Obtaining / Changing Jobs in the Evolving International Financial Services Industry

by Professor William Byrnes, llmprogram.org (from 2006)

             This article briefly frames the landscape of obtaining a high paying job amongst new opportunities in the international financial services industry.  The framing is accomplished by answering questions frequently posed to Professor Byrnes by potential applicants to the Diamond LLM program: (1) Is the industry growing or has it stalled? (2) What are the new job opportunities? (3) Can smaller firms compete for my employment? (4) What skills must I have to land the job? (5) How do I distinguish myself from other job seekers? (6) What professional certifications apply to our industry? (7) Now, how do I get a job? This article does not review continuing professional education which has been addressed in my previous Offshore Investment articles.

1. Is the financial services industry growing?

In my 900-page economic report on the offshore financial services industry, I examined and calculated the economic size and impact of the sector on local jurisdictions. [1] But for periods of global financial crisis, the sector had experienced double-digit annual growth and contributed robustly to the local economy and society.

Since 1996, the international financial services sector has expanded at an average rate of 10%.  During this period, the number of HNWI clients Offshore Investment’s readers serve have almost doubled, from 4.5 million to 8.7 million, as have their assets, from $16 trillion to $33 trillion. [2]   An estimated one-third, $11 trillion, is now held offshore. [3]

2. What are the new job opportunities?

In my 2004 speech to the BVI Financial Services Institute after laying out the economic conclusions of my report, I forecast the offshore sector’s growth for the coming decade, for whom it would occur, where it would occur, and why.  I also forecast which firms’ business would shrink and who would be shaken out altogether by a coming waive of competition and regulatory enforcement.

HNWIs are showing lack of fidelity to older institutions and are migrating a portion of their portfolios to boutique investment firms and family office operations.  By example, HNWI clients have already diversified their portfolios to 20% alternative investment, up from just 3% in 2000. [4] 

According to polling by Cap Gemini, several factors are driving this re-allocation.  HNWIs, and in particular the new generation of HNWIs, are increasingly globally informed about investment opportunities and risks. HNWI’s are engaging firm’s investment teams that develop and use global strategies and products, sometimes with complex international hedging to mitigate risk. Offshore Investment readers should note the use of the word: “teams”, not firms. High profile trouble, lackluster performance, and lack of service, has shaken client confidence in large, traditional institutions enough to put their boutique collaborative-competitors on an equal footing.

Because the financial services sector continues to out or evenly pace other sectors in terms of firms’ and employees’ earnings, the sector has grown more competitive with new boutique firms entering monthly.  Three types of boutiques have shown significant growth in the past five years. First, investment team boutiques that create and manage internationally oriented investment funds focusing on alternative investments, such as cross-border arbitrage strategies. These boutiques appeal to both HNWI’s directly, competing with larger institutions, and to the institutions themselves, in collaborative arrangements. Secondly, family office firms employing holistic family business and tax management and lifestyle solutions, sometimes in combination with investment management services. Thirdly, compliance and anti-money laundering (AML) firms and employees, that service financial service firms, have experienced the greatest growth in employment opportunities.

3. Can smaller sized firm compete for my employment?

Cohesive investment teams are also not a new phenomenon.  Investment teams have since the 1980s moved horizontally within the industry among financial institutions, seeking greater compensation and access to investment funds. Since the mid-90s, the growth of transparent funds-of-funds and institutional re-branding of other institutions’ funds has allowed investment teams to control their own destiny by establish proprietary firms while maintaining access to investment funds. Institutions, in turn, now flexibly offer to their own client bases an institutionally-branded menu of many investment teams’ opportunities and potential returns. Thus, international investment managers are now finding opportunities with teams as opposed to with institutions.

The family office service firm is not a new phenomenon.  Rather the family office is the branding of a re-packaged bundling of services that Offshore Investment’s readers have been providing clients since the development of the private bank. Often I am asked “Why are smaller boutiques taking market share from larger financial institutions?” The modern evolving family office branding requires a firm to paradigm shift from departments as the profit-center to re-alignment into a team-solution client-services approach. The team solution, if carried to its potential, requires a team profit center wherein the client does not experience fragmented billing or advice. Some institutions cannot employ this evolution within their current business model, while some national regulatory regimes do not allow it.

Finally, AML and compliance firms and employees are a relatively new development in the last five years in the sense of a regulatory requirement for firms to employ such.  Centralizing this expertise and enforcement of evolving regulations to a new management level position known as the compliance officer at every firm, be it small or large, is significantly due to regulatory and licensing requirements. These regulatory and licensing requirements further require education and training of the compliance officer and the firm, which many jurisdictions require to be performed annually. By example of the USA Bank Secrecy Act § 5318:

(h) Anti-Money Laundering Programs.—

(1) In general.— In order to guard against money laundering through financial institutions, each financial institution shall establish anti-money laundering programs, including, at a minimum—

(A) the development of internal policies, procedures, and controls;

(B) the designation of a compliance officer;

(C) an ongoing employee training program; and

(D) an independent audit function to test programs.

