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Is bigger better?

Date: 28 August 2015

Working in the finance sector often leads to debate between professionals over whether it is better to work for a small or large bank. It’s a conversation we have both within the company and with external clients and candidates, as everyone seeks a definitive answer.

The fact is there are pros and cons to both sides of the argument; whether a candidate is looking for job satisfaction, career mobility or job training, both large and small firms have their merits. So we’ve consulted with our specialists and come up with what we believe to be some useful information relating to both sides of the finance industry.

‘Bulge bracket’ banks

There are some fairly obvious advantages to working in a big bank as opposed to a smaller operation. First up is the career development opportunities many of them offer; in larger banks, more established HR functions and training programmes mean it is often easy for employees to further their career and move up the ranks. Larger banks also tend to offer a broader range of training opportunities.

The geographical coverage of job opportunities is also bigger, with the opportunity to work internationally often an option.

With such a range of opportunities often comes more internal competition, however, meaning that employees need to be prepared to give every working day their all or face being potentially nudged out in what can be a much harsher environment than smaller firms.

But, with more workplace stress often comes more workplace benefits, with monetary and personal gains to be made. The size of the deals forged and clients acquired are often much larger and often newsworthy as well. 

Boutique banks

Gone are the days of thinking large, multi-national finance institutions are the only way forward – financial start-ups and smaller firms are reaping the benefits of the financial crash as fewer people have faith in the larger banks.

This is leading to more interest in working for smaller finance businesses; one of the top reasons candidates opt to work for smaller firms is the relationships they can forge. In smaller banks, the number of internal staff is often lower and communication can be easier between departments – there are fewer middle-men to go through and as a result relationships within offices are stronger and the understanding of functional interrelationships a lot better.

Similarly, relationships between employees and customers are often more personal due to the close-knit nature of the business.

Training opportunities can often be less impressive than boutique banks’ large financial counterparts, due fewer training resources. However, since professionals from larger banks often make a transition to smaller firms later in their career, new employees benefit from the experience and expertise of professionals who have made the move from larger enterprises.

When it comes to the benefits of working for smaller houses, while well-being programmes or employee engagement initiatives may be less well established, when business is good the monetary benefits of working for a smaller firm can be significant. Although job stability may not be as strong as in larger institutions, the relationships formed and possible benefits often keep individuals engaged.

Roles within smaller boutique banks can often be more diverse and offer candidates more experience, whilst not restricting their progression within the company.

What choice to make?

The argument for either size of bank – whether bulge bracket or boutique – seems to be fairly evenly matched; but this hasn’t stopped smaller banks from becoming more popular. As was recently reported on the Quartz website, that boutique banks are gaining in prominence and even shutting some of their larger competitors out of news-worthy deals. In fact in 2014 boutique advisory firms took home around 30% of global M&A fees – that’s nearly triple the amount such firms took home in 2000.

Alongside this news, however, are other articles claiming that Wall Street and larger banking firms are bouncing back after difficulties and are making efforts to attract new talent with higher wages to help further propel them forward. In 2014, the larger banks in America made more M&A deals than they did in the year before the financial crash and now employ nearly as large a share of the work force as before the crisis, indicating a real return to form.

So where does this leave candidates? There has been a definitive shift in recruitment style since the financial crisis, with big name banks generating less interest and a new focus on skill acquisition taking the limelight. But both sides of the sector are hiring aggressively and a pro-active war for the best talent is waging.

With both sides of the finance sector offering pros and cons, and news outlets stating that bulge bracket and boutique banks are both lucrative areas of employment, it seems that cultural fit must be the final deciding factor for candidates.

It should also be noted that pay between the bulge-bracket and boutique banks is often not that different – salaries and bonuses are often similar although the structure of payment may vary. Candidates should therefore seek the environment that best suits them; larger banks offer more structured and defined career opportunities, while smaller firms can be more creative and diverse, offering more autonomy.

For more information on specific recruitment opportunities in large and small banks, and for advice on the specific differences between the two and which route may be best for you, contact Selby Jennings today.

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