2009 Year in Review:
The Wall Street Employment Scene from a Recruiter's Perspective
Interviewed by Bill Singer
Bill Singer: To say that 2009 was a difficult year for job candidates on Wall Street would be a classic understatement. From your perspective as an industry regulatory/compliance veteran and recruiter, how bad did things actually get?
Stuart Rosenthal: Things slowed abruptly in mid-March 2008 after Bear Stearns was sold to J.P. Morgan. It's hard to believe that it's been nearly a year and a half since that event, but that was a day when things truly came to a screeching halt. Remember that Bear had some 15,000 employees when the sale was announced, and keep in mind that it took nearly two months to finalize that transaction (which, in the interim, went from a proposed purchase price of $2 to the final deal at $10 a share). Then, just as the market was digesting that fiasco, we got hit harder when Lehman Brothers filed for bankruptcy in September 2008. That impacted about 25,000 employees. Frankly, at that point, we hit the wall -- hiring stopped. It was as bad as I've seen in my two decades on the Street. Firms were not hiring, but were looking to cut even more jobs, and there were virtually no plans (short, mid, or long-term) for hiring. It was dismal.
Singer: Do you think we've seen the worst?
Rosenthal: Although things have improved since the Bear and Lehman crises, I don't think we will ever return to the staffing levels of the last bull market, at least, not for this generation. I think that we have seen the worst on the employment scene from the Great Recession, but we are still adjusting to the new world order.
The New York Times recently reported some 216,000 domestic jobs vanished in August 2009, but those losses were somewhat more moderate than the worst numbers of the year. Most economists see recent improvements as the result of moving away from the low point of last fall. Earlier this year we were hemorrhaging nearly 700,000 jobs a month, but that has slowed. However, "improvements" and slowing down are not the same as vigorous growth.
The Wall Street Journal just released an economists' survey showing that, on average, the unemployment rate is not expected to recover to under 6% until 2013. That's another four years of substantial unemployment, and keep in mind that many economists still don't think that the current rate has peaked; they are pointing to February 2009 as the possible high water mark.
Singer: What are the chances of Wall Street embarking upon the rehiring of the tens of thousands of folks who have been laid off during the Great Recession?
Rosenthal: The headcount is not coming back. There will be opportunities for compliance professionals capable of overseeing desk traders, particularly fixed income. Similarly compliance staff who understand derivatives, credit default swaps, and trade reporting will likely enjoy some demand.
Singer: Are you seeing any positive signs on the Street in terms of employment?
Rosenthal: A lot of firms are still focused on cost cutting, and a major component of that push is layoffs and deferring hiring.
Did you know that the New York Stock Exchange (NYSE) eliminated nearly its entire Staffing and Human Resources Department as part of a major headcount reduction earlier this year? The NYSE and others continue to use a contract-to-hire and a temp-to-perm model as much as possible. For job candidates, that may be a troubling development, but it is a fact of life and one that will likely be the new norm for much of the Street.
Given the magnitude of the public outcry for regulatory reform, I think that we should expect to see some job creation in response to that dissatisfaction. Not only will Wall Street firms need to maintain certain levels of compliance staff, but there will likely be new rules and regulations that will require expanded coverage. For example, I'm seeing some job creation in the options surveillance area and some new adds in Fixed Income.
Then you have the well documented fact that middle market Institutional firms are picking up shuttered bulge-bracket alumni. I have also seen some start-up activity -- to some degree, this is a phenomenon that likely arises from a belief that if you can't find a job, you might as well create a company to employ yourself (and maybe some of your former colleagues). I am aware of some movement in this area in the retail fixed-income trading sector. For example, look at a new firm like Second Market, which was just just founded in 2008 and has already established a niche in Auction-Rate Securities.
Singer: In what parts of the industry do you expect to see an early pick-up in hiring and when?
Rosenthal: I do expect enhanced or additional regulatory/compliance requirements for Private Equity and Hedge Funds, which will likely generate hiring needs for consultants and legal counsel. Although much of that initial work may be on a part-time, per diem, or temporary basis, I think it's fair to assume that as the economy continues to recover and those funds stabilize and expand, that we will see a move towards permanent legal and compliance staffing, along with risk/financial oversight positions.
