- Investment banks are seeking backup as they struggle to retain junior staffers.
- High rates of attrition and fierce competition are sparking a talent war for young bankers.
- Recruiting firms are racing to poach junior bankers, and one has formed a dedicated team.
- See more stories on Insider’s business page.
Wall Street is racing to recruit reinforcements to bolster its junior investment-banking ranks after months of rapid-fire deals.
Goldman Sachs and JPMorgan are among the bulge-bracket banks that have recently vowed to bring on more people. Goldman President and Chief Operating Officer John Waldron said earlier this week the firm was caught off guard and “underresourced” after deal volumes surged in the second half of 2020 and earlier this year.
“I wish we had done it sooner,” he said about the bank ramping up hiring.
Some headhunters say they are also bringing in reinforcements to accommodate banks’ hiring needs.
At Bay Street Advisors, a boutique search firm in the financial-services industry, partner Kevin Mahoney told Insider that his firm had set up a designated internal group, which he called a “SWAT team,” to focus almost entirely on hiring associate and VP-level placements (which are considered junior to midlevel) in investment banking.
Mahoney, who heads the firm’s investment-banking, private-equity, and private-credit practices, said the new group was made up of about five full-time hires, three of whom have joined the firm just in the past year. Two additional director-level recruiters help oversee the group’s activities.
“It started off as hiring reinforcements, adding head count,” Mahoney said about the banks’ activity. “Somewhere around two months ago, it really became more of replacement hires, dealing with attrition.”
In fact, Mahoney said, one large-cap bank that his firm recruits for is in the process of hiring for as many as 15 junior to midlevel bankers — five are replacement hires to fill vacant roles, and 10 are roles that didn’t exist at the bank before.
“In the past month, they’ve lost 10 people,” he said, “which is not included in that head-count number.” He declined to name the bank.
The tug-of-war between hiring demands and the revolving door is creating challenges for big banks. They’ve been doling out retention-focused incentives like special bonuses and raises, while trying to lure in new talent.
“There’s, frankly, just not enough bodies in the market,” Mahoney said.
Juniors at investment banks across Wall Street are under siege
Many young bankers are struggling to keep their heads above water, with some hoping things will improve once they’re back in the office and can enjoy some camaraderie.
Others are throwing in the towel, opening up vacancies in firms’ ranks — and banks are having to get creative to fill them.
Mahoney saw the first signs of trouble toward the latter half of 2020. Deal volumes, which slowed early on in the pandemic, rebounded in late summer.
By the fourth quarter, almost all sectors were marching forward, he said. The dealmaking has been nonstop, pushing some big banks to record first-quarter performance at the start of 2021.
“As we approached year-end last year, banks were saying, ‘We need to hire more people. We’re going to be super busy going into next year.'”
By February, juniors’ patience with the blistering pace was wearing thin. Working from home in solitude didn’t help matters, and many pursued other paths altogether, he said.
Meanwhile, new data from Refinitiv shows record levels of M&A. April was the second-highest month on record for announced deals since Refinitiv began tracking M&A volumes in 1980.
And deals backed by private-equity firms doubled year-to-date both in terms of value and the number of transactions, Refinitiv found.
Goldman’s push to hire more juniors came after two leaked analyst presentations showed how analysts were pleading for support since remote work began.
UBS has said it is “actively recruiting” for additional juniors, in a memo first reported by Financial News earlier this month. The firm also announced new bonuses for people who get promoted from analyst to associate that will hit bank accounts in June.
JPMorgan isn’t matching the special bonuses some other Wall Street firms are showering on their junior talent, but it is putting a heavy emphasis on hiring. The bank has recently brought on 65 analysts and 22 associates, Jim Casey, its cohead of investment banking, told Bloomberg earlier this month, and there are plans to add another 100 junior bankers and support staff in the coming months.
Casey said the bank was also targeting prospective career switchers at law and accounting firms to expand the talent pool. A JPMorgan spokesperson told Insider the bank regularly considered lawyers and accountants for employment in the investment bank because many are already trained as dealmakers — and they’re used to the long hours required by junior bankers.
“Corporate, M&A, and distressed-debt work all segue well into a career as an investment banker,” Sharon Mahn, a legal and executive recruiter, told Insider in an interview.
Mahn said risk-averse lawyers could bring in different perspectives to dealmaking and were well-suited to look at a prospective deal’s complexity from all sides.
“They’re an interesting fit for a bank,” she said, adding that a legal degree could be helpful in an investment-banking role.
Competition from all sides
Plus, there’s also plenty of competition for junior talent from the buy side, Anthony Keizner, a managing partner at New York’s Odyssey Search Partners, said.
In years past, it was the hedge funds that would often be snapping up top bankers. More recently, there’s been a jump in demand from growth equity and traditional private equity.
“What is interesting about this season currently is that both public- and private-equity firms are doing well” and aggressively hiring, he said.
Ken Moelis, the chief executive of the boutique bank Moelis & Co., has taken notice.
When he was asked on an earnings call this week about the hiring environment and competition from bulge-bracket banks to hang on to people, Moelis said that “there’s a lot of talent-hunting out there for junior talent,” according to a transcript from the investment-research platform Sentieo.
And on an earnings call Friday, Ken Jacobs, the CEO of Lazard, told research analysts that his firm was also “trying to find a way to deal with the activity levels and real demands on our staffing.”
“We’re doing everything we can to improve that at the moment” when it comes to the junior ranks, Jacobs added.
Keizner said bank bosses across the Street felt the urgency to get more people in place. For their part, juniors are likely eager for help in lightening the load.
“The banks are not turning down the deals or the opportunities to make pitches,” Keizner said. “So if they have less folks to work on these things, they are pushing investment bankers harder than ever.”
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