October 20, 2020 – Businesses around the world are entering a “high wire act in a brave new world of work and hiring,” according to a new report from Options Group. For the investment banking divisions of financial institutions in particular, the realities of a radically different operating environment are already bringing significant new challenges to how institutions assess, manage, develop, and retain their talent.
“The future positioning of the investment banking divisions of financial institutions is top of mind,” said Richard Stein, chief growth officer at Options Group and author of the ‘Analysis of Moves During COVID-19’ report. “The realities of a radically different operating environment have brought significant operating challenges to how firms assess, manage, develop and retain their talent. Firms are now reassessing their value proposition and allocating more resources to data-driven and analytical offerings, digital capabilities and electronic markets.”
Market volatility in a normal year itself would be a major factor. However, 2020 is not a normal year and remote work has further complicated the operating environment in many ways. “Most financial firms have the vast majority of their employees working from home, including significant parts of their sales and trading teams,” said Mr. Stein. “However, investment banks have impressed even their most vocal critics in the significant steps they have taken to become more agile and normalize their operations.”
The markets in 2020, while still extremely volatile, have remained liquid and volumes continue to rise. “COVID-19 has enabled the leadership of investment banks an important opportunity to address their business models and crisis management strategies,” Mr. Stein said. “They are now reassessing their talent strategies, especially in respect to diversity, equity and inclusion. What is clear is that work from home has been turned upside down over the past eight months and this will have a lasting influence on the future of work as well as how banks navigate their diversity, equity and inclusion strategies moving forward.”
A Radically Different Approach
Options Group conducts over 16,000 monthly calls with key market participants in 18 segments across its 15 offices globally. “No one can say for sure what a new normal will actually look like but it will involve a radically different approach to how investment banks assess their client coverage models, systems, remote working and operations,” said Mr. Stein. “In each case technology will be leading the way and playing a pivotal role. The pandemic has dramatically impacted the investment banking business value proposition and over the next 18 months we expect more M&A as well as departures as firms refocus their product mixes and reallocate resources on strategically valuable products, clients and geographies.”
Richard Stein is partner, chief growth officer and head of OGiQ at Options Group. He has had a distinguished career supporting the C-suite of many of the world’s top financial services organizations in all aspects of talent acquisition, development and retention. Among the first in his industry to use competitive intelligence as a disruptive technology, he has helped the C-suite of major international companies create strategic, market and competitive advantage. Mr. Stein focuses on how competitors’ changing strategies impact the competitive landscape and helps formulate rapid responses to these initiatives and opportunities with an emphasis on talent.
The winners that emerge will be defined by their flexibility and agility as well those that lead the way on important lessons learned. “They will be the ones that upgraded their mainframe infrastructures well before COVID-19 not in response to it and made their cybersecurity protocols and capabilities a top priority,” Mr. Stein said. “They had an edge because they already established new processes and structures that proved essential to adapting to the COVID-19 crisis.”
From a strategic perspective, the second half of 2020 has been critical for firms in terms of refining their talent and interviewing strategies. “It has been an opportunity to optimize the influx of recently furloughed or unemployed talent looking for jobs, and an opportunity to find new talent not previously considered,” said Mr. Stein.
Virtual interviews were successfully used before the pandemic and now can create efficient ways to identify strong candidates without incurring travel costs. “One positive aspect of the virtual interview is that it has made it possible for companies to recruit an even more diverse workforce and a remote workforce,” said Mr. Stein.
“A person in London can now video conference with people based out of New York or Singapore to achieve the same outcomes as a physical meeting. This greatly enhances the quality of employees available to employers if they are willing to step outside of the box and accept remote working as a valuable tool to growth. For jobs which can be completed behind a computer, a company based out of San Francisco can now hire a person based out of Beijing with a unique skill-set that may not be available or may be too expensive in the USA.”
Options Group’s team of researchers and analysts, OGiQ, analyzed 3,200 critical people moves that have taken place across FICC, equities and banking since the coronavirus crisis began in January. The team has closely monitored and tracked these moves from its proprietary intelligence systems, those 16,000 conversations that the firm’s recruiters conduct globally each month with key market participants across 18 product segments, as well as all the primary source information that is available in the public domain.
Among OGiQ’s top findings in regard to people moves:
- 32 percent of moves in 2020 YTD are women. This is a significant increase from a year ago.
- The buy-side and particularly hedge funds have aggressively hired since January and are a major competitor for sell-side talent.
- Not surprisingly, U.S. and EMEA experienced the greatest hiring activity, with the top cities being New York and London respectively.
- The average tenure duration at the individual’s previous firm is 4.7 years.
- FICC has seen the most hiring, with credit accounting for nearly 35 percent of all positions since January.
- Hiring during COVID-19 has been remarkably robust especially at the junior ranks including associates as firms become more resilient and agile.
At the end of 2019, Options Group highlighted in its annual compensation report the sectors that hiring managers believed were going to be the most active in 2020. Here is how those predictions turned out:
- EMEA accounted for 60 percent of the moves in investment banking; hiring managers predicted the U.S. and Asia would be more active.
- The U.S. accounted for 70 percent of the moves in emerging markets, which mirrored hiring managers’ predictions.
- The U.S. accounted for 83 percent of the moves in securitized products, which also matched hiring managers’ expectations.
- All regions were predicted to experience moderate hiring activity across the credit sector, while EMEA only accounted for 18 percent of the moves in credit. Each region accounted for around a third of the moves in rates and FX, which also matched hiring managers’ expectations.
The most active companies hiring during COVID-19 in the select moves that Options Group tracked were led by Bank of America, Goldman Sachs, Credit Suisse, Morgan Stanley and JP Morgan.
When is the Right Time to Change Jobs?
As the world is faced with the uncertainty of a pandemic, it can be tough to decide whether now is the right time to change jobs. In making that decision, you should take stock and ask yourself if you are truly ready for change, says Richard Stein, chief growth officer of Options Group. Settle that first, then you can consider the team, the mentor, and the money.
The companies that accounted for the most departures in the select moves that the firm tracked were led by: Deutsche Bank, Goldman Sachs, JP Morgan, UBS and Barclays. The top FICC firms that hired the most in the moves that Options Group tracked were: Bank of America, Citigroup, Morgan Stanley, Barclays and Credit Suisse. The top firms that lost talent in the moves Options Group tracked were: Barclays, Morgan Stanley, and Deutsche.
In equities, the top firms that hired most among those that Options Group tracked were: Jefferies, UBS, and Goldman Sachs. The top equities firms that lost talent were: Deutsche, Morgan Stanley, JP Morgan and Citigroup.
As for investment banking, Options Group found, in the select moves they analyzed, the winners were: Bank of America, Credit Suisse, Goldman Sachs, Lazard and Citigroup. The top firms in losing talent in moves tracked were: Deutsche, JP Morgan, Morgan Stanley and BNP.
“Our goal,” said Mr. Stein “is not simply to frame the market, but also to help position our clients as employers of choice in a very tight and competitive market. To attract and retain talent, financial institutions continue to redefine their employee value proposition from purely financial rewards to enhancements in employer brand and focusing on long term capability building.”
As a result, OGiQ is helping clients make forward-looking decisions rather than simply reacting to the necessity of hiring on a purely tactical basis. “This has helped to create a competitive advantage and drive organizational excellence by looking at the data we present and package as a key enterprise asset,” said Mr. Stein.