Executive recruiters expect a diminished "January effect" this year.
Rather than leaving because of disappointing bonuses based on last year's dismal market performance, disgruntled portfolio managers and senior executives are far more likely to stick it out.
"During a rough market phase, people think, `better the devil I know than the devil I don't,"' said veteran asset management recruiter, Edward Oppedisano, chief executive officer of Oppedisano & Co. Inc., New York. "I think there will be many who will tighten their belts and stay, whereas in other years, you tend to see a lot of people making job changes in the period between December and February, after they get their bonuses," Mr. Oppedisano said.
With many thousands of people in the money management industry laid off last year - although relatively few in the ranks of senior money management executives or investment personnel - it's not surprising many people will stay put during this bonus season.
That said, Mr. Oppedisano expects healthy recruitment activity in 2002, especially in the following areas:
* Performance and new products. Seeking to improve sagging performance of existing strategies and to add new capabilities in all areas, money management companies will conduct selective searches for portfolio managers.
* Asset retention. Money management companies are getting aggressive about keeping institutional client assets, which they've spent a lot of money to obtain, by hiring upper level, seasoned client service professionals. This trend sharpened beginning in June.
* Increasing asset base. Money management companies are scouring the ranks of experienced sales people and marketers for the best talent to augment assets under management.
* Hedge funds. Recruiters handled more searches in 2001 than ever before for both portfolio managers and distribution specialists on behalf of institutional money management firms seeking to meet increased demand from plan sponsors for hedge fund investments.
Asset management recruiters who deal with senior executives and portfolio managers said the layoff trend in the industry so far has only slightly affected their practices. The pain has been acute, however, among middle and lower level financial services personnel. A staggering 116,647 people were laid off in the U.S. financial services sector in 2001, said John A. Challenger, chief executive officer of Challenger, Gray and Christmas Inc., Chicago, a national outplacement firm. Especially hard hit were mutual fund companies, investment banks, brokerages and insurance companies. American Express Co., New York, announced layoffs of 14,000 employees, with 1,200 from the Financial Advisers unit, which includes asset management; Fidelity Investments, Boston, let go of 760 people last year; Deutsche Bank AG, Frankfurt, reportedly laid off as many as 9,500 people worldwide, 900 of them in the United States, and 300 in the private client and asset management units; and Janus Investments, Denver, reportedly released 2,300 people by April 2001.
Search time up
The average search time for a new job in all industries is rising, hitting 3.04 months in the third quarter, compared with 2.07 months in the second quarter, Mr. Challenger said. In 2001, about 41% of the laid-off workers for whom Challenger, Gray and Christmas helped find new jobs changed industries, translating "quality sales support and client service skills from money management, for example, to, say, healthcare," Mr. Challenger said.
The thousands of people laid off from money management companies, and all industries, have affected boutique asset management recruiters such as Mr. Oppedisano. He hasn't noticed a dramatic increase in unsolicited resumes from senior investment professionals seeking the mid- to upper-level positions for which he is recruiting, but his office has been deluged with 300 to 500 pieces of unsolicited mail each week from people outside the investment industry. "It's hard to cope with, for a small practice like ours," he said.
Peter Crist, a 25-year veteran recruiter of money managers, noticed a different phenomenon.
Every time he begins a search for a senior-level money management position, "word gets around real fast - `Peter has a search!' - and friends alert friends, and I start getting e-mails, phone calls, faxes. Some of them are aggressive. I won't say I'm inundated, but the pace is accelerated," said Mr. Crist, vice chairman of Korn/Ferry International Inc., Chicago. He said another subtle difference now is how hard he is being "leaned on. I've been getting calls from people - past clients, former search candidates - who are pushing to have a friend seriously considered." Some of the proposed candidates are already unemployed; some still have great jobs, he said.
"What I can say is that there's a low rate of success from candidates who come to me this way; but you do get candidates, some of them good, who are worth looking at," Mr. Crist said.
Dennis Ferro, chief investment officer at Evergreen Investments, uses a recruiter to fill many senior positions at the $217 billion asset management company, but he does keep a file of unsolicited resumes he receives by mail as a cross-reference. The file is much fatter now than in previous years, he said.
"It's definitely gone from being a seller's market to a buyer's market," Mr. Ferro said. "There's still a premium for high-quality investment talent with a track record, but for the rest of the market, it is much less ebullient than it was a year or two ago," he said.
The current buyer's market suits Evergreen Investments very well, as Mr. Ferro has several senior positions to fill in the company's Charlotte, N.C., Boston and Philadelphia offices. "There are more candidates out there, and we have a great ability to select someone based on experience and hire them at an appropriate financial level, compared to previous years where there were fewer candidates and you had to pay up to get them. We find that it's a much more fluid environment to attract people," Mr. Ferro said.
Arrowstreet Capital Management LP, Cambridge, Mass., with about $1 billion under management, received about 250 resumes for a portfolio manager vacancy posted late last year on the Internet at monster.com. About 40 responses were from qualified portfolio managers, an unusually high number, said Peter L. Rathjens, chief investment officer and managing partner.
The number of responses to an online posting for an investment research position also was quite high, but the systems support personnel jobs really brought a tidal wave of applications, Mr. Rathjens said. Arrowstreet has been finding that applications programmers are far more willing to work in the financial services sector now than they were 18 months ago. "Before, they all wanted to work at Microsoft or somewhere like that."