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Signs of life in the securities industry

The United States continues to emerge from a tough economic downturn -- a "perfect storm," if you will, fueled by the end of an unprecedented bull market run, unpredictable geopolitical events and high-profile corporate scandals.

Peter Santora

Although the employment outlook remains uncertain across a few specific industries, the overwhelming sense is that the worst is over for many others, including securities, both here in San Diego and throughout the United States.

The U.S. Department of Labor reports that employment in the securities industry has increased nationally by more than 30,000 since the beginning of 2004, meaning that nearly half of the securities jobs that were lost during the recession have now been gained back.

A major trade group, the Securities Industry Association, recently announced that the industry is on track to grow between 3 percent and 3.5 percent this year.

Speaking as an executive recruiter, my firm has noticed a sustained sense of confidence from the financial services sector. Our securities industry clients, in particular, are feeling more optimistic in their ability to grow again. For the most part, staffing levels have been "right sized" and they are clearly once again beginning to think about strategic hiring.

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Staffing needs in the areas of compliance and credit derivatives are surging. Brokers are in high demand, as are accounting, technology, operations and administrative professionals. Temporary workers and outsourcing firms are also filling specific needs. Across many of these professions, compensation packages are climbing and the "two-year guarantee" is re-emerging.

Despite these signs of life, it is unlikely that investment banking staffs will expand rapidly -- nor should anyone expect hiring to return to the record levels of the last decade.

Why? Because many traditional investment banking activities, such as mergers and acquisitions and initial public offerings, have yet to truly rebound.

Investment bankers with solid track records, strong relationships and known deal-making capabilities will undoubtedly find a way to turn a liability into an asset. But others who are still out of work have begun to reinvent themselves, creating opportunities in some obvious -- and not so obvious -- places, such as corporate finance, hedge funds, entrepreneurial activities and private wealth management.

What's ahead?

Despite the ever-changing, unpredictable economic situation that has dominated the past few years, securities remains a compelling and viable industry, though the long-term employment outlook will depend heavily on the magnitude of the local and national economic recovery.

Although some recent economic indicators (such as last week's employment numbers from the U.S. Department of Labor) have been somewhat lower than expected, Korn/Ferry International's clients -- including those in the securities industry -- are with few exceptions moving forward with a top-down approach to hiring, aggressively filling senior-level positions that were lost during the downturn.

San Diego, in particular, has an exciting and very real opportunity to boost its presence on the financial services scene. The county is already home to more than 80,000 financial services employees and 1,300 securities brokerage firms, according to California's Economic Development Department.

As key San Diego industries such as life sciences and telecommunications continue to raise healthy amounts in venture capital funding, the outlook for the local investment banking sector, in particular, is encouraging.

Winning the war for talent

Regardless of the industry, San Diego -- like all other cities -- faces an ongoing challenge: attracting working professionals to the area, as people today are understandably cautious about moving to a new city, given the uncertainty of the business climate.

Luckily, San Diego appears to be winning the battle, as an increasing number of young, educated individuals are living, working and perhaps most importantly, staying in the area -- a claim that many neighboring cities cannot make.

With unemployment rates well below the state's and the nation's, a diverse local economy and aggressive job creation, professionals in San Diego's burgeoning securities industry and the greater business community are exceedingly well-positioned to take advantage of both the economic upswing and emerging career opportunities.


Santora is a managing director at Korn/Ferry International, where he specializes in senior-level executive search assignments throughout Southern California.

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