Job markets: why are some unemployed for so long?

Here is my thought on the job market in banking and finance.

It’s not your capabilities that matter. It’s all about finding your place in the job market. In my view, it is a mistake to build your career thinking that working in revenue-generating function is better.

If you are made redundant, you might have already gone through this, but applying for any job is a bad idea. You have to apply for the job you are actually qualified to do. More precisely, you have to apply for a job THEY think you are good for. Now the question of whether you can perform the job is irrelevant. Of course, an ex-trader CAN do the trade reconciliation. Ex-ECM banker CAN do a fund administration job or even a relationship manager. Any monkey can be a recruiter. Unfortunately, that’s not the way the job market works. QUALIFIED TO DO does not mean your capabilities. It is more “fit” than capabilities.

Misconception and misunderstanding of the job description leads to 1000 applications for one role. Am I the only one who is surprised by the number of applicants on LinkedIn. The numbers might be based on the initial click, but they are still too high. If you actually speak with third-party recruiters (who in my view shouldn’t be using LinkedIn to advertise roles!), they will tell you that 70-90% just try their luck, 5-9% have the capabilities but not the fit, 1-5% worth looking at.

Front office workers tend to look down on “non-revenue generating” people. The FO workers think they can do what MO and BO do. But if you are one of those unemployed front office workers who now feel “anything is better than what I am going through now,” you might have thought about joining a non-revenue generating department, or even less glamorous businesses such as custodian or data provider. The longer the unemployment, the faster, deeper and stronger the feeling becomes. If you were previously in Asset Management, trading, hedge funds, you can try your luck setting up your own business (the barrier to entry is your own capital, so none and you are not harming anyone) and quite frankly, you would be foolish to return to the job market if you are successful in doing that. You have to adjust your strategies depending on your capital. But for ex-IBD bankers, it is not at all an easy task to set up your own practice. This is one of those industries where people pay for a book of contacts. Who pays for an ex-VP from Goldman providing independent M&A advices? You have to be a lot senior in IBD (or Big 4 advisory) to start your own practice because the barriers to entry (due to credibility, lack of track record and brand name) is incredibly high. There aren’t many CFOs and CEOs that decide to hire no-name boutiques to remedy their financial problems.

The job market works by labelling people and connecting dots that way. If you are previously a relationship manager in fund administration, once you are in the market, you will be seen as a possible candidate for a relationship manager in custodian business. You can try your luck as a relationship manager for asset management, but the chances of you making the successful transfer are small (if you don’t believe me, you can try). The first thing, apart from the job description matches, the in-house recruiter looks for is the connection between what the candidate did before and the job advertised. If you were in fixed income sales at Deutsche Bank and cannot find a similar role at a company of similar standing, you are in trouble. Smaller lenders and retail banks would not hire you because you would not fit in (again the question of your capabilities is besides the point). Your best chances of returning to the job market (if that’s what you desire) are to wait for a similar role in a similar organization to come up in the market and do your best to get the interview (leverage your contacts).

The more specialized you were in your previous role, the more difficult for you to find a next role. You might have been a “strategist” in your previous role at Goldman. Once you come in the market as a “strategist” looking for a new role, realistically, what are your chances of finding a new role if you have already been turned down by all major buy-side money managers and Goldman’s competitors? More, if you are an ECM banker who specializes in one industry, moving within the ECM to another industry is really difficult (as some of you already know).

Let’s look at this from the perspective of a middle office trade reconciliation person. The job market is exactly the same. Once he or she comes into the job market, she will be seen as a possible middle-office trade reconciliation candidate. But she is not confined to one industry or sector (as trade reconciliation does not work that way). She would still have to look for a similar role in a similar company.

Let’s take a look at this from a qualified accountant perspective. Now the number of options available to you once you come into the job market is greater because the skills you have are really transferrable. You can work for EasyJet this year and can work for Sports Authority next. There are some “on-the-job” skills and knowledge, but these are not difficult to acquire even at senior levels.

What should we do if we happen to find ourselves in that unfortunate situation where you are rejected for a support role because you have worked in FO before, you are rejected for a role in less established organization because of the cultural misfit, and there are no immediate openings in your specialism?

To the best of my knowledge, there are a few options. 1. Become a recruiter. Big and established recruitment firms would not hire you. So you have to look for a small firm with a decent base salary (in recruitment) and “pay for performance” bonus. Recruitment industry takes anyone they can get. 2. Wait for a role to pop up. This is a lonely road and your saving doesn’t last forever. Also if you are in your 20s, 30s and 40s, you must work for your future/retirement! The DC won’t just increase if you are sitting at home googling “investment banking associate.” 3. Change industry completely and change to an industry where there are less established career paths, defined roles and responsibilities such as tech and start-ups. These people would be open to “ex-bankers.” But this is essentially you starting from square 1 again. 4. If you have CFA, think about teaching a prep course. Luckily, the number of candidates is increasing (for good or worse given the job market). 5. Start your own business unrelated to banking or finance. You have more success setting up a food business in your van than opening your own boutique in your bedroom. 6. If you were in a position of an analyst (with appropriate qualifications), you could consider working in data or move to a private research firm unrelated to finance or banking. That’s it. I don’t have any more.