The lucrative lives of financial services recruiters
In the golden age of financial services recruitment, somewhere around 2006, there were reports of a London financial services recruiter retreating to his castle at the weekends. At the end of a busy working week, placing junior bankers in private equity jobs, he would retire there and presumably live like a Norman Lord, albeit with modern conveniences.
The story may be apocryphal, but it's based on a grain of truth: jobs placing people who work in financial services can be very lucrative indeed.
"If I place an MD, I get £100k-£125k," says one London headhunter. "It's £100k for a director, and £75k for a vice president," he adds. "If I place five VPs in a year, that's £375k."
Given that VPs are some of the most populous staff in investment banks, placing five in a year isn't unfeasible. Goldman Sachs promoted 2,200 people to VP globally last December and has well over 10,000 VPs in total. If 25% of them leave every year, that's plenty of money to grease recruiters' wheels.
This explains why financial services recruitment can be an alternative route to a comfortable existence in a Manhattan apartment or landed-property in the London home counties. Moreover, 2021 was a boom year as banks stocked upon in investment banking talent: Citigroup alone hired 70 managing directors globally.
As we point out here regularly, financial services recruitment is a business that lags the markets. After a bumper year for banks and recruiters in 2021, recruitment remains buoyant in 2022 (Citi is still hiring in ECM for example), and this is driving a spate of hiring and poaching among recruitment firms themselves. "A lot of search firms are looking for people and competition for talent is fierce," says the head of one international financial services headhunter, talking off the record as with everyone who spoke to us for this article. Another confirmed that good junior recruiters are almost as sought-after as junior bankers in the current environment.
While junior bankers are now on salaries of between $110k-$120k on Wall Street and £70k at top investment banks in London (plus bonuses), good junior banking recruiters can earn $150k in their second year and $200k in their third years according to recruitment firm heads. Pay is dependent on performance, with recruiters typically earning between 25% and 50% of whatever they bill (the more you bill, the more you keep), and most people are performing right now. "Everyone is doing deals, so juniors are getting paid well," says the search firm head.
Some financial services recruitment firms pay more than others. If you work in 'executive search', headhunting candidates, you will earn more than if you work in 'contingent recruitment', waiting for the CVs to roll-in. At Sheffield Haworth, one London-based executive search firm, 73 employees earned an average of £151k ($196k) each in 2020 according to results filed with Companies House; the highest paid director earned £450k. At Phaidon International, which owns recruitment firm Selby Jennings and operates a more contingent recruitment model, 290 people earned an average of £82k each in 2021; the highest paid director earned £270k.
Nonetheless, anyone who presumes that a career as a financial services recruiter is an easy route to riches is mistaken. "It's an out of hours job," says the head of one search firm. "You are often taking calls at people's convenience - breakfast, lunch, evenings and weekends, although the pandemic has made it easier with people working from home." Another says most of the bankers he deals with are "a*holes" who make his life a nightmare.
If financial services recruitment turns down, as it likely will at some point, there's a danger, too, that recruiters' ability to print money will dry up and that all the recruiters hired in recent years could be released to do something else. This is why everyone's reinventing themselves as crypto recruiters, says one headhunter: "Most markets are mature, but crypto is a whole new asset class."
He observes that however good things have been in financial services recruitment this year and last, they could have been even better. Some VPs earned over $1m last year, which means recruiters should have been paid commensurately when they placed them in new roles, but most banks are now capping headhunters' fees. "This wasn't the case 15 years ago," he sighs.
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