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Compliance & Risk

Coronavirus pandemic creates disruption, challenges & optimism in compliance employment

Todd Ehret  Senior Regulatory Intelligence Expert

· 5 minute read

Todd Ehret  Senior Regulatory Intelligence Expert

· 5 minute read

Economic turmoil caused by the COVID-19 pandemic has had a devastating impact on employment in virtually every industry. Although the financial services industry has fared better than some, it is not immune from hiring freezes or job cuts. The current employment picture for compliance and risk professionals mixes signs of optimism with clouds in the outlook.

Thomson Reuters Regulatory Intelligence (TRRI) regularly speaks with top compliance, legal, and risk recruiters about issues such as supply and demand of candidates, skills, qualifications, and compensation trends. We recently reached out to several recruiters, compliance officers, and senior managers at financial services firms to take the pulse of the employment environment for compliance professionals.

Employers pumped the brakes in March

Compliance, risk, and legal departments are often seen as “critical or essential” functions and are sometimes shielded from job cuts. However, in March when the pandemic and work-from-home directives were issued, employers slammed the brakes on new hiring, which is often seen as a precursor to layoffs.

The second quarter of the year is often the busiest for compliance hiring, according to Melanie Marshak, Managing Director of The Execu/Search Group’s Financial Services division. “In Q1 compliance departments are overwhelmed with yearly projects and filings, after that, they begin to assess their hiring needs,” Marshak said. “Things were just beginning to heat up, and when the virus hit in March, everything got put on hold.”

So far, widespread layoffs are relatively scarce, and don’t seem to be in the works; rather, firms are taking a “wait-and-see approach.” However, some firms have used the pandemic and economic uncertainty to “cull some under-performers” with a goal of possibly upgrading the talent later, according to some recruiters.

According to Marshak, some firms that put positions on hold in March and April are now resuming recruitment. She said things are picking up now, which could minimize the typical summer slowdown. Although Marshak said she optimistic and busy, with plenty of open roles, some other recruiters are less bullish, or hopeful only that things “might not turn awful,” as one person put it.

Working-from-home & open to job switches

An interesting development that Marshak has seen since the work-from-home orders took effect is a much greater willingness by “currently-employed talented individuals” to interview for or pursue open positions. It is “much easier for people to interview at almost any time of the day from home, as opposed to having to sneak away from a boss who is right over their shoulder in the office,” she said.

Alan Johnson, with the compensation consultancy Johnson Associates, agreed that people now might be more open to recruitment. However, he expressed skepticism over the number of offers that actually will be extended after only remote interviews. “When you hire someone, you are essentially marrying them. Are you really going to marry someone you’ve never actually met in person?” Johnson said. “This isn’t online dating.”

College considerations

The pandemic’s shock could not have come at a worse time for college juniors about to begin summer internships and graduating seniors about to join the workforce. Many college students in the graduating class of 2020 have found themselves unexpectedly unemployed as firms have rescinded job offers, while others have pushed back starting dates indefinitely.

Juniors have also experienced wide-spread cancellations of internships which are often stepping-stones to full-time offers after graduation. Therefore, a large group of current and future job seekers are sidelined.

Although some fear this logjam might take years to repair itself, others are more optimistic. “College grads will be just fine, as they are enthusiastic, smart, and most importantly, cheap,” Johnson explained, adding that although they may have “got caught in a bad window timing-wise, it will work itself out, as this isn’t 2008.”

Relocation still very much a factor

There has been a persistent trend in compliance and operations employment where positions have gradually been relocated to lower-cost locations such as Florida, North Carolina, and Utah. Recruiters agreed that salaries go further in those locations and the trend could accelerate as a result of the pandemic.

“The pandemic will surely accelerate several years of departures from locations like New York and San Francisco to less costly locations, and including some remote work, as nothing beats a 15 minute, or even a 15 second commute,” Johnson said.

Varied picture

The financial services industry is broad, and different sub-sectors are seeing vastly different employment pictures. Several individuals said the asset-management and brokerage industries were initially “scared to death” as stock markets plunged in March, but when markets recovered, firms breathed a sigh of relief.

The insurance industry is facing its own unique challenges, noted the head of investment operations at one of the largest global insurers. (The source requested anonymity as they were not speaking in an official capacity.) As a result of “near-zero” interest rates, “margins have been crushed” so budgets and overall expenses are tight. “Budgeting across the board for everything, including technology spending, is going to be brutal going forward,” the individual said.

Sources broadly agreed that if serious job cuts were on the table, compliance and risk departments would likely be the last to feel them. Regulators expect firms to do the compliance job effectively. Additionally, the November elections could lead to a change in power and usher in a new regulatory push. “So, compliance is the last thing you would want to cut right now,” one compliance officer said.

According to Jordan Moss, an associate partner at the firm Financial Exchange Group, “the numbers of candidates seeking positions is definitely growing as a result of positions being put on hold. Offers are now being made, though only to qualified and highly-skilled candidates.” The climate is improving, Moss added, and there is a particular need in areas such as financial crime, data science, and market data.

Despite fears and uncertainty surrounding employment in compliance and risk as a result of the pandemic, there undoubtedly are some reasons for optimism. Structural factors such as technology, geography, working from home, and regulatory change, expectations, and obligations will play important roles in shaping the employment landscape in compliance and risk in the future.

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