It's been a tough several months on the Street.
After the financial crisis trampled everything in its path in 2008 and 2009, firms tentatively started rebuilding their teams in 2010 and continued hiring into 2011. Then August hit. The killer combination of a Greek debt crisis, U.S. debt downgrade and uncertain regulation roiled the markets, slowed the economy and forced Goldman Sachs, Morgan Stanley and their brethren to, one by one, announce layoffs. Jobs dried up like raisins in the sun.
A few weeks into 2012 and we see no end in sight for the reduction plans of some firms. So far, the biggest shedders are HSBC and Bank of America, which each are cutting at least 30,000 jobs around the world. All of the big names, including Goldman Sachs, Morgan Stanley, Citigroup, UBS, Credit Suisse, JPMorgan, Deutsche Bank, Royal Bank of Scotland, Nomura and assorted regional banks are collectively cutting thousands of positions, too.
Unsurprisingly (mainly because the banks warned employees not to get their hopes up), bonuses are down across the board this season. At J.P. Morgan, very few people saw increases in total compensation over last year, flat was considered good and even "top-rated" people saw pay cuts, a source tells us. Goldman's fixed income, currency and commodities division was hit hard, while Bank of America investment bankers are said to be getting 25% less this year than last. That's not so outrageous: Morgan Stanley's senior investment bankers and traders are receiving 20% to 30% less compensation for 2011 than the year before.
So where's the good news? Some sectors that hired last year will continue to do so into 2012. Financial institutions are looking for talent in accounting, wealth management, and in emerging markets. Although Asia cooled off slightly at the end of last year, many banks still plan increases in their corporate finance and fund-raising groups.
Then there are the firms that don't hog the spotlight. Houlihan Lokey, the Los Angeles-based investment bank with just 850 people, will add to its teams in the U.S., Europe and Asia this year, while Marsh & McLennan, eager to expand its reach, will hire for its risk and insurance businesses across the globe.
Finally, don't forget about jobs spawned by Dodd-Frank, the financial regulation reform bill passed in July 2010 that created new agencies to oversee financial institutions and levy new rules on them. Even though the Securities and Exchange Commission and Commodity Futures Trading Commission don't have budgets to bring on masses of people, the Consumer Financial Protection Bureau expects to hire almost 500 people by September 2012. In addition, all those new regulations are prompting compliance hiring at private-equity firms, hedge funds and banks.
It's unclear whether the changes Wall Street is undergoing are permanent. Some analysts claim that a shrunken Street will eventually become the new normal. Others, like Goldman Sachs Chief Financial Officer David Viniar, say the industry is facing a cyclical downturn, not a secular decline, and that things will be back to business as usual. No one knows when either scenario will play out.
Even if the majority of jobs don't return, there are still some out there if you know where to look. In the FINS 2012 Finance Jobs Outlook, we'll give you advice on how to tailor your resume for every industry you might be interested in, from hedge funds to corporate banking. We'll show you the trends in accounting hiring and wealth management and point you to the opportunities in Asia. We'll also guide you toward smaller firms like Cantor Fitzgerald, which are gleefully scooping up Wall Street's displaced talent.
Here's to 2012 and a year that's better than last.
Write to Julie Steinberg at Julie.Steinberg@dowjones.com
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