Wall Street edging back to hiring mode

Gloom is lifting, but gains will be slow

Nov 14, 2010 @ 12:01 am

By Aaron Elstein

Signs are emerging that Wall Street is looking to staff up after a long, painful purge.

This month, Job Expo International held its first financial job fair in two years. More than 300 people paid the $10 admission to line up in the basement of a New York hotel and present their résumés.

More tellingly, representatives from 23 employers, including Citigroup Inc. and The Charles Schwab Corp., were on hand to greet them.

“Last year, employers just had no interest — I mean zero — in coming to an event like this,” said the fair's organizer, Bradford Rand, who plans to hold another event next March. “The fact that they're here now means better times are ahead.”

Of course, attending a job fair is a long way from landing a job. And while a handful of financial institutions are hiring — with some even offering the industry's legendary eight-figure paychecks — the job market remains difficult for most would-be Wall Streeters.

Still, a small but growing number of firms are dusting off their expansion plans.

“The black mood is gone,” said Richard Lipstein, a managing director in the financial practice group at Boyden, an executive search firm. “But this isn't a case of a rising tide lifting all boats.”

This month, Sandler O'Neill + Partners LP, a boutique firm that advises other banks, sold a 40% stake to two private-equity firms to fund expansion. Similarly, midsize firms such as Jefferies & Co. Inc. and mergers advisory powerhouse Lazard Ltd. are also taking on staff members in anticipation of more activity.

A $30M HELLO

Morgan Stanley Smith Barney LLC is snapping up hundreds of sales executives with expertise in such areas as emerging-markets equities and currency trading, and Citigroup turned heads recently by poaching a UBS AG energy banker with an offer of a $30 million package over three years. This month, pay consultancy Johnson Associates Inc. had Wall Streeters smiling again with its forecast of a 5% overall increase in bonuses this year, with gains in payments for money managers offsetting projected declines in other specialties.

Wall Street has a long road to travel to recover its swagger, however. Even though the pace of the erosion has slowed, New York's undisputedly best-paid work force keeps shrinking.

In the first nine months of the year, 2,700 securities industry employees in that city lost their jobs, according to data from the Bureau of Labor Statistics. In the past two years, 16% of New Yorkers who worked on Wall Street, or 30,000 people, have lost their jobs.

Further, while the industry has traditionally rehired in large numbers when fortunes have rebounded, some analysts doubt that it can do so this time. Stricter regulations are expected to crimp Wall Street profits from such activities as derivatives and proprietary trading for years to come.

In this challenging environment, banks need to lower costs. That primarily means employing fewer people or paying them less.

To help firms make such adjustments, a new breed of firms, including Accordion Partners LLC, is stepping in.

Launched 12 months ago, Accordion offers financial institutions a chance to save big by temporarily hiring analysts laid off by big banks and private-equity shops.

Chief executive Nick Leopard contrasts Accordion's service with banks' practice in recent years of outsourcing basic analytical work to countries such as India. The firm allows the same banks the chance to return that work to experienced people here.

Business is booming, said Mr. Leopard, himself a refugee from The Bear Stearns Cos. Inc. Accordion already has grown to 20 employees, and he hopes to make it 100 in two years.

“We don't see any competitors in our particular space here yet,” Mr. Leonard said. “But we think there will be a wealth of them soon.”

Aaron Elstein is a reporter at sister publication Crain's New York Business.

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