Thursday, July 8, 2010

Opportunities: A Pause in the Momentum?

Remember the upbeat outlook back in the first quarter, 2010, after the economy showed signs of a recovery, corporates reported robust profits and financial institutions appeared to have emerged from the abyss of the crisis? Since then, volatility has been the norm in equity markets. And sovereign-debt turmoil in Europe has rocked confidence and spilled into other arenas.

So is there a pause in the recovery from the recession? And is that affecting the revival of recruiting and opportunities in finance? Have banks, insurance companies, asset managers, corporates, and funds called time-0ut on expanding the number of hires in 2010-11 at all levels?

Financial institutions went into hiding in 2008-09 in recruiting, as they patched themselves up, reduced staff, and waited for signs of an upturn. By late 2009, the signs began to point upward. Institutions returned to campus, hired more interns, expanded programs, created opportunities in growth areas and made efforts to bring on board experienced talent.

Will the recent signals of uncertainty send recruiters back to their cubicles and discourage firms from hiring to support designated growth areas? Will new financial reform impose regulatory restriction on activities such that that banks will rethink recruiting numbers?

Opportunities still exist, but perhaps in scattered, specific areas. Financial institutions identified long-term growth areas, are committed and have made sufficient investments. Banks and investment firms that targeted private wealth management, securities processing, cash management, and emerging markets for growth will continue to bring in more professionals.

Yet with financial regulation threatening to change the extent to which institutions can engage in trading or alter the economics of dealing in derivatives, firms certainly scale back hiring practices in capital markets and trading. Opportunities in these area--always limited or unpredictable--will become more so.

Entry-level MBA programs seemed to have returned to a humming pace--particularly in investment banking, corporate banking and private banking. Firms won't contract as they did in 2008-09, but they may slow the pace down until they have more confidence about the recovery. Banks don't want to staff up in anticipation of a certain volume of deal flow, new clients or product revenues that won't come to fruition until 2011.

MBA interns, including many from the Consortium, this summer were able to take advantage of renewed confidence. The moods, the opportunities, and the openings were significantly better than they were for second-year MBA's, who just graduated. Recent MBA graduates, without the benefit of impressive internships in the summer, 2009, have had limited opportunities, although with effort, outreach and drive, some are finally winning sought-after positions.

Early-career finance professionals, who want to transition into other roles in finance or seek to be rehired after staff reductions, are facing occasional barriers. The going can still be rough at times. If they do, they find opportunities in specific roles, requiring specific experiences and credentials. For example, a big bank seeks to hire an experienced associate to do healthcare equity research or oil-and-gas banking in Houston. Or another institution seeks an experienced vice president to manage custody-account relationships in Columbus, Ohio. Consortium sponsors Goldman Sachs, BoA, and Citi, for example, will regularly post position openings for associates with particular, special experiences.

For those interested in venture capital, hedge funds, or private equity, uncertainty always prevails. These firms have always been close-mouthed, insular in their hiring practices. They hire and still do in this environment. They, too, select for special purposes and reasons (a specialty trader, a risk manager, a compliance officer, a systems programmer, etc.). They key, as ever, is using a detective's skill to find them and figure out a way to get in.

Two years ago, MBA talent and finance professionals started looking toward the U.S. Government as a place to start or a place to transition to. The SEC, the Federal Reserve, and the U.S. Treasury stepped up recruiting efforts to take advantage of talent availability. They hired many in 2008-09, especially in experienced roles. They continue to hire, but not necessarily at growing levels. Amidst a recovery, they have slowed down their penetration at business schools. Or perhaps as big financial institutions firms return, their presence is less noticed.

Opportunities always exist in certain regions. That means in this environment, people may need to go where opportunities exist or go where they can be in the right place at the right time. Often that might mean being willing to be in New York, Chicago, Charlotte, or London. Or Stamford or Washington. In financial management at industrials, that might mean not being in, say, New York or San Francisco.

Have diversity initiatives emerged from the back seat? In some places, they have been relaunched or renewed after diversity fell to the bottom of the agenda during the crisis. Some, including some Consortium sponsors, are admired for being ironclad in not allowing diversity to slip.

For those in under-represented groups (women and people of color), the numbers coming out of the crisis were ugly. The crisis took its toll. Many from the under-represented were affected by staff reductions or left the pressure and turmoil of the industry to pursue other less-stressful activities. Some simply became disillusioned with chaos all around them.

The numbers declined at all levels--from first-year analysts to sector heads. The impact is being felt now. Early-career professionals wonder today where are or who are the senior role models from under-represented groups at the top. Financial institutions everywhere know they have to find ways to get back to pre-2007 numbers, whether they admit that openly or not. More important, they must convince themselves that diversity initiates are still worth the effort and expense. In crisis times, some struggled to justify the expense or time and approached diversity as a cyclical business.

The pause or the recent uncertainty that clouds recovery might have been inevitable. Economists, pundits, and finance experts hadn't figured out or fully agreed on whether we were in a full recovery. Recoveries, some contend, are always characterized by sporadic dips or pauses in growth.

The bright side? Financial institutions always want to be poised and prepared for an upturn. So they persist in planning for expansion, growth and bringing more professionals on board. Never do they want to be caught off guard when business opportunities arise.

The added bright side? They pull out the diversity agenda and initiatives from file cabinets and reassemble dormant diversity committees--things that never really should be under cover in the first place.

Tracy Williams

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