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Trends in Investment Banking in 2019

Date: 22 January 2019

Because of  2018’s success in the investment banking market — an overall bullish market and record-high transactions and deals —  there seems to be a significant shortage for top quality talent. As the unemployment rate keeps hovering at 3.8%[i], 2019 is shaping up to be a time where the struggle for talent will continue to be a priority for the entire financial sector.

Pursuing a More Balanced Life

Trends show analysts and associates are leaving the banking industry in significant numbers, which is making it difficult to retain and laterally recruit talent.  In fact, there’s been a steady rise in analysts leaving before their associate promotion and even post-MBA associates seeking exit opportunities — some as early as six months into their first year.

"One main trend we have noticed toward the end of last year that’s consistent with the beginning of this year is that there is a shortage of talent in this candidate-driven market,”  says Gary McCool, head of east coast Investment Banking recruitment for Selby Jennings. “Now more than in the past we’ve seen candidates from smaller boutique or middle-market platforms move up-market to larger financial institutions.”

Some of the more common reasons candidates leave the industry are due to the long hours, work environment and work/life balance. Many also believe it’s better to cross over into buy side and corporate development roles. From a combination of these factors, McCool has noticed that smaller firms are attempting to promote a better work culture, including offering increased flexibility and better compensation to incentivize talent to stay put.

Increased Compensation

Since many investment banks are competing over the same candidates, trends show that candidates are earning higher salaries. We have noticed a larger number of counter offers last year because candidates have been leveraging their job offers from banks. It’s become extremely difficult to replace hires within a short time frame on top of hiring someone under normal circumstances.

Trends from 2018 show total compensation is as high as 10%-20% more than average. In addition, at some platforms, the base pay for analysts has been raised to be as much as $115,000. Elite boutique platforms have begun to take notice of this as well. 

Changes in Visa Policies

The last year also saw changes in visa policies. Investment banking attracts qualified candidates from diverse backgrounds and many come overseas to study in the U.S. Many investment banks hold off on hiring candidates because of the uncertainty of visa requirements. Both the firm and candidate will need to restart a new hiring process if visa application petitions do not get approved. Companies hiring this with H-1B or TN visas will find it difficult to onboard a new candidate, leading to an increased struggle to find top talent.

Keep Up With Competition

As the economy and the investment banking industry continues to be strong, the market will only be more competitive. Securing visas are still up in the air, although there’s hope that the current suspension will be reviewed and possibly rescinded by early 2019. Considering the strong need for talent, banks will need to offer significant compensation packages and promote flexibilit and a better work culture to attract top candidates.

If you are looking for new opportunities in investment banking, or are hoping to secure top talent in this competitive landscape, get in touch with the team at Selby Jennings today.