If there is a single word to describe the most sought after profile of 2006, it is likely to be multifaceted. With banks keen to squeeze the most out of people, financial polymaths can expect to come out on top.
Vasco Moreno, a director of research at financial services focused bank Keefe Bruyette & Woods, says the search is on for staff who can maximise synergies across product areas.
This is the latest manifestation of a trend that began in 2002 when Dresdner Kleinwort Wasserstein (DrKW) formed a combined capital markets group: "It's a cost issue: emphasis is on the cross-fertilisation of ideas, cross-selling products, and working across asset classes. It's less about hiring and more about optimising existing resources," Moreno says.
The pursuit of polymaths is likely to be most in evidence when it comes to derivatives, where falling margins and complex client requirements are driving demand for new hybrid products.
Aidan Kennedy, managing director of search firm Armstrong International, says solutions-oriented staff who can work across products will top banks' shopping lists: "We see selective hiring rather than volume hiring. Individuals who have multi-product client coverage, or can structure across asset classes are going to be very much in demand."
Shaun Springer, chief executive officer of Napier Scott, the fixed-income focused search firm, says, "It is becoming much more the case that someone who is selling equity derivatives will also sell interest rate derivatives, credit derivatives and FX derivatives if clients require it."
Dresdner Kleinwort Wasserstein, soon to be subsumed by its parent Dresdner Bank, will be among those hiring.
In September, Steve Bellotti, head of capital markets at DrKW, said the bank was expanding sales and marketing headcount from around 20% of the division in 2004 to 40%. He said new additions would be distinguished by the breadth of their abilities: "We are looking for a rare breed of banker - someone with cross-asset class experience, an entrepreneurial approach, and a client solution rather than a product focus."
Other banks are taking a similar approach. Last year JP Morgan, for example, integrated its derivatives marketing business across product and client types; salespeople now work regionally instead of in distinct product and client silos. Hires such as Laurent Depraz, head of multi-asset derivatives marketing at DrKW, have been brought in to fit the new model.
Russell Schofield-Bezer, managing director and head of Northern European corporate derivative marketing sales at JP Morgan, says growth in the subordinated bond market is one example of market developments driving banks' need for people who understand the debt and equity sides of a balance sheet, as well as foreign exchange when products are issued in non-reporting currencies: "Corporates do not want to be in front of a marketer who only knows one area and gives them the business cards of five colleagues to deal with the others."
He says derivatives marketing headcount at JP Morgan is smaller, but the bank is making more money in the area with fewer people.
Know your client
If broad-based derivatives skills are good for banks' profitability, they are also increasingly essential to clients.
The head of one fixed income search boutique says pension funds and insurers are increasingly using hybrid derivative products to address imbalances between their assets and liabilities. He says DrKW, Royal Bank of Scotland and BNP Paribas are among the banks looking to build structured solutions teams to cater for this market, and described the lack of talent as dire: "There is a real shortage of people that know not only the products, but the client base as well."
Recruiters say a broad-based skill set is becoming equally important elsewhere. For example, electronic execution salespeople are increasingly expected to work across the range of algorithmic trading, connectivity and direct market access products.
Monima Siddique, a director at research-focused search firm City Analytics, says the combination of fixed income and equities research teams at banks such as JP Morgan and DrKW is contributing to demand for equities analysts with an appreciation of fixed income products, and vice versa.
Too much of a good thing?
Davide Taliente, head of European banking for consultant Mercer Oliver Wyman, warns against taking the cross-product approach too far, however. He says: "This falls down because it's a bit of an ask for people to do this. It often doesn't meet expectations because individuals don't have the knowledge, the flexibility, or the incentive to make it work."
Bonuses are an important issue, says Taliente: they are typically allocated on a product basis and can be difficult to adapt to a cross product environment. This will need to change if banks are to attract and retain a new breed of polymaths in 2006.