Executive search firm Carlton Senior Appointments reflects on the smart way to play the banking bonus season.

As the season for bonuses arrives – always a widely-reported event by the media and followed closely by industry professionals – this publication shares an article from Carlton Senior Appointments, part of the Phaidon International Group. While drawn from examples in countries such as the UK, there are issues that will interest readers beyond the UK. The editors of this news service don’t necessarily endorse the views expressed by outside contributors and invite readers to respond.

The bonus season is fast approaching for those employed in the wealth management sector. This is a difficult time of year for many, with the promise of bonuses sometimes causing tension between employees and an employer if the amount is less than expected. Two recent reports from Reuters have revealed that on the whole, bankers’ bonuses are due to drop again this year, with London investment bankers looking set to receive 9 per cent less in 2016 compared to a year earlier, as managing directors relinquish up to £25,000 ($35,946) from 2014 figures.

There is a fear that pressures to reduce costs at big name banks, such as Deutsche Bank, Barclays and Credit Suisse, may impact the amount of bonuses paid. But it’s not all negative – JP Morgan and Citigroup have announced they will leave bonuses unchanged from 2014 levels. Also, those working within boutique banks/wealth managers will be less concerned in the run-up to bonus announcements. The agile nature of less institutional banks enables them to take a more formulaic and transparent approach - thus giving employees a better understanding of what they will receive come March/April. 

However, some big banks are likely to pay out in order to keep hold of top talent, despite potentially seeing their profit fall. The Financial Times recently quoted a senior executive from a global bank as saying: “There’s a bid out there for the top talent. […] The world has changed quite a bit, even if bonuses are down […] the best jockeys will be protected.”

A willingness to pay extra to hold onto the most talented individuals will definitely be reflected for those in the private banking sector, too. The very top performers employed in banks are likely to be well rewarded this bonus season despite cuts being made in other sectors. It seems that most private banks will be willing to pay to retain top talent. One head of a boutique private bank we spoke to cited both the difficulty in finding and the associated costs of bringing in new talent as the main motivator for ensuring their current top performers are well rewarded.

The need for skilled individuals
It is this need for skilled individuals that is making it an incredibly lucrative time to look. If you’re considering a change but are unsure how to best approach the situation with bonus season around the corner, follow our advice below:

Don’t waste time
Many candidates will be waiting for the 2016 bonus season to really start before looking for new opportunities, but now is the time to begin interviewing. Actively seeking new employment opportunities now will mean you avoid interviewing at a time when banks are inundated with those looking for employment, and the time and resources of hiring managers are stretched. If you wait, securing the right move could prove more difficult.

Beginning your search now will also help you to avoid the post-bonus hiring stampede when hiring managers are often seeking replacement headcount to fill vacancies where people have left, rather than where banks are actually looking to grow. Finally and perhaps most importantly, by beginning your new job as early as possible, you will also be able to utilise the rest of the year to maximise your bonus next year.

Align yourself with the bank
In light of recent market pressures, a number of banks are seeking to de-risk their business. If your market coverage isn’t a priority market for a potential institution then joining them will inhibit your career progression.

Choose a bank committed to your market to improve your career development and attract more clients
It is therefore important to align your market coverage with the bank in question; while in the past an interview would focus on the prestige of a bank and their company ethos, it is now as important to research any developments within the bank, changing commitments and the firm’s future strategy. Choosing a bank that is committed to your market will not only increase your chances of career progression but it is likely to increase your ability to attract clients, as the bank will be investing in tailored investment services and marketing specifically to target your potential clients.

Consider the skills in demand
Individuals with stable backgrounds and high-performing experience within a relationship manager role will always be in high demand. Profiles with back-office experience are also growing in demand as a number of banks are seeking to increase their investment advisory headcount.

As well as the above, a number of private banks are looking for talent from non-traditional wealth management backgrounds. Hiring managers are becoming increasingly interested in candidates from corporate banking and institutional sales backgrounds, as these represent industries with the desired skillsets required in private banking but give individuals a more rounded understanding of ultra-high net worth individuals and their overall financial needs.

Banks are also prioritising candidates with professional qualifications such as the CFA or CISI, in reaction to recent changes in regulations and an increased emphasis on compliance. 

Bonus season is fast approaching but there is a lot of uncertainty across the different banks regarding what  bonuses will be awarded.