executives could
expect by defecting to a competitor has probably doubled, said
Robert Voth, managing director at executive search firm Russell
Reynolds Associates. Competition is particularly fierce for
people who can help banks diversify their ranks. “The more
progressive companies have lifted traditional ceilings on
compensation to ensure they can lead the pack,” he said.
One thing banks have less room to do is rely on their
prestige to keep talent.
“There’s no longer a firm that stands out so far above the
others that people are willing to work there just because of the
name,” said Jeanne Branthover, global head of financial services
and fintech at headhunting firm DHR International. “It’s about
lifestyle, it’s about work-life balance, it’s about no longer
wanting to get in a car or on a bus or on a train to get to
work.”
Originally posted by Bloomberg.
