An insightful article in Efinancial careers highlighted an interview with a Millennial woman who had this comment about the financial services industry.
Financial Crisis Fallout
The financial crisis cast a cloud over the sector, persuading young talent to pursue options in other industries. A recent Forbes article corroborates the millennial woman’s attitude:
The financial collapse has unquestionably tarnished the reputation of the industry. Millennials have especially questioned the industry because they became adults during the time of the financial crisis, bank failures, and the foreclosure boom. As a result, 21% of millennials have decided to avoid the financial services sector.
“When you are trying to get get the younger talent, you’ve got to be able to sell them on yout culture and of course be competitive on compensation. But that’s not where it ends. You really need to be able to mentor them and help them develop.”
The fallout from the financial crisis led to tighter regulations, rules that demand greater transparency, and higher tax burdens on financial institutions. The Dodd-Frank Act is considered the most powerful regulatory enactment since the aftermath of the Great Depression.
The myriad of regulations is causing more compliance and risk-management experts to emerge, while “revenue-generators” have exited the industry given the restrictive regulatory environment that surrounds deal-making. As a result, many banking professionals, happy to accept significant salary cuts in return for a share of the new equity pie, are handing in their resignations and making the leap into the FinTech sector.
The Demise of Career Development Programs
Bank executives say recruiting commercial lenders is among the most significant challenges they face in 2017. Bank Director cites the actions by many large banks to curtail career development programs (along with the retirement of aging baby boomers) as key contributors to the industry’s.
“While real wages for financial services professionals in New York rose by 14%, the number of young people working in the financial sector has declined by 11,000.”
Apprehensive banks have cut training programs that developed strong sales talents into commercial lenders, contributing to a lack of young commercial lenders. The 2016 Bank Director Compensation Survey revealed that Millennial professionals identify the “opportunity to learn new things” as a key motivator for working in the banking industry. Commercial banks that slashed training programs in response to economic pressures must restore these career development opportunities by establishing mentorships and leadership programs, and reinforce the company’s commitment to individual growth if they want to attract younger talent.