The more things change, the more they stay the same.
So, what has changed jobwise in the equities space over the last nine years when it comes to hiring?
Not much.
Despite the U.S Bureau of Labor Statistics reporting 109 months of continuous job growth for the U.S. economy, job growth on Wall Street has been almost non-existent. The last decade has seen many people leave the industry altogether – technology – and the ongoing depressed level of commissions have thinned theherd. Permanently.
“The only job growth on the trading desk is the occasional opening of a technologist job,” said one veteran trader. “I recently spoke with one of my HR people and they told me that for one job posted they had upwards of several thousand applications within one hour.”
Another trader in New York said that since jobs are so scarce, people won’t venture out and are content to stay where they are – even if means less compensation or no advancement.
“We already have our fill of MDs, so there is no more upward mobility,” he said. “Plus, the compensation picture is not that good.”
For some of the larger firms, the equities franchise is a loss-leader that must be maintained in order for the broker to call itself “full service.” Traders Magazine learned that one firm’s equities business will post a mid-single digit loss for 2019 but its other divisions offset the loss with growth.
According to this week’s compensation report from Johnson and Associates, a New York-based compensation consultancy, Wall Street traders shouldn’t expect great bonus pay for the year. In their research, the firm wrote that equity traders will likely be the worst off with bonuses and other compensation expected to drop between 15% to 20%.
“Pay is down in a healthy market — that just tells you how much competition there really is,” Alan Johnson, managing director of Johnson Associates, said in an interview. “We’re clearly in the new normal.”
Sometimes being normal isn’t good.
“I’ve seen many of friends leave the business and soon I’m afraid, I will have to as well,” said one New York trader. “And if this is a new normal then I guess I’m ready to start my mornings of by asking people, ‘You want paper or plastic’?”
This article originally appeared in the November 2010 issue of Traders Magazine
Bleak Hiring Picture in Equities
By James Ramage
Few firms are hiring equities traders in numbers these days, according to two headhunters. And until volumes pick up, and regulators provide a clearer picture for pending market structure changes, few will. [IMGCAP(1)]
The combination of low volumes and regulatory uncertainty has daunted brokerages and institutions from hiring new traders, said Alan Guarino, a senior client partner at executive recruiting firm Korn/Ferry.
“Equities are in crisis,” Guarino said. “Volumes are down. Obviously, budgets are not being met. And there’s a lot of cynicism that volumes aren’t coming back anytime soon.”
The current threat of regulations is holding everything up, he added. No firm is willing to embark on any new initiative without knowing how the market will change going forward.
And the options markets hiring outlook doesn’t look any more promising. “With equities derivatives, [it’s a] similar situation,” Guarino added.
Some firms have been hiring in dribs and drabs. The level of interest, though, doesn’t approach that of 2009 during the same time period, said Michael Karp, chief executive of Options Group, a New York-based global executive search and consulting firm.
The picture has been grim. Business began to slow on equities desks roughly midway through 2009, after a strong start to the year.
This summer was particularly light, industry pros say. Equity markets in the United States suffered greater than 20 percent declines in August and September, compared with a year ago, according to the Equity Research Desk in Greenwich, Conn.
For the past six months, many institutional money managers have shed domestic equities from their portfolios; the May 6 “flash crash” also dampened investors’ interests in equities.
As a result, commissions have been down. And firms have been casting people away. Hefty job cuts have been reported at Bank of America Merrill Lynch, D.E. Shaw and Knight Capital Group.
One recent forecast by analyst Meredith Whitney, of Meredith Whitney Advisory Group LLC, painted a particularly dark picture. It holds that securities firms around the world will slash as many as 80,000 jobs over the next 18 months.
For his part, Guarino said he doesn’t see anything dramatic happening with hiring in either equities or options until the midterm elections are over and the regulatory environment stabilizes. But firms have mostly finished making their large staffing cuts, he added.
“The firing is, for the most part, over, relative to what we’ve already done,” Guarino said. “Episodically, you’ll see that happening, but I think we’re done, for the most part, purging.”
One bright spot has been a lasting demand for experts in mathematics, science and computers. Candidates with advanced degrees in mathematics and computer science have better chances than most at changing firms, Guarino and Karp said. This has been the fact for a number of years. As the markets have become increasingly electronic, mastering the tools of business has been crucial.
“There’s a really good opportunity there, because if you think about it, the math is the next phase,” Guarino said. “We’ve got the same technology. We know where all the liquidity is, and how to get to it. Now, we need to get to it faster and better, and there’s where the math comes in.” [IMGCAP(2)]
By and large, firms always want to hire “superstar” alpha generators, Karp added. “There’s no mass hiring going on,” he said. “So as a recruiter, you find the next best guy who can deliver alpha.”
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