News

Bigger is not always Better

New York, NY- There seems to be a changing of the guard on Wall Street these days.  The first half of 2007 was going great for many of the top broker-dealers on Wall Street such as Citigroup, Bear Stearns and Deutsche Bank.  Record profits and bonus numbers for 2006 and phenomenal earnings in both first and second quarters had employees at the top Investment Banks counting down the days until next bonus season.  Six months later, and boy how things have changed.

Bad bets on Mortgage Backed Securities at many of the top investment banks have slashed earnings dramatically.  In turn, there have been massive lay offs and talk of minimal to no bonuses at some firms.  As a job seeker, market conditions have seen to have made at 180 degree turn.  Investment Banks to job seekers were known as safe havens, where hedge funds were viewed as an opportunity to make big money, but you ran the risk of being out of a job in six months.

Investment Banks have been struggling to get out of the credit crisis, while the majority of the hedge funds out there are thriving.  “Employment at small to medium-size firms is very robust.  It’s the large firms in finance that have been shedding jobs” said Joel Prakken, chairman of Macroeconomic Advisers, which compiles the ADP report.

At the same time the larger financial institutions are laying people off, the smaller firms have been hiring them.  Asset Management Firms, Hedge Funds and Private Equity Firms continue to hire aggressively while the larger broker dealers have scaled back hiring dramatically in the 4^th Quarter.

As a job seeker, bigger does not look to be better these days.  Hedge Funds seem to be just as stable if not more secure than former giants of Wall Street.  As one executive recruiter recently said, “The alternative asset management industry is where everyone wants to be these days.  They offer the same stability as an investment bank, offer more money and give you more exposure compared to working at a top bank. There is no 18 month rule at Hedge Funds.  Employees can move into different groups and take on new responsibilities because there is less red tape at these smaller firms.  I advise all of my top candidates to take a look at the smaller shops first”

As the top broker dealers continue with lay offs and write downs, candidates tend to be shying away from the bigger, more structured environments.  The financial services business has always been volatile business; the broker dealers will rebound like they always do, but for now there is no other place you would rather be than at a smaller alternative asset management firm.