Where can you go after a career in investment banking? As well as the havens of private equity and hedge funds, an increasing number of bankers are opting for the executive search industry.
In the past month, Korn/Ferry International has hired Giles Goschen, a former M&A managing director at Deutsche Bank, and Hugh Pye, head of banks research at BNP Paribas. Napier Scott, a capital markets headhunter, has recruited Patrick Burford, an analyst in fixed-income sales at Goldman Sachs.
The notion that bankers can go into headhunting is nothing new: Goschen, Pye and Burford are in good company. Last year Egon Zehnder International, a rival search firm, hired Mary Caroline Tillman, former chief operating officer of JP Morgan's European advisory business. Blackwood, a London financial services search firm, employs Amanda Smithson, a former chief operating officer of the investment banking group at Morgan Stanley.
Sheffield Haworth, another boutique, harbours Julian Bell, a former head of European equity capital markets at Société Générale.
Edward Bathgate of Longbottom Associates, a headhunter of headhunters, enticed Pye to Korn/Ferry. He said former industry staff can offer significant advantages over career headhunters.
"People who have spent the past 20 years in banking are good at high-end relationship management and have a strong perspective on how markets will react to certain appointments," he said.
Giles Crewdson, managing director of Korn/Ferry UK, said Pye and Goschen possessed the essential characteristics of successful headhunters: a network of contacts, credibility and the ability to influence people. He said they were also untainted by the competitive and incestuous search industry. "Sometimes it's easier to integrate new people with our vision than to change old habits," he said.
Egon Zehnder International has a policy of employing only former industry professionals, all of whom must have an MBA or second qualification. In addition to Tillman, in the past two years the firm has recruited Jörg Janke, a former Goldman Sachs director and Tommaso Arenare, a vice-president from JP Morgan.
Andrew Lowenthal, global head of the financial services team at Egon Zehnder and a former investment banker at Credit Suisse First Boston, said bankers could be cautious about moving into headhunting: "It's a different culture: in banking you're typically selling yourself and your ability to deliver. In search you still have to do that but then it's about selling someone else or an organisation."
Pay can also deter bankers from moving. According to the Ocean Partnership, a headhunter of headhunters, senior search consultants, as headhunters are also known, can earn basic salaries of more than 60,000 (€86,000), plus a bonus of more than three to four times this figure. It is good money but falls significantly short of the remuneration for top bankers.
Steven Hones, a former co-head of London syndicate at JP Morgan and one of the founders of I-Search, a fixed-income headhunting boutique, said being paid less than banking goes with the territory. "Do I make as much money as I would in the markets? Probably not, but I have a lot more control over my personal time," he said.
Daniel Whomes, director of the Ocean Partnership, said pay for search professionals was rising because a shortage of talent encouraged the use of banking devices, such as golden hellos and guaranteed bonuses. Nevertheless, he said headhunting was regarded as a soft career option by some bankers. "People see search as something to do when their industry years are over: something that will keep them occupied and involve a few meetings with ex-colleagues," he said.
Bankers-turned-headhunters are quick to dismiss this notion of their profession. When he co-founded I-Search in 2000, Hones said he initially planned to apply himself on an ad hoc basis, while nurturing an internet business. It became apparent that more commitment was needed.
"We realised that it was a full-time job, not something that meant popping into the City of London two or three days a week and having lunch with our friends," he said.
Bathgate said the professional status of search consultants had risen as their role has evolved: "Search firms no longer just find candidates to fill jobs. They are doing broader things, from talking about leadership issues, through to coaching and providing advice on diversity in the boardroom."
As a result, Bathgate said search consultants were now more akin to strategy consultants than recruiters; their jobs were more appealing as a result.
Bell said time in banking had left him well placed to understand the sort of candidate best suited to a role. Capitalising on his background in equity capital markets origination, he spends much of his time at Sheffield Haworth bringing in new business. He said: "The origination side of the business, which involves consultancy and relationship management, is similar to banking."
Overlaps with banking professions exist in unlikely places. Pye said even equity researchers have to sell themselves these days: "Analysts now spend a lot more time selling their ideas to investors than on the research itself." He said cold calling candidates to discuss details of retained job searches was not dissimilar to calling recalcitrant investors to discuss investment ideas.
Resilience also marks bankers as potential search consultants. In 2001 and 2002 headhunters made swingeing job cuts and closed offices. Pye said it was a risk he could live with: "Having worked in banking for a long time, I'm more than used to economic cycles."