Advice to 240,000 fired Wall Streeters: Grow up and get a real job

Harsh reality from the head of Heidrick & Struggles.

Q. How bad is it for people working on Wall Street?

A. We haven’t seen anything like this in the financial services industry, particularly in investment banking but also in the capital markets area. The numbers change every day, but at the end of 2008 the number was that 240,000 had been laid off on Wall Street in an 18-month period. If you’re talented — and there are a finite number of individuals across every organization who are A-plus players — you won’t have any trouble getting a job. If you’re newer to the investment banking field, you’re going to have to look at different types of employment.

Q. Is it just people in investment banking losing jobs or is it also happening in other areas, like private equity and hedge funds?

A. It’s across the board. You haven’t seen private equity being hit as hard as investment banking or the hedge funds. I don’t think a day goes by when you don’t pick up a newspaper and see another hedge fund that’s closing. A lot of these individuals will either reinvent themselves in different areas of the hedge fund world or retire or do something completely different. Therein lies the challenge. What type of industries do you want to go into when you’re being compensated fairly heavily now?

Q. Where do those 240,000 people go?

A. There are a couple of things happening. When I say retool or reinvent yourself, some of the local investment banks in Chicago are recruiting people from New York. That just wouldn’t have happened a couple of years ago.

You’re also seeing people moving abroad. —

But it’s a supply and demand issue. The demand simply isn’t there for all 240,000.

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Q. If many of these people were skilled at building complex financial instruments that are no longer in demand, how can they use those skills in other industries?

A. You see a number trying to go back to school. You see a number trying to get into different areas. If you’re intelligent, there will be opportunities. It will just take much longer than it used to. At this time, it could take six to eight to nine months.

But it’s tough because the areas that are looking to recruit and grow right now are energy, things that deal with the environment, pharmaceuticals and some parts of high tech. It’s tough to make a transformation from trading credit-default swaps one day to going to work for a health care company the next. They have to discover what they want to do when they grow up.

Q. Are business schools teaching people to become investment bankers when the world doesn’t need investment bankers any more?

A. There is truth in that. I’m on the board of the Fuqua business school at Duke University, and we were just having this conversation at a board meeting. If you look at all the analytical tools they’re teaching at the University of Chicago or at Wharton, they’re teaching people how to become a great investment banker, but not necessarily how to manage and lead.

Those readers who have argued that Greenwich needs huge salaries to support last year’s prices and who warned that those jobs are disappearing would seem to have a point, eh?

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    3 responses to “Advice to 240,000 fired Wall Streeters: Grow up and get a real job

    1. anonymous

      Indeed…

      Would also observe that no. of really smart kids annually coming out of the 5 leading “feeder” colleges (Wharton, Stanford, Harvard, Princeton and Yale) is fairly constant….<1K kids/yr who graduate in top 10% of class in a competitive/relevant major….but size of both NYC/Greenwich’s financial industry and SiliconValley’s tech industry has exploded over past 20yrs….much dilution of a fixed talent pool….i.e., lots of overpaid, not-so-bright/less productive workers, even at the best hedge funds or tech cos….

      Recall that famous (?’02) Paulson quote when he was CEO of Goldman: some 20% of GS employees are responsible for 80% of profits….the usually-unspoken, politically-incorrect truth that senior execs consider when divvying up a rapidly shrinking bonus pool vs a shrinking headcount….

      And recall that I-banking comp is roughly 60% cash and 40% (restricted) stock/options for most Greenwich-caliber workers….cash comp is ~50% take-home post-tax….equity comp of past 3yrs for many IB workers is deeply underwater….and bonuses for ’09 and ’10 appear grim….suggests diminished ability (and willingness) to pay for houses for those buyers who actually will retain their high-income HF or PE or IB jobs….

    2. pulled up in OG

      “Q. If many of these people were skilled at building complex financial instruments that are no longer in demand, how can they use those skills in other industries?”

      Didn’t they quarantine the lepers in the old days?

    3. Calling financial services an “industry” riles my gut. An industry produces something, and Wall Street produces nothing, and takes so much money for that absence of productive activity that real production is stifled. Why “work” for money if you can just make…money?

      Financial service companies make money from the simple fact that actual production requires the movement of money. Industry is the springs and lakes that feed a river of money, and now there are so many middlemen, each taking just a drink, that the river no longer reaches the ocean.