Job Cuts in Financial Services: Don't Despair

It's getting really ugly out there. For example, according to a consulting firm cited in The Economist, financial services layoffs in April were 25% of total U.S. job cuts. However, when you read this article, don't take the associated chart at face value. It is misleading. It counts job cuts announced, not necessarily those that actually took place. Also, it does not offset these figures with hirings. Thus, even in periods during which overall employment in the financial services industry expanded, the chart still shows cuts, leading the uninformed reader to deduce that overall employment has shrunk by about 1 million over the past decade. This, of course, is utter nonsense.

Sure, times are tough in the financial services industry right now, on a macro level. However, never lose sight of the fact that your career is on the micro level. There always are functions that remain in net demand during periods of net employment contraction, both in the industry as a whole and within individual firms. My own entry into financial services in 1987 is illustrative of this fact.

I had just been extended an offer by Merrill Lynch to enter its internal financial analysis function, charged with developing profit measurement and transfer pricing methodologies. Then the great market crash of October, 1987 hit, just weeks before my start date. When I reported for work, plans were already underway for the first large-scale, across-the-board layoffs in the firm's history. I was sure that I'd get the ax. Much to my surprise, I did not. Why? With the recent big hit to earnings, Merrill Lynch was determined to do a much better job in the future of controlling risk and analyzing profit dynamics, the field in which I was just hired. I had the right skills at the right time and in the right place. Hopefully, you can say the same today.