Survey Results: The Money Management Job Outlook

Two months ago, we started a survey with what in hindsight turned out to be a purely rhetorical question: “How do you feel about the job outlook in financial services?” Ever since, hardly a day has passed without announcements of sharp cutbacks in the headcount at money management firms.

At the time we launched the survey—in which 250 industry people participated—companies had announced hiring freezes and perhaps one or two had acknowledged plans for layoffs, but the daily litany of firings had not yet begun. That’s how quickly employers have responded to the drop in their revenue as assets under management have been depressed by the free-falling securities markets. To date, the layoff hit list includes Fidelity, Janus, American Century and Alliance Bernstein, with more to follow.

As reported by Money Management Executive, the ICI says that from 2005 to 2007 alone, fund industry employment grew by 21,000 to a total of 168,000. MME notes that picture is rapidly changing due to investors’ loss of $144 B in mutual fund assets from August through October, with some observers stating that job losses could well exceed those of the bear markets of 2001-2002 and 1991-1992.

More Layoffs Ahead

Only 21% of our survey participants say they have heard rumors about layoffs in their own companies, but 58% predict ‘massive layoffs’ in the money management industry. Fifty-six percent say more large financial companies will fail before the situation improves and agree that we are in the worst financial crisis since the Great Depression.

Economic Rebound, but not for the Job Market

More than one-half expect the crisis in credit and financial markets to stabilize within the next six months, but they do not expect the job market to rebound next year. Sixty-two percent are less confident about their careers than a year ago.

Looking for Work

When asked about their job status, 42% say they are “employed but open to new opportunities;” 22% are “employed but actively seeking new employment” and 18% are unemployed. The rest -–only 18%--are content where they are. Only 43% feel secure in their current jobs.

Why are employed people looking for work? Thirty-eight percent are concerned about being laid off and 31% seek career advancement.

Though one participant reports he has been looking for work in the industry since his layoff five years ago—a circumstance he attributes to age discrimination—most of those now unemployed have been looking from one to six months.

One third of those looking for work expect to find a new job soon. But for two-thirds, the search is taking longer than expected, a result of an “insufficient number of new opportunities” and a “poor hiring environment overall.” Many are also not sure what they would like to do next or feel they aren’t yet spending enough time looking for a job.

Fifty-percent of the active job seekers say they may leave the industry if their search takes much longer.

How they are looking

In their search for work, more than 50% are looking for jobs online. The rest are calling friends or recruiters or contacting employers directly.

Other comments

We gave our survey participants the opportunity to comment on the current job market. Here is a sampling of their remarks, edited for brevity:

“I'm of the belief that a recession is inevitable. Whether that turns into a depression depends on untrustworthy, unreliable people in Congress. If some kind of relief from this credit crunch doesn't come soon, I fear the future… I do believe that many financial services companies will be laying off massive numbers of employees. I am thankful that our company will not be one of them. We are expanding!”

“All sectors have been hit. Response back from employers is they are receiving 150-250 resumes for every senior level marketing position - and I live in an area that's known for better employment opportunities.”

“To the extent we are talking about employment close to the front line and clients, demand is going to go up over the short, medium and long term. That is built into the demographics and the growing shortage of investment advisors. If we are talking about management…that is highly likely to shrink in the face of consolidation across all financial services…”

“Even though the economy is facing tough times, the financial services employees are the ones who have the most knowledge and insight into the markets; even though many firms have failed, and job losses in the financial sector will be high, ultimately the people who work in this sector are needed by the American public for guidance, advice, and sound financial planning. I think even though layoffs will be substantial, in the months to come, this will be a profession in high demand.”

“There will be a new financial services industry in the next few years and there will be re-regulation so financial services will grow at a slower pace when compared to the past ten years or twenty years.”

“I think there will be decreased appetite for risk, and, therefore, more demand for risk-management professionals and services.”

“There are always layoffs when the market falls. Often this is because of over-hiring when the market is up. I've been subject to both trends over the years.”

“I feel that the industry will probably never get back to where it was. With outsourcing, etc. the world has changed. Hopefully the tide will turn again - it was great to be part of its development.”

“There are a number of people at every firm in Sr. Mgmt. positions that should be shown the door, but when push comes to shove they protect themselves and sacrifice others.”

I posed the same question to members of my Linked In Group and received similar comments:

“The job situation in the financial services industry is [worse than ever seen] in the Great Depression. There is a lot of excess garbage in the industry and the when this turmoil dies down, one can see a smaller and nimbler financial services industry.”

“A bit bleak right now… Once things calm down…firms will be leaner and operate with a bit less "irrational exuberance" when it comes to adding to, or replacing staff.”

Welcome

I started working in the financial services business right out of college, so --other than working for a short time as a news writer and radio talk show producer--this is the only industry I know. As a result, I've witnessed and participated in many changes in every aspect of the industry, from product innovation to new modes and means of marketing.

For the past ten years, running my own marketing and executive search firm, I've worked through both sides of the 'supply and demand' equation for talent. When I started this business in 1998, there were too few skilled people chasing too many jobs. Stock option grants were commonly part of the compensation package for people in senior professional or management roles, and everyone wanted to work for an Internet company. Needless to say, all of this past experience has been turned on its head. The money management industry is in a state of 'employment contraction,' rather than growth. Even the largest, and presumably most stable companies are cutting back, and there are some early indications that if the financial crisis continues, the fund industry itself may be reshaped.

This blog is my effort to share my personal perspective on industry job and employment trends and to stimulate dialogue and commentary from others who work in the business. I welcome your participation.