In almost all offshore jurisdictions, substantially similar regulations apply to financial institutions and, unlike the USA, to all trust/company providers.  Failure of firms’ AML policies have, in the USA context, led to very large fines. By example, Bank Atlantic suffered a $10 million civil penalty and AmSouth Bank a $50 million one. Since 2004, regulatory audits, actions, and fines of both large and small institutions and firms is significantly increasing. For conflict of interest reasons, traditional providers of services to a firm, such as the audit firm, may not also be able to provide AML and compliance assessments because these assessments may include assessing the service of themselves in relation to the assessed firm.

4. What skills must I have to land the job?

The overriding theme of my presentations to government and industry has been the correlation of in-depth “international” education and training to a firm’s and professional’s economic success, and regulatory survival.  Servicing modern HNWIs who now require international elements for their families and their business interests requires a dynamic ability to obtain economic and regulatory information, understand the clients’ and the markets’ issues and inefficiencies, and create solutions. Family office employees must be able to employ an international holistic team approach for a HNWI including business, tax, estate, legal, accounting, intra-family dispute resolution and lifestyle issues, and communicate operations and solutions to the HNWI and family members. The AML and compliance expert must be able to analyze a firm’s/ HNWI’s business and synthesize it with the different jurisdictional regulatory requirements. Thus, education in these aforementioned skill sets, leading to a potential employee’s retooling, is the key to opening today’s financial industry job market door.

5. How do I distinguish myself from other job seekers? 

One method to achieve this level of expertise proved by an internationally recognized professional title is to obtain an industry and regulator recognized degree.  Graduate programs in the US remain industry’s "gold standard" according to ranking and placement services. [5] The PhD, JSD (US acronym for PhD in law) and LLM (Master of Laws) titles carry the highest prestige in relation to fields requiring legal knowledge such as compliance, trust services, and tax planning.

The Walter H. & Dorothy B. Diamond online International Tax LLM and JSD may accept non-lawyers who have a university degree and industry experience.  Eight years and almost 500 alumni after its founding, the two-year LL.M. program has increased to an annual enrollment of 100 and now has curricular concentrations in five areas: (1) Offshore Financial Centres, (2) Trusts and Estate Planning (3) Anti-Money Laundering and Compliance (4) US tax, and (5) E-Commerce. The program is taught interactively online using a mixture of legal jurisprudence and business school case study methodologies.

The LL.M. program offers students the in-depth study of topics such as: establishing and managing a family office; creating an institution’s AML policy and procedures as well as testing of those procedures for shortcomings; drafting a tailored variable life insurance product; China’s investment, tax and regulatory law; and forming / administering charities.  A sampling of the pre-eminent faculty includes Offshore Investment’s Marshall Langer and Charles Cain.

Other established, excellent LLM programs in the field of International Taxation include University of Florida, New York University, Leiden University and the University of Vienna.

6. What professional certifications apply to our industry?

The cost, pre-requisites, time commitment, and available seats, for degrees is simply not possible for the entire industry.  But a robust, albeit gentler, internationally recognized certification may be pursued. Three universally respected organizations whose certifications leading to a professional designation require attention.

The Society of Trust & Estate Practitioners (STEP), International Compliance Association (ICA), and the American Academy of Financial Management (AAFM) certify professionals through education terminating with an examination, and maintain certification via continuing professional development requirements.

AAFM offers educational programs leading to the professional designations of Chartered Wealth Manager, Chartered Portfolio Manager, and Chartered Risk Analyst.  AAFM, through its membership in the universally accepted top business school accrediting agency AACSB, allows ‘waive in’ to its professional designation from other AACSB accredited business school curricula. Other applicants may undertake a one-year AAFM diploma study of face-to-face workshops, study manuals, and examinations.

The AAFM Board of Standards has also recognized the Diamond’s LLM courses as a path to certification.  Because professional certification has become prevalent in the financial industry, the LLM program now offers a variety of non-degree curriculum of courses that lead to AAFM professional designations.  The compliance friendly designation of CWM ™   Certified Wealth Manager  ™  and CTEP ™   Chartered Trust and Estate Planner ™   are available to LLM program students who also meet the AAFM requirements for certification.

Multiple other professional designations include the Institute of Chartered Secretaries and Administrators (ICSA), Certified Risk Analysts (CRA) and Chartered Compliance Analyst (CCA) from the AAFM, Risk Certified Ecommerