John Mullally is director of financial services (Hong Kong) and director of Shenzhen at Robert Walters.
Talented millennials in Hong Kong are looking beyond investment banks for opportunity
One of the biggest recruitment and retention challenges faced by investment banks today is the increasing turnover that they are experiencing in their analyst and associate talent pools.
It seems that, for many millennials, investment banks are no longer the employers of choice they once were for previous generations. Attracting the highest quality graduates is becoming as difficult as ensuring they stay beyond their first five years with the bank.
There is an obvious perception problem. Ever since the 2008 financial crisis investment, banks have faced a significant media and societal backlash. Many of the losses dealt by the crisis were covered by the tax payer and yet investment bankers, especially senior executives, continued to receive large compensation packages. The swathes of redundancies, bankruptcies and outright bank closures that occurred then – as well as over the past eight years – have also deterred potential recruits who are seeking security in a rapidly changing economic environment.
There is also the issue of compensation. Ten years ago, many university and business school graduates were making Faustian pacts upon entering the industry, believing the money on offer was too good to turn down. They perhaps were more interested in – and better suited to – other industries and jobs, but got on the gravy train and did the long hours because the pay-off seemed worth it.
Now, however, while junior investment bankers are still some of the highest earning professionals in their age group, the inflated bonuses that typified the pre-2008 era are, for the most part, a thing of the past.
It is perhaps better for investment banks, and the junior bankers themselves, that fewer people are making the decision to join banking purely for the compensation. However, this does mean that investment banks have a smaller pool of candidates to choose from.
Retaining talent at the analyst and associate levels is an even bigger challenge. The concern has become significant enough that certain CEOs of bulge bracket investment banks have publicly stated their goal to reduce the number of working hours for junior staff. (In practice, however, we haven’t seen much of an improvement in junior bankers’ work-life balance.)
Base salaries for analysts and associates have increased over the past 12 months, and yet banks are still losing more of these employees than they would like. The loss is especially galling for senior bankers, who put in effort to develop and train such individuals with the goal that they will be able to add some value on the origination side of things in about six years.
If recruits leave within their first four years, the bank has actually put more into these employees in terms of hours and money than they have gotten back.
Compounding the banks’ bad wrap is the millennial tendency to be more independently minded and less inclined to follow a corporate path. They are more likely to consider the level of fulfilment they get from their job, and whether their personalities are suited to the world of banking.
The start-up sector, for example, tends to appeal to them more than being a small cog in the big machine of a traditional company. Some might be considered misguided in their career plans, but the fact that they are willing to risk – which is perceived as an opportunity – leaving their well-paid banking jobs for less traditional working environments, which is another main reason why banks are experiencing such high levels of turnover.
The bottom line, though, is that many of the smartest, hardest-working and most ambitious graduates still choose to go into investment banking. Despite everything mentioned above, many people still like working in a big company and the opportunities that presents – as well as the money. Whether they choose to stay and climb the corporate ladder is the bigger question.
It is perhaps for the best that a larger-than-usual percentage of the current generation of analysts and associates are choosing to move their careers in other directions. The hope would be that those who remain are the ones best suited to take up future leadership roles in these firms.
This article appeared in the Classified Post print edition as Changing perspectives.