U.S. compliance job prospects and compensation review: ‘Challenging and stagnant’
A multi-year, massive investment and build-up of compliance staffing by financial firms has stalled in the United States as the financial crisis and the Dodd-Frank regulatory overhaul that fueled the surge fades into memory, according to recruiters, compliance professionals and hiring managers.
Regulatory Intelligence regularly speaks with several top compliance, legal, and risk recruiters about issues such as supply and demand of candidates, requirements for skills, experience and qualifications, and compensation trends. There is now a consensus that the sellers’ market for compliance talent has softened.
Post-financial crisis and the passage of the Dodd-Frank Act, compliance and risk hiring exploded on Wall Street while other areas such as trading and operations experienced deep cuts. As one recruiter put it, “if you had a pulse, you could find a job in compliance between 2012 and 2016.” This is no longer the case.
Relocation still very much a factor
At the same time as many traders have been replaced by computers through the advancements of algorithmic and computerized trading programs, operations and compliance positions have gradually been relocated to lower-cost locations rather than entirely eliminated. Firms have quietly moved compliance and other back and middle office functions to less costly locations.
As one recruiter put it, “all the compliance positions are now in Jacksonville, North Carolina, and Utah, or Poland or India.” Multiple other recruiters agreed, citing the fact that the same $100,000 to $150,000 salary goes much further in those locations from a standard of living perspective.
Compensation is ‘stagnant’
The typical compliance officer compensation and bonus has remained very flat for several years. This is likely a result of supply and demand, relocation mentioned above, and technology.
According to Alan Johnson with the compensation consultancy Johnson Associates, many will see their pay stay flat or possibly decline this year. Pay is under pressure because of increased competition and automation, according to a recent report published by the firm.
The Johnson Associates report is based on the firm’s work with 16 major banks and asset managers that are not named, Johnson told Regulatory Intelligence, adding that “the heyday of compliance and risk job growth and pay has waned.”
Compliance and risk have now been lumped in with other senior professional groups at firms.
“Therefore, if the pool is up or down, they will be up or down as well, to some degree,” Johnson said.
Still a spot at the table for compliance?
Johnson still sees a need for compliance.
“A good scandal, or a change in leadership in Washington such as the Democrats winning the White House and Senate will be a boon for compliance,” he said.
Virtually all of the individuals Regulatory Intelligence spoke with described the compliance job market as “challenging,” despite strengths in the overall economy, labor force, financial sector, and stock market.
As one individual put it, “it shouldn’t be this difficult when there is a bull market and full employment.”
Therefore, it’s safe to assume that other factors are having a significant impact on hiring and pay.
Specialized AML skills ‘essential,’ but now expected
Although several recruiters suggested Trump’s deregulatory agenda as a potential factor, others disputed that theory, saying new regulations in areas such as cybersecurity, privacy, cryptocurrencies, and financial technology are complex and far from “deregulatory.”
The skills necessary in different areas of compliance are unique.
Whether it’s surveillance, regulations and regulatory change, data analysis, financial crime, AML and KYC, or cyber security, all of the recruiters agreed that specialized skills and experience are essential. However, such skills are now expected and do not seem to necessarily be rewarded with greater job security or higher pay.
Another factor universally cited by the recruiters was the impact of technology on the industry, requiring new skills and potentially displacing people.
Learning a new language to land a job
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 proficiency in VBA (Visual Basic for Applications, the programming skill within Excel and other Office programs to create a task-automation macros) 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.
Python, which is often used in machine learning, data science and cloud infrastructure also is in demand, (via JD Supra, Reuters Regulatory Intelligence).
Monroe’s Musings: Well, we all knew it couldn’t last forever.
Ya know, that red hot compliance job market that seemed to keep bubbling and frothing with ever more demand and soaring salaries.
Financial crime compliance, as important as we all see it, is and has always been a cost center. And when the Congressional, regulatory and investigative pressure starts to ebb – as it has under the administration’s push for fewer regulations and billion-dollar penalties becoming far less frequent – bank budget overlords start to tighten the purse strings and shrink staff.
Of course, as this story points out, that isn’t the only reason. Improvements in technology, AI and automation are trimming some of the lower-ranking, less-skilled AML jobs. Interestingly, the specializations so many compliance professionals have spent thousands of dollars on to master aren’t as shiny.
In fact, they are just another requirement to stay employed or get a foot in the door. So what does the future look like?
Fincrime compliance professionals may need to broaden their skillsets to become more malleable and indispensable to their current institution – and become attractive to future employers.
Think a human compliance Swiss army knife – able to swiftly, fluidly and confidently move between AML, fraud, corruption and cyber disciplines, leading teams, and knitting them together to improve investigations, close cases and create richer and more timely intelligence for law enforcement – the true desirous outcome of the current laser focus on efficiency, effectiveness and results.