From the monthly archives:

June 2014

If you had to guess which financial sector has seen the best recovery in employment, which would you guess? Would it be the popular, but beat-down hedge fund industry? Perhaps it would be the private equity industry given the strength in mergers and acquisitions recently and the availability of cash? On the other hand, maybe the industry bringing on the most individuals would be the investment banking industry following the massive collapse of Lehman Brothers and Bear Sterns.

Investment Banking Employment

First, let’s explore what employment in the investment banking industry has done over the past ten years. Employment in the industry boomed in 2006 and 2007, expanding by almost 30,000 people to its peak of a little over 100,000 in July 2007.  The expansion represented growth rates of upwards of 15 percent during the peak expansionary period. As a note of comparison, during the housing market boom and peak in 2006 and 2007, economy-wide employment growth only grew a little over 2 percent.

Since the peak, employment in the industry has collapsed, shedding almost 10 percent of its workforce from peak (July 2007) to through (January 2011). Perhaps unsurprisingly to industry insiders, investment banking industry employment has yet to fully recover from the housing market recession, still about 5,000 jobs short of the peak. At the current growth rates, employment in the investment banking industry may surpass the 100K mark in about three years, putting a decade between the initial July 2007 peak and a new peak-employment.

investment banking


Private Equity Employment

Moving now to the private equity industry.  In contrast to the wild ride the investment banking industry went through, private equity was more calm and collected.  Employment in the industry peaked in August 2008 at about 36,000, more than a year after the investment banking industry’s peak.  Following the peak, employment in private equity declined by about 2,500 settling around 33,500 in September 2009. Following the September 2009 trough, private equity firms began adding jobs again at 1 to 2 percent.  The sum of all employees working for private equity firms now stands above 36,000 – a few hundred above where it peaked in August 2008.

private equity

Hedge Fund Employment

If you were asked which industry has a more volatile employment base, would you say investment banking or the hedge fund industry?   The answer, not surprisingly, is the hedge fund industry.  Employment in the hedge fund industry peaked in October 2008 at about 21,200, representing an annual growth rate of about 10 percent at the time.  Akin to the investment banking industry, albeit at a larger rate, hedge fund employment dropped quickly since peaking, declining almost 20 percent from October 2008 to October 2009 (about 4,000 jobs).

Since entering the recovery, the hedge fund industry’s employment count has fluctuated significantly, contrary to most other sectors or industries, including most outside of the financial industry.  Overall, employment count for the hedge fund industry has fluctuated from +7 percent Y/Y to down 4 percent Y/Y.  The most recent Y/Y growth figure for the industry is, interestingly, flat.

hedge funds

Comparing the Three Areas

Getting back to the question at hand, how has the employment in the investment banking industry fared compared to the private equity and hedge fund industry?  The follow graphic has the comparison since 2008.

Overall, private equity firms have performed the best, having added 3 percent to their payrolls since 2008.  In second place is the hedge fund industry, overall flat since 2008.  In last place is the investment banking industry, still down 4 percent since 2008.


Overall, of the three major financial sectors, employment in the investment banking sector has experienced seen the least positive recovery.  Hopefully for those interested in the investment banking sector this trend will change and more jobs will be available going forward.

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Let’s get one thing straight about mentors: They’re nice-to-haves, not have-to-haves. Someone in a senior position paving the way for you is a rare advantage, but counting on some patron to drag you up is just pathetic.

Robert I. Sutton’s recent blog post on the Harvard Business Review site suggests five reasons why even a successful and well-intentioned mentor might be a hindrance to your career rather than a help. These apply to just about any career track, but anyone seeking investment banking jobs in particular does well to be aware of them.

  1. Are you straying from the path that your mentor has taken?  Your mentor knows one thing for certain: What worked for him/her. It doesn’t necessarily follow that the same professional choices will work for you. You’re different people, and you started your careers at different times.
  2. Will some of your choices benefit your mentor more than others?  Again, we’re assuming your mentor’s intentions are above reproach, but let’s face it – we are all human. And if we’re accustomed to having a sharp, young investment banker like yourself watching our backs, we might unconsciously nudge you toward roles where we can continue to rely on you. Maybe that ex-pat assignment is what’s really best for you, but there’s always a justification to be found to keep you close at hand.
  3. Is your appetite for risk drastically different from your mentor’s?  Beware of mentors who like to skydive. They obviously have a huge appetite for risk and, if you’re the kind of person who feels the need to have a mentor in the first place, maybe you don’t. By the same token, if you’re looking for an investment banking job that commits capital to start-ups involving unproven technology, you might not want to spend all your lunch breaks with T-bill traders.
  4. Do you know more than they do?  We live in a time when your dream job might not have been invented yet when your mentor was your age, even if your mentor is only ten years older than you. You can rely on their expertise about people, and introductions to certain persons, but when it comes to the process and technology of investment banking jobs, maybe you are the mentor in this relationship.
  5. Do your peers — and those you lead or mentor — know more about you than your mentor does? Been to the zoo lately? Notice how the beta gorilla takes more time and attention getting to know the alpha gorilla than the other way around.  Behavioral science calls this “asymmetry of attention” and, in our current context, it means that you likely know more about your mentor than your mentor knows about you.   That’s why 360-degree input is so important: You need to get the viewpoints of your peers and, if you have any, your direct-reports to fill in the gaps in your mentor’s understanding of you and your goals.

What this all boils down to is that even though your car has GPS, you’re still the driver. Even the best mentor is no substitute for self-reliance.

If anyone ever tells you, “Just do what I tell you for the next twenty years and you’ll get where you want to go,” then your baloney detector should be ringing like bells at a royal wedding. Don’t let anybody own your career but yourself.

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