While 2023 saw a markedly slower pace of hiring within the financial services industry relative to recent years, it was also a year of a number of new hiring-related developments that will remain important considerations for firms to assess in the coming year.  Below is a quick recap of those items along with our recommendations.

Riding a fine line with hybrid work structures
In the summer of 2023, we published an industry benefits benchmarking survey of more than 50 asset managers with a majority of firms (53%) indicating they are using a hybrid three-days-per-week in-office structure, followed by a second group of firms (21%) using a hybrid two days per week in-office structure.  As companies have wrestled with bringing back people to the office more frequently, a natural question becomes how many days a week is possible without a cost in talent. Our research indicates that moving to 4 days per week in-office results in a loss of roughly 1/3 of a candidate pool and that moving to 5 days per week in-office results in a loss of 2/3 of the candidate population. While having employees in the office is crucial for cultural preservation, employee connectivity, and real estate utilization purposes, firms need to remain mindful of how their peers are approaching hybrid work offerings as it is likely to remain a key facet of talent acquisition and employee retention.

Calling all mentors
Throughout 2023, candidates have consistently provided feedback that there is a lack of mentoring available to them in their current workplace, citing that being in the office less often has created fewer opportunities. The lack of office time has also made candidates feel isolated from their colleagues and not part of the bigger picture.  Many clients have noted this challenge as well and plan to make mentoring a 2024 priority, including cross-functional projects exposure to help employees learn how different departments work together and potential progression paths available.  Another notable benefit of these projects can be new optimization/efficiency ideas driven by colleagues from other teams.

Does anyone want to relocate anymore?
With many people having relocated to new areas since the onset of the pandemic, the percentage of the population open to doing so today has fallen sharply.  When coupling that aspect with historically high home prices and increased borrowing costs, the allure of relocating for a role has become a much higher hurdle than in the past. This development has led to a notable impact in terms of quantity (and sometimes quality) of a candidate pool so keeping a flexible mindset as far as potential commuting scenarios or remote work options can be an important consideration in attracting the greatest talent.

Why 8 out of 10 might be better than 10 out of 10
In each search undertaken, any good recruiter consistently seeks to find candidates who are a virtually identical match to the ideal candidate profile sought by the hiring manager, the proverbial “10 out of 10” if you will.  In our experience though, it’s far more likely that the candidate who ultimately gets hired for a position is best described as an “8 out of 10” candidate. This is by no means always the case, it’s more of a general law of averages that very few “10s” exist and, where they do, they are usually well-paid and generally happy at their current firms. To make a successful (and efficient) hire, one needs to recalibrate expectations and prioritize the key attributes needed. Our advice is to seek out those candidates who i) demonstrate enthusiasm and personal investment in the role, and ii) possess not only the hard skills required but also the soft skills or “EQ” needed in the role.

Job candidates are more resourceful than ever when exploring potential new career opportunities
We are consistently finding that job candidates are spending a greater amount of time performing their own due diligence on a company or job opportunity before even applying for the role or discussing the opportunity with a recruiter. That research goes deeper than visiting the company’s website or running Google searches for company news. Instead, it takes the form of reviewing the company’s SEC Form ADV and other publicly available information, analyzing recent client flow patterns and product performance trends, researching Glassdoor reviews, and even going so far as to reach out to LinkedIn connections who have knowledge of the firm to get their input.  While editing a candidate’s initial impression can sometimes be challenging, hiring firms can take back the narrative by having a well-crafted job description that draws candidates in by speaking to the appeal of the firm’s mission, culture, strategic vision, and investment that it makes in its employees.  Candidates often report that those aspects rather than just the job duties themselves are what compelled them to pursue an opportunity.

Having experienced one or more compensation increases over the past few years and also enjoying a fairly flexible hybrid work structure has resulted in candidates becoming more selective about any potential new job opportunity they explore.  While many of the unfortunate candidate practices such as ghosting have thankfully disappeared, job seekers desire a strong platform with an attractive product set and a clear sense of the growth path available at a new firm (in compensation and responsibilities).  With that in mind, the appetite for risk-taking among candidates generally is about the lowest in memory.

Having a well-defined (and public) corporate culture is key
Building on the topic of candidate resourcefulness, the importance of having a strong cultural presence cannot be overstated.  While this may seem obvious coming from a recruiting firm whose tagline is “culturally aligned talent”, one thing that we consistently hear from candidates is that their current employer lacks a well-defined culture or they feel disconnected from it. Headed into 2024, our view is that cultural identity will persist as a key differentiator in attracting and retaining talent. Hiring firms need to be transparent in how they present their culture publicly by having a well-defined culture section on their website which lists out the firm’s core values. Having this information clearly articulated not only fosters an early connection for potential job applicants but also creates a unified message of reinforcement for existing employees as well.

The Future of AI use is still unclear
The use of artificial intelligence within the financial services industry has been a consistent area of interest and discussion from our clients in 2023.  Among the many asset managers that we’ve informally polled on the topic, most have not yet implemented an AI solution but are actively exploring potential ways to do so. There doesn’t appear to be a primary target area for AI deployment though most commonly mentioned are i) automating back-office operational tasks such as new accounts onboarding processes, ii) automating the development and presentation of firm/client analytics for use with senior management or board members, and iii) incorporating AI into the portfolio construction process to make better-informed investment decisions. While the jury remains out on how things will take shape, one area consistently deemed off-limits for now is the realm of client interface (distribution, marketing, and client service) roles given the human element required.  Potential regulation of AI use which has been gathering steam lately in the media will likely play a part as well.

Legal and compliance roles remain in high demand
While many investment managers have experienced modest headcount reductions in 2023, the one hiring area that we have noted robust hiring has been for legal and compliance roles. Investment advisors and their Chief Compliance Officers have consistently reported feeling understaffed in a rapidly evolving regulatory landscape.  Regulatory focus areas concerning advertising practices, protection of clients’ material nonpublic information, third-party vendor risk oversight, use of predictive analytics, and more have all got compliance staffs working long hours and feeling overwhelmed.  With several new regulations set to be finalized in 2024, the corresponding increase in monitoring and reporting will likely lead to further headcount additions next year as well.

Honesty Is the best policy
We are continually surprised by the lengths that prospective job candidates will go to in terms of the hours they spend interviewing and PTO leave taken from work for a specific role that they have little intention of taking.  Our only advice on this topic is to compel candidates to take an initial interview with a hiring firm, learn about the role through that discussion, and then make a decision.  A good principle is that if the position and culture align well in terms of your view of a potentially good next step of your career, keep with the process.  If not, then opt to withdraw rather than waste your and everyone’s time, hoping to get an eventual offer only to decide it’s not for you at that point.

2024 will require doing more with less
In a continuation from 2023, hiring managers are increasingly searching for candidates who can wear multiple hats in a role. With firms managing margin compression and fewer headcount additions available, job searchers must present themselves with a flexible attitude about future role and potential skills acquisition.   This can also lead to multiple career paths as opposed to feeling pigeonholed so it can present unique growth opportunities in the years ahead.