The Compliance Job Market is Currently Broken

By Jack J. Kelly


As an Executive Recruiter, specializing in the placement of compliance professionals, I had a front row seat to watch one of the greatest explosions in growth and hiring.


Compliance went from a sleepy back office type of job into one of the hottest and fastest- growing professions- especially on Wall Street and within financial services. After the financial crisis, when the public, media, and politicians woke-up to the reality that Wall Street could be capable of destroying the economy and crushing the stock market, demands were made for enhanced compliance and regulations. In addition to being a contributing factor to the great recession and financial crisis, banks, financial institutions, and corporations were caught engaging in a succession of scandals. Perhaps, they were always doing this, but with a more vigilant regulatory body and concerned public, many of these acts were caught and resulted in multi-million and billion dollars fines.


In response to the realization that banks and all types of corporations couldn’t easily get away with business as usual any longer, they were forced to hire tens of thousands of compliance, legal, audit, regulatory, risk, anti-money laundering, and related professionals. These departments experienced explosive growth and the headcount multiplied like wildfire.


Compliance departments, which were historically understaffed, dramatically boomed.  Salaries grew tremendously, new jobs were created, and opportunities were plentiful.  Compliance people were able to freely change jobs after being at their current company for only one or two years without question.  They were offered 15 to 20% increases to their base salaries and generous bonuses to lure them away from their current employers, due to the competitive nature of the compliance job market.  Each successive year became hotter than the next.  It became a feeding frenzy for these highly sought after professionals as corporations, banks, brokers, hedge funds, mutual funds, asset management companies, investment banks, private equity, wealth managers, insurance, and all other financial services organizations faced intense pressure by regulators, the media, public, and politicians to hire and maintain a large compliance presence.


Now, after decades of unrelenting growth, the compliance job market has hit a wall – hard.  The Trump administration has made deregulation of the financial markets and corporate America a top priority. His thesis is that with less rules and regulations, the ‘animal spirits’ of companies will kick-into gear.  Companies will be unencumbered by onerous regulatory burdens and set free to aggressively pursue bold business pursuits (please note, this is not about politics, it is a sober analysis of the events).  Along with high taxes, regulations are viewed as an anathema to corporate growth and profits. Once the companies are freed from these shackles, they will earn more profits, hire a greater amount of people, and, thereby, vastly improve the economy of the United States.

According to President Trump, new rules will not be needed and existing ones should be scrutinized and thrown out, as he famously proclaimed, “For every new rule, two must be revoked.”   Corporate and Wall Street executives tend to be a savvy bunch of guys (yes, they are pretty much all dudes). They quickly realized that the Trump administration (at the time of his attack on regulations, Trump’s entourage was lousy with former Goldman Sachs executives and other extremely wealthy millionaire/billionaire professionals) doesn’t really care too much about regulations and compliance.  In fact, these guys always hate the annoying regulations and pesky regulators always meddling into their affairs. They believe in the free market and contend that regulations are an impediment to growth and a pain in the a$$.  Consequently, the executives saw a unique chance, after many years of suffering the yoke of regulation; they were now free to significantly reduce their compliance costs. They hid their glee, since it would not be viewed as politically correct for the CEOs of companies to high-five each other in public.  Behind the scenes, it was probably like an episode of The Simpsons where Montgomery Burns and other rich industrialists meet in a secret conference room, rub their hands in glee, and salivate over their good luck. In The Simpsons cartoon version, visions of big bonuses, stock options, and all the related fancy accouterments that they could buy with their enhanced wealth would pup-up in bubble dream sequences over their heads.


Most people scoffed at the idea that compliance and related areas would be cut back. They said Dodd-Frank and other rules would never be rolled back. It was much easier to hobble compliance than people thought. Corporate executives immediately realized that Trump gave them a wink and nod to do whatever they want and the changes happened fast.  Senior, well-paid compliance executives have mysteriously been relieved of their positions and handsome salaries (which pale compared to other Wall Street professionals).  Big chunks of compliance department personnel were moved to lower-cost cities outside of hubs, such as New York City, to save on real estate, taxes, and salaries.  These new centers primarily rely upon younger and cheaper employees with considerably less experience.  Artificial intelligence and software are also being deployed to displace people. People leave and are generally not replaced – if some are replaced, it is at a lower title band with a decreased compensation.  Salaries are flat or trailing downwards and bonuses have declined.


