Wall Street's job losses could climb to 40,000 in the wake of the ongoing turmoil in the financial markets, according to reports. But the massive cuts could signal an opportunity for buy-side shops to hire top-notch talent.
In his latest research note, "How the Massive Upheaval on Wall Street Will Impact the Investment Management Business," Dushyant Shahrawat, senior research direction in investment management at TowerGroup, cites the purging at bulge bracket broker-dealers as a positive for buy-side firms.
"For years asset managers have looked to broker-dealers as leaders in areas such as IT, operations and trading and now there is a great opportunity to hire some of those people away," he says.
Shahrawat says that the trend of sell siders crossing to the buy side has been gaining momentum over the last few years and now could see a significant increase. "The sales and trading positions on the sell side have been declining for five years, but now that trend is expanding into other banking areas and all parts of the capital markets business," he notes.
"Those on the sell side might be asking themselves, 'for the long-term future of my career I might find a better fit on the asset management side,'" says Shahrawat, adding that the biggest asset managers have the ability to hire "a couple of hundred" at this point.
Beyond more stable jobs, salaries may also lead sell siders to make the switch. "The Street as we know it is gone and clearly the shift from broker-dealer to bank holding company is going to impact salaries," explains Shahrawat. "The gap between salaries on the sell side and the buy side is going to narrow so there is less incentive to stay on the sell side and more incentive to jump to the asset management side."
He also sees second tier broker-dealers such as ITG, Jefferies and BNY ConvergEx being in good positions to capitalize on the available talent as well.