Thriving in a Candidate-Driven Investment Banking Market

After a period marked by economic slowdown, political uncertainty, and widespread job cuts, the investment banking sector is showing signs of recovery. Early indicators suggest that 2025 could be a turning point for the industry, with increased deal flow and notable movement among Managing Directors (MDs). Investment banks are preparing for what is expected to be a candidate-driven market, reminiscent of 2021.

For firms looking to stay ahead, strategic hiring and proactive engagement investment banking and executive search recruiters will be crucial. Here’s what to expect in the coming year and how businesses can position themselves for success.

A candidate-driven market: What this means for investment banks

A candidate-driven market occurs when demand for skilled professionals exceeds the available talent, giving job seekers substantial leverage. This trend last appeared in 2021, as investment banks competed to attract top talent. As the industry regains momentum, 2025 is expected to mirror these conditions.

A major factor driving this shift is the significant movement of MDs over the past year. When senior leaders transition to new firms, they often bring their trusted teams, creating vacancies that need to be filled quickly. This movement increases the pressure on investment banks to maintain stability and continuity, making succession planning more important than ever.

Additionally, a resurgence in mergers and acquisitions (M&A), heightened capital markets activity, and a rise in private equity deals are all contributing to the increasing demand for skilled investment bankers. As these markets heat up, the need for experienced professionals to navigate high-stakes transactions will grow, creating additional challenges for firms to secure top talent. With a limited talent pool, firms will need to offer competitive compensation packages and incentives to attract and retain the best candidates.

The impact of MD movement on hiring trends

Managing Directors play a crucial role in deal origination and execution, so their movements have a significant impact on hiring trends. Over the past year at Selby Jennings, we’ve seen numerous MDs leave their firms, either seeking better opportunities or as a result of restructuring at major banks. These transitions often lead to a ripple effect, resulting in increased hiring activity across all levels.

For firms looking to retain top talent and maintain a competitive edge, staying attuned to MD movement trends is vital. When MDs depart, firms risk losing valuable business and face the challenge of filling leaderships gaps. Effective succession planning becomes key. Proactively identifying and engaging strong candidates through executive search recruitment can help ensure a steady pipeline of leaders, safeguarding stability and growth during periods of transition.

The importance of timing: Pre-bonus hiring strategies

To gain a competitive edge in 2025, investment banks should engage with candidates before the annual bonus season. Many professionals wait until they receive their bonuses before considering job moves, but firms that engage early can position themselves as attractive options ahead of the hiring rush.

Key strategies for firms:

• Building relationships carly – Reaching out to potential hires months before bonus season allows firms to gauge interest and stay top-of-mind when candidates start actively exploring new roles.
• Offering competitive packages – Salaries, performance incentives, and career growth opportunities will play a major role in attracting talent. Firms that offer competitive compensation will have a better chance of securing top professionals.
• Enhancing employer branding – Investment banks should highlight their culture, deal pipeline, and career development programs to stand out in a crowded market.
• Streamlining hiring processes – Lengthy hiring processes can result in top candidates accepting offers elsewhere. Efficient interview and onboarding procedures are essential.

The upcoming bonus period: What to expect

The bonus period is a critical time in investment banking, with many professionals basing job decisions on the bonuses they receive. If a firm underperforms on bonus payouts, employees may be more likely to seek new opportunities. Conversely, firms that offer competitive bonuses are more likely to retain their top talent for another year.

For firms looking to hire, the weeks before and after the bonus period will be a prime opportunity to secure professionals. Engaging candidates early and offering competitive packages can position firms as attractive alternatives during this highly competitive time.

Secure talent before the hiring frenzy

As the bonus season approaches, firms must be proactive to avoid last-minute scrambles and bidding wars for high-quality candidates. If you’re looking to hire or want to pre-empt turnover during this critical period, request a call back today.

At Selby Jennings, we have extensive experience helping firms identify and secure top investment banking talent ahead of hiring surges. With a deep understanding of market trends and a proven track record of success, we help businesses stay ahead of the competition. If you want to build a strong team for 2025 and ensure you’re positioned for success, contact us to discuss how we can support your investment banking recruitment strategy.

Navigating the evolving investment banking landscape

Beyond hiring trends, investment banks must also adapt to broader industry shifts. The increasing role of technology, the rise of ESG (Environmental, Social, and Governance) considerations, and regulatory changes are all shaping the future of the sector. Firms that integrate these factors into their hiring strategies will be better positioned for long-term success.

• Technology & automation: The use of AI and automation in deal-making and risk assessment is changing the skill sets required for investment bankers. Firms should prioritise hiring professionals with strong analytical and technological capabilities.
• ESG & sustainable finance: With growing investor demand for sustainable finance solutions, professionals with expertise in ESG-focused investments will be in high demand.
• Regulatory adaptation: As governments introduce new financial regulations, investment banks must ensure that their teams are well-versed in compliance and risk management.