Amid the self-evaluation and manager assessments of the annual performance review season, many compliance professionals consider or ask the question: "am I in a good place, being fairly compensated, or better off elsewhere?"
The answer reflects in part the individual's performance and skills. Outside factors such as supply and demand within the industry and sub-specialty areas are also essential to determine adequacy of compensation, job prospects, and the overall job market. This year's change in the U.S. presidential administration, with its promises of relaxed regulation, inject an additional element to the consideration.
Job recruiters who specialize in placing compliance professionals expressed a view in conversations for this article that the growth of jobs may be peaking, but there remain areas of strong demand such as anti-money laundering (AML) skills, and they saw little early indication of a political change in Washington affecting the job market in compliance.
Many recruiters spoke on condition of anonymity, as they were not speaking in an official capacity for their firms.
GROWTH IN COMPLIANCE JOBS MAY BE PEAKING
Since the financial crisis the only steady area of job growth in financial services has been in legal, compliance and risk disciplines. As Wall Street has cut jobs in virtually every other area, the need for compliance grew partly due to the wave of new rules and regulations in the aftermath of the crisis.
Early in 2016 the Chairman and CEO of Goldman Sachs, Lloyd Blankfein, said most of the firm's increase in headcount in recent years was from "heightened compliance efforts," but he saw the effect as temporary.
"This has a Y2K feel about it – that is, we have to hire additional people because we have to get ourselves up to speed," he said. "I think once we catch up and once automated, we probably will be able to reduce that headcount in some of these costs."
Blankfein's comment initially raised eyebrows with compliance, legal, and recruiting professionals. However industry recruiters tended to agree that a multi-year, massive investment and build-up of compliance staffing by financial firms appears now to be inevitably leveling off.
"Archaic programs and budgets were out of line with their needs, and this underinvestment caught up to them," a recruiter told Regulatory Intelligence. For the last several years firms had "real projects and deadlines to meet and the money to spend on hiring to get the projects done," the recruiter said. Those commitments and investments have now finally been made and for the most part met.
With new systems now in place for the most part there isn't the need for staffing new projects and building new systems. Another recruiter described, "a shift toward hiring attorneys and more senior people at the VP and higher level to now monitor the systems that have been put in place."
The more senior personnel must also be "focused on regulatory change and making sure things are operating smoothly and correctly." The recruiter added that it appears that the large firms have slowed in hiring people to build systems and now are outsourcing some of this work.
Some building of new systems and transition from legacy systems was done by contract workers. Now, a fair amount of the day-to-day work is now also being outsourced to third-party compliance firms. Recruiters claim that the largest outsource compliance firms are still adding staff but question for how long.
SKILLS IN DEMAND INCLUDE AML, CYBER SECURITY, DATA ANALYSIS
After the significant growth in hiring in virtually all areas of compliance and risk after the financial crisis, hiring has become more targeted in specific areas with a need for individuals with particular skills, many recruiters said. Because of the regulatory emphasis and global focus on terrorist financing as well as the complexity and new rules, the largest firms continue to spend and invest in these areas. As one recruiter put it, "highly skilled AML and financial-crime experts, especially those with backgrounds in law enforcement, like the FBI are highly sought after."
Similar to experienced AML and know-your-customer (KYC) professionals, cyber security experts are also in demand. Meeting the demand is often a matter of price, and it is up to recruiters to convince tech professionals with security skills to shift from a career in technology to compliance and legal.
"There is still very much a need for senior compliance professionals especially those with backgrounds in financial crime and AML," said Maurice Gilbert with Conselium Executive Search.
There is also great demand for "senior people with skills in technology, particularly predictive data analysis capabilities," he said.
These individuals must thoroughly understand technology and its capabilities and be able to work with the programmers to customize the necessary systems, he said. The population of these types of individuals "currently is very low and demand for these types of people will continue unabated for years to come," according to Gilbert.
PERSONAL LIABILITY IS A CONCERN WITH TOP PROFESSIONALS
Sounding a note of concern, Gilbert said that last year he saw on multiple occasions qualified senior compliance officers turn down the top compliance job at other firms "because of a concern for personal liability." Such concerns arose after publication of the "Yates Memo" by the U.S. Department of Justice which stressed the importance of holding individuals personally accountable for their actions. Additionally, any move to a different firm inherently carries the risk of an unknown culture of compliance and a new surrounding cast. Stepping into the top spot at a new firm with both culture concerns and personal liability concerns after the Yates Memo is causing some deputies to stay put, according to Gilbert.
One trend universally cited by recruiters is that firms are shifting compliance jobs to lower-cost locations. Job cuts in the higher-cost New York metropolitan area are occurring at many of the large banks. The positions in many cases have been relocated to area suburbs or other states, including North Carolina, Florida and Utah.
As for New York, recruiters reported that activity has slowed somewhat but there is demand in a few areas. Mid-size international banks are actively seeking people particularly with experience in AML/KYC compliance, U.S. international sanctions and financial crimes.
Internationally, one recruiter said the London market has cooled off after the Brexit decision last summer. He said, however, the compliance job-market uncertainty will not likely last long as firms gain Brexit clarity, and firms still have projects that need to be completed. Activity in the Middle East, China, and South America remains robust as firms deal with myriad global financial rules and regulations.
FIRMS ARE MATCHING AND PAYING UP TO KEEP SKILLED PEOPLE
One recruiter mentioned seeing late last year instances of skilled junior employees being offered positions at competing firms at slightly higher pay levels. However, he cited one notable case where that a talented junior analyst with less than a year on the job was able to win a higher offer from the current employer, which was eager not to lose the person. "It's not a lot of money in some of these cases; we are talking about the $60,000 to $80,000 annual pay packages, so a 10 or even 15 percent pay bump to keep someone they know is good is very doable."
TECHNOLOGY EXPERIENCE AND UNDERSTANDING IS IMPORTANT
Technical skills or at a minimum technology understanding, are a must according to all of the recruiters. In more junior positions, technology skills such as VBA (Visual Basic for Applications, the programming language of Excel and other Office programs to create a macro to automate tasks) and SQL (Structured Query Language, a special-purpose language designed for managing databases) are highly sought after, as they allow for the customization and creation of necessary reports.
Experience with any other compliance software programs such as order management systems, e-mail review and retention programs, and other portfolio and risk monitoring programs are helpful but not critical. Many branded and custom built programs are similar in nature and user friendly, so familiarity with such programs as opposed to expertise is sufficient.
RISK ASSESSMENT, MOCK ASSESSMENT, OR REAL AUDIT EXPERIENCE IN DEMAND
Smaller firms that have grown to the point they need to separate duties of dual-hatted chief compliance officers and chief financial officers are often searching for candidates experienced with mock or real regulatory audits. Candidates with even a year or two under their belt with a regulator may find this experience valuable to prospective employers.
The overall number of such positions is limited, however, as smaller firms in general are struggling to grow against the much larger competitors in a fee-compressed environment.
THE TRUMP ERA AND REGULATORY UNCERTAINTY
When the topic of President-elect Donald Trump and his promises to roll-back or repeal regulations was asked, every recruiter was skeptical of the prospects actually occurring quickly enough to affect the near-term hiring market.
Even if some firms were inclined to take a wait and see approach, the recruiters said, international rules and regulations won't go away, and neither will financial crime. Firms have spent billions building out systems and compliance and risk departments to comply with rules and regulations, and these systems need to be staffed. Therefore, the firms will be very cautious to undo what they have invested so heavily in over the last several years.