2008 Hiring Trends: Equities

Hiring in Equities Investing fell sharply in December, bringing hiring over the whole year down to 59% of 2007’s volume.

The sharp fall in Equity hiring seen since October continued in December, with a 50% drop on the previous December, continuing the slow down as expected and bringing hiring in the 4th Quarter 2008 down overall by 62% on the same period in 2007. Overall, hiring was down 41% on 2007.

Hiring activity over the twelve months was as volatile as the underlying market movements, swinging wildly from record low figures –in July, hiring figures for were probably the lowest we have recorded in any single month over the last seven years, and down 89% from July 2007 levels; to unusually high figures - in June, hiring was the highest we have seen for that month over the last three years, and up 33% on June 2007. But the general trend was, like the markets, down: out of the twelve months, nine saw falls in hiring relative to the previous year while three saw very substantial increases. But the overall trend has been a continuing decline in intensity, particularly if one examines the figures for each of the four quarters – whilst Q1 was up 26%, Q2, Q3 and Q4 were progressively down 35%, 57% and 62%.

Up until September, there were some signs that sentiment had started to improve. However, Lehman Brothers’ unexpected demise in September was followed by widespread volatility with severe falls across most markets and asset classes in October. This proved to be the final straw for hiring sentiment, prompting most firms to shift from a hiring stance to a firing stance - deciding how best to wield the axe on staff costs, in line with sharply falling fee revenues. This was accompanied by the suspension of most firm’s hiring budgets for 2009, as the sudden decline in fee revenues prompted Finance Directors to call for re-submission or freezing of headcount requests.

So, for the last quarter, the pace of the decline in fact accelerated, and we would therefore expect Equities hiring in the first Quarter of 2009 to be very subdued compared with historical levels.

The greatest increase in hiring demand in 2008 was for Global and UK Equity specialists. The proportion of hiring in Global Equities increased from 12% to 32% of all hires. While the greatest demand was for UK Equities specialists, comprising 41% of all hires (up from 26% in 2007). Conversely, demand for European Equity specialists declined from 23% in 2007 to 18% in 2008, as did demand for Emerging markets specialists. Most hires (58%) have been Portfolio Managers, while demand for Analysts has fallen sharply, from 30% in 2007 to 17% in 2008. Demand for Product Managers remains steady, but only accounts for 5% of hires as the majority of appointments have been internal transfers.

Our prognosis is that hiring in Equities is likely to remain very subdued for the first half of 2009, as macro economic conditions continue to decline into recession. However, we believe that there may be an increase in team moves and ‘star manager’ moves, as high-performing teams or individuals decide to jump ship to companies which offer greater stability or opportunities at the corporate level, so we would expect activity to start picking up towards the end of the second quarter of 2009.

• Hiring Trends: Equities
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