I also anticipate that the interest rate derivatives sector will provide new hiring opportunities as it seems likely that there will be new regulation in that area that will require expanded trade reporting and oversight. For example, we recently saw the christening of new positions as Credit Rating Agency Compliance Officers started to gain traction.
Similarly, if the proposals to require hedge funds and private equity firms to register as investment advisers with the SEC are approved, that would necessitate the hiring of a new class of compliance officers. Another wrinkle is the talk about banning placement agents to raise money from government pensions, which could motivate private equity firms to hire in-house marketers. I have already been contacted about such placements.
Singer: What mistakes do job applicants make in terms of resumes, cover letters, or other written submissions?
Rosenthal: I would suggest that every applicant use a brief cover letter when transmitting a resume. Even if you're submitting via email, you should include a cover letter in the body of the message with your attached resume file. I would encourage applicants to use the cover letter to explain the gaps in their resumes. Don't be afraid to explain that your firm was shut down, imploded or become part of a merged entity. While it's true that most industry professionals know what's what and understand the unprecedented nature of the past two years, you should still pre-empt the issue and let a potential employer know the circumstances of your unemployment or, in many situations, under-employment (typically part-time jobs, consulting positions, etc.).
Singer: What's the advantage of using a recruiter versus directly reaching out to an employer?
Rosenthal: In this market, you should always be aggressive in following up on any leads. There are multiple, qualified candidates for every opening and you have to sell yourself. However, given the flood of qualified applicants and the limited number of jobs, going through a recruiter has some advantages. In many cases, I have a track record with an employer and when I "push" a given candidate, that may carry quite a bit of weight. Moreover, my employer clients expect that I triage the many resumes that come on my desk and interview the candidates before sending them down the line. Having my imprimatur on your application can make the difference during these competitive times.
STUART ROSENTHAL, Managing Director of Rosenthal Recruiting, has a financial services career that spans over two decades. As a regulator, he served as a Compliance Examiner with the National Association of Securities Dealers (NASD), now the Financial Industry Regulatory Authority (FINRA). Rosenthal's industry employment has included Merrill Lynch and Smith Barney. At Jefferies & Company, Inc., Rosenthal worked for ten years in the Compliance and Risk Management Department, where he helped to implement and later monitor the Global Analyst Research Settlement. Subsequently, Rosenthal became a Compliance Officer for Soleil Securities Corporation, where he supervised broker-dealer research, sales and trading services, and hedge funds/mutual funds asset managers.
Rosenthal Recruiting places legal and financial services candidates. Placements and clients include global public NYSE-listed corporations, investment banks, hedge funds, AmLaw 100, 200 and boutique law firms, global-to-start-up broker-dealers, registered investment advisors and nationally recognized statistical rating organizations.
BILL SINGER (first name is legally "Bill") is a shareholder in the Securities Practice Group of the law firm of Stark & Stark, where he represents securities-industry firms, individual registered persons, Wall Street whistleblowers and defrauded public investors. Singer has represented clients before the American Stock Exchange, the New York Stock Exchange, the NASD, the Financial Industry Regulatory Authority, the United States Securities and Exchange Commission, and in criminal investigations brought by various federal, state, and local prosecutors. He has the distinction of representing witnesses during high-profile Congressional investigations.
Before entering the private practice of law, Singer was employed in the Legal Department of Smith Barney, Harris Upham & Co.; as a regulatory attorney with both the American Stock Exchange and the NASD (now FINRA); and as a Legal Counsel to Integrated Resources Asset Management. Singer was formerly Chief Counsel to the Financial Industry Association; General Counsel to the NASD Dissidents' Grassroots Movement; and General Counsel to the Independent Broker-Dealer Association. He was registered for a number of years as a Series 7 and Series 63 stockbroker.
Singer publishes the RRBDLAW.com and BrokeAndBroker.com websites and the BrokeAndBroker.com blog. Singer is the Street Legal columnist for Registered Rep. magazine; a featured columnist for Forbes.com; and a member of the Forbes Intelligent Investing All-Stars Panel. He regularly appears as a commentator on television and radio, and is frequently quoted in the press. Singer is an outspoken critic of ineffective regulation and a staunch advocate for Wall Street reform.
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