Many Jobs on Wall Street May Never Come Back
David Ambinder spent nearly a quarter-century in the banking industry before Wall Street caved in on him last summer.
"You kind of knew it was coming," says the former executive at a host of major financial firms, "you just didn't know when."
Like hundreds of thousands of other professionals there, Ambinder was stunned by the rapidity with which the credit crisis swept through some of the world's most venerable financial institutions.
His career as he knew it, which most recently took him to Lehman Brothers but previously had landed him at Goldman Sachs and Salomon Brothers/Smith Barney, was over.
And like many in his position, Ambinder isn't waiting around for his job to come back.
Ambinder, in fact, has put Wall Street behind him, mindful that in the new economic paradigm, he is best off planning for the future than ruminating about the past.
"Wall Street has changed," says Ambinder, who most recently worked as a senior vice president for global support services at Lehman before being laid off. "The investment banking culture is gone to a large extent or is under a microscope right now. I just don't see it returning to the way it was."
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Indeed, job placement professionals and former Wall Street titans themselves agree that while this is hardly the first time Wall Street has been socked with large cuts in workforce, this is different.
In the past, the jobs came back, like when 116,000 positions were cut in 2001. This time, with federal scrutiny intensifying of the investment banking industry and mass consolidation among the Street's top firms, things are different.
The financial sector has lost a whopping 413,000 jobs in the past two years, and more than 260,000 in 2008 alone, according to figures compiled by outplacement firm Challenger, Gray & Christmas. Last year's total represented about four times the typical amount.
Gone are some of the Street's most esteemed companies—Lehman, Bear Stearns, Merrill Lynch and Washington Mutual among them.
Layoffs have been stunning both in number and location: More than 50,000 at Citigroup ; 35,000 at Bank of America , which swallowed Merrill; 18,000 at JPMorgan Chase ; 16,000 at Lehman, more than 11,000 at Wachovia.
It's a once-in-a-lifetime tectonic business shift that has the nation's top investment and banking leaders groping to adjust.
"The world has certainly changed and the massive growth industry that was Wall Street for the past 20 to 25 years is probably a thing of the past," says Kurt Harrison, a senior executive at Russell Reynolds' global banking and markets practice. "What we are seeing, however, is a couple of very definitive and distinct trends in the environment."
The New Normal
Essentially, those trends break into three categories: A surge in demand for qualified investment advisers that some ex-Wall Streeters are likely to fill; a cottage industry for regional and boutique banks who have access now to displaced personnel whom they couldn't have approached before; and a move by some to use their knowledge from the financial pits to grow other businesses.
Ambinder falls into the latter category.
Rather than hold out hope that when the economy turns, Wall Street will start hiring again, he decided to take matters into his own hands.
That's how Ambinder met Mr. Handyman.
The household repair franchise has more than 300 locations across the country, but Ambinder said there was a need in the northern New Jersey suburbs for people who don't have enough time or expertise to handle home fix-it projects.
He researched the franchise, liked what he saw, and decided to open an outlet near his home where he now gets to spend more time.
While going from the heights of the nation's financial industry to dispatching technicians to repair leaky pipes might seem like a difficult transition, Ambinder says he's enjoying the new normal in his life.
"When I heard about this Mr. Handyman thing it just clicked for me," he says. "You can easily create a great business model that will work."
To be sure, Ambinder's move completely out of the financial world is the exception among displaced Wall Street professionals.
Most are still looking to find meaningful employment in their field, and those who haven't latched onto one of the other titans on the block are in some cases getting out of the trading environment and into positions where they can help investors recoup some of the stunning losses in the 2008 stock market decline.
"I think the role of the independent entrepreneurial adviser who knows how to build a business, counsel, guide and provide advice to others is somebody who's going to succeed in a major way," says Ray Sclafani, president of ClientWise, a coaching firm that works with Wall Street financial firms and investment advisors.
"I actually see an expansion among financial service advisers in the US."
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A crisis of confidence not only in the stock market but also in the advice dispensed by many investment pros actually could benefit those who can show they stayed above the risk fray and minimized losses.
Ironically, several placement experts said the scandal surrounding Bernie Madoff, who is accused of running a $50 billion Ponzi scheme, will help investment experts who have maintained their reputations.
"A big demand is unmet for trustworthy advice," says Bob Frank, a professor at the Johnson School of Cornell University. "There's a widespread perception that people were convinced to buy things based not on the best interests of the buyer but on the best interests of the seller."
Big Fish to Crowd Some Small Ponds
Smaller Firms to Benefit
Many of those advisers, then, will shift away from Wall Street and are likely to wind up at some of the smaller, regional institutions who haven't suffered like the big Wall Street names.
In some respects, it's like the fabled career choice for most workers--being a small fish in a big pond or a big fish in a small pond.
The small ponds are about to get more crowded.
"There's been a natural gravitation toward smaller firms, with less bureaucracy, less entrenched ... a much smaller, collegial type firm," says Harrison, of Russell Reynolds. "You can really move the needle at some of these smaller firms who have had strong risk management and are looking to take advantage of that fact."
At the same time, some of the more aggressive displaced workers are looking to hone their skills and fit into what looks to be a new, more personal environment.
"Investors are savvy enough to know that the role their advisor needs to play is to guide them to make more powerful decisions about their life and their future and their money," Sclafani says. "The advisor who knows not just how to provide advice but also to create a partnership with their client and help them be prepared to make smarter decisions will be the adviser who rises above. This is a major movement among financial advisers."
But are things really as bad as the conventional wisdom seems to be dictating?
Not everyone thinks so, with some saying that jobs will come back when the economy improves, and there's also sentiment that Wall Street firms have gone too far on layoffs and will realize as things stabilize that the cuts didn't need to be so severe.
"Times rise and times fall and it always feels during the depths of the recession like it's never going to return," says John Challenger, of Challenger, Gray & Christmas. "Certainly the landscape will be changed and maybe the jobs will be spread out to other areas of the country and the world. ... But I'm not convinced the jobs have disappeared forever."
And even if many of the jobs don't come back, Challenger says that's not a completely bad thing as some firms may have hired too many during peak times. He also predicts the jobs picture to get better in the second half of this year as the economy recovers.
But for many of those displaced things will never be the same, marking the end of an era.
"I don't think I miss it yet," says Ambinder. "But down the road, who knows?"