Regulatory agency budgets have been cut and there has been an exodus of top talent jumping ship.  The regulators will be defunded and defanged. It was always hard for regulatory agencies to fight the big banks and corporations with their war chests of money, attorneys, and political connections. With fewer funds, and no support from the President, it is even harder now. This asymmetry in power between the regulators and Wall Street/Corporate America will enable the companies to run rings around the regulators. Morale will plummet at these agencies and the flight of the best and brightest will further erode their abilities to protect the public and reign in the excesses of banks and companies.


With an administration that is adamantly against regulations and a weakened regulatory infrastructure, it is easy for companies to curtail the hiring of compliance and related personnel. Given the new landscape, why should they keep spending money and resources on this area when it could be redeployed to revenue-producing divisions?  In the past, there was always a rush to hire- due to the fear of invoking the wrath of regulators and face unending excruciatingly painful examinations resulting in huge fines and accompanying massive legal costs and bad publicity.  Without this fear, there is little need to act quickly or hire at all. Check on any job site and you will notice considerably less positions listed in this area, as compared to several years ago.  View the feature on LinkedIn that broadcasts when a connection announces that he/she got a new job. You used to see scores of people move every day; now, not so much.  Well paying compliance and related jobs are far and few between.  The interview process takes forever and is filled with so many hurdles that you have to wonder if firms really want to hire.  Job descriptions contain an endless unrealistic list of requirements and the offered compensation is greatly lower than what an appropriate candidate needs to earn in order to make a move.  Offers, when made, are lackluster at best.  Phone calls are replacing in-person interviews, which demonstrate the diminished urgency to fill the job and decreased respect for the compliance professional.


In recent history, the compliance job market had an unprecedented, nearly ten-year, straight-up run, which is very uncommon.  The job market is sort of like the stock market.  When you look at stock charts, they rarely go straight up. Usually you see a roller coaster type of graph with some upward movement, precipitous drops, then spikes higher, accompanied by dips, and so on.  Like stocks, nothing goes up forever and there are almost always pullbacks along the way.  What we are seeing in the job market is the pendulum swinging far back to the other side.  Banks recognize the chance to save millions of dollars by reducing headcount, relocating to cheaper locations, using technology, and hiring more slowly, if at all, as a consequence.


My prediction is that there still will be hiring, albeit at a much slower volume and pace.  Compliance people at companies are similar to police officers, firemen, and teachers in cities; they always need at least a certain base line amount of them.  Companies will continue to pay less for people and demand more out of them. With the ascension of technology and junior employees in lower-cost locations, there is downward pressure placed on salaries. How could you push for a raise and larger bonus when the threat dangles over your head that your job could easily be moved across the country, or to another country, at a lower salary?


There is light at the end of the tunnel.  My prediction for the future is somewhat cynical and jaded (I am a native New Yorker, so what else would you expect of me?).  Due to the aggressive job and salary cuts, loss of senior executives (and their knowledge and experience), rapid increase in less experienced junior staff, and using IT as a wishful quick fix, in my opinion, we will end up with a fresh new round of terrible scandals.  Then, the public, media, and government will wake-up; the aggressive hiring of compliance, legal, risk, audit, regulatory, and related professionals will be great again.


The motivation to write this piece is not to depress you; rather my goal is to shed some light on what is happening. I speak with so many people on daily basis who feel that they are all alone in experiencing these issues. They are unaware of the bigger picture that is adversely impacting almost everyone. They get discouraged, disheartened, and take it personally.  Sometimes- even if it is cold comfort- when you realize that the problems are systemic and not a result of anything you did wrong, it offers a little solace to know that you are not alone in the struggle.

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