Wall Street Is Offering 8-Figure Pay Packages to Woo Top Talent

(Bloomberg) -- The trading desk was just embarking on a second banner year when senior executives started defecting to the likes of Bank of America Corp., Citigroup Inc. and Millennium Management. By this fall, many of the team’s heaviest hitters had gone.

The setting wasn’t some struggling investment bank. It was the equity derivatives desk inside the mighty JPMorgan Chase & Co. -- one of many pockets of employee turnover that have erupted there in recent months, keeping the company’s recruiters busy. Pan out, and it’s part of a trend sweeping across Manhattan’s financial industry.

Signs of a surge in Wall Street job-hopping are emerging everywhere: An independent recruiter said he’s never seen so many eight-figure hiring packages. A career coach said his banker clients aren’t basing decisions solely on money -- they’re fed up with working so much they can’t even date. An industry veteran said moves are becoming so common that some people left behind are anxious: Are they making a mistake by staying?

The trend coincides with the easing of a pandemic that bottled up job changes and prompted many in the industry to question whether they want to resume old commutes, or even stay in the same city. Now, rival firms are dangling money or, in some cases, more flexible lifestyles to lure talent and capitalize on the trading and dealmaking boom. There’s also more competition for women and members of minority groups after virtually every major firm promised to improve diversity in the wake of last year’s racial equity protests.

While numbers are hard to come by, JPMorgan is by no means alone. What’s notable is that such a profitable, marquee name isn’t immune to the burst of circular poaching. Departure rates in many of JPMorgan’s businesses are up at least a few percentage points from pre-pandemic levels, according to people with direct knowledge of the matter. That translates to thousands of seats to fill, which then adds to yet more turnover at other banks -- and so on.

In fact, JPMorgan’s hiring machine has been reeling in replacements and then some. Despite elevated departures, its corporate and investment banking division has managed to increase staffing by 4,500 people in this year’s first nine months. And the equity derivatives desk used promotions to fill vacancies and ended up boosting revenue by more than 20% compared with last year, one person said.

“We’ve been able to retain top talent even in this unique environment,” said Brian Marchiony, a JPMorgan spokesman. “We’ve also welcomed some outstanding new hires to JPMorgan, given our performance and market leadership.”

The problem for banks is that defending and recruiting talent is costly. JPMorgan and Bank of America were among major firms that warned shareholders last month that compensation costs may rise in the coming year. Goldman Sachs Group Inc. Chief Executive Officer David Solomon told analysts there’s pressure on compensation and wage inflation, but that it’s manageable. Days later, Goldman’s board awarded special long-term bonuses to both him and a deputy, giving them more reason to stick around.

Worries about the “war for talent” have crept into other boardrooms. Citigroup’s directors recently offered incentives of up to $5 million to a group of senior executives who are overhauling internal systems to appease regulators.

In fact, scores of senior executives are using the moment to explore ways to get more money, more prominent roles or a potentially more lucrative job on the buy-side. Many of the eight-figure hiring packages are coming from investment firms, such as hedge funds and private equity shops, said Mike Karp, CEO of recruiting firm Options Group. He’s also seeing more counteroffers and sometimes full-blown auctions.

“There were a lot of unfilled jobs where the bids just kept going higher and higher,” he said.

Frustrations Below

That’s the scene on Wall Street’s upper echelons. Lower down, legions are also leaving in frustration. 

For traders and investment bankers, the pandemic meant longer hours, often while working remotely, juggling child care and rising costs. 

While banks saw market activity and revenue soar in 2020, they showed restraint when setting year-end rewards. Some managers told staff that their improved performance had more to do with external forces, and that it would be ugly to dole out higher bonuses in a pandemic. Besides, banks’ lending arms had set aside billions of dollars to cover potential defaults. Then this year, much of those reserves were reabsorbed into their bottom lines.

The result is that many employees are feeling overworked and under-appreciated. 

“These people are exhausted and really need to have a life -- and that’s why they are quitting,” said Claudio Antonini, who set up a business last year as a career coach for unfulfilled investment-banking professionals. “They can’t date, they can’t have a romantic life or even interact with other people.”

Junior bankers, at least, scored significant raises and other concessions in the first half of this year after some at Goldman Sachs made their frustrations known with a slide deck that leaked and put a harsh spotlight on the industry.

JPMorgan recently surpassed Wells Fargo & Co. in commanding the largest workforce in U.S. banking with some 265,800 people, roughly the population of Buffalo, New York. Because of that size, the company offers a microcosm of other issues at play within the financial industry and the broader labor market. 

CEO Jamie Dimon has been leading the firm for more than 15 years, and recently received an incentive package to stay another five. The lengthening tenures of Dimon and other heads of big U.S. banks have put a damper on upward mobility, prompting some rising stars to consider opportunities outside their own companies.

JPMorgan was among the most aggressive in requiring U.S. employees to return to offices, leaving some staffers stewing and creating a hiring opportunity for firms offering more flexibility. In some outposts, such as San Francisco, returning JPMorgan workers initially found it hard to buy lunch because so few local companies were summoning people back that restaurants stayed shut.

Some business lines are under particular pressure. Virtually every major global bank has singled out wealth management as a priority for investment and growth. And at JPMorgan, that competitive pressure has fueled an increase in adviser defections, with firms such as UBS Group AG recruiting more aggressively. Some advisers are even striking out on their own.

JPMorgan is hiring in that area too. The bank has said it aims to double adviser headcount in the private bank over the next five years, and it’s on track to do so, according to a person with knowledge of the plan.

Estimating Raises

The job hunters’ market may not hold up for long, at least in New York’s hub. Almost a quarter of financial-services firms are planning to reduce their workforces in the city within the next half-decade, according to a survey published this week by Partnership for New York City. At least some of those jobs are being moved to cheaper locales, such as Florida and Texas.

For now, industry veterans examining their options have found they have more alternatives than before. A growing number of financial-technology companies, crypto-currency ventures and so-called blank-check companies are interested in enlisting their experience. 

So how much can a banker get by jumping ship? It depends.

The standard bump of at least 10% that executives could expect by defecting to a competitor has probably doubled, said Robert Voth, managing director at executive search firm Russell Reynolds Associates. Competition is particularly fierce for people who can help banks diversify their ranks. “The more progressive companies have lifted traditional ceilings on compensation to ensure they can lead the pack,” he said.

One thing banks have less room to do is rely on their prestige to keep talent.

“There’s no longer a firm that stands out so far above the others that people are willing to work there just because of the name,” said Jeanne Branthover, global head of financial services and fintech at headhunting firm DHR International. “It’s about lifestyle, it’s about work-life balance, it’s about no longer wanting to get in a car or on a bus or on a train to get to work.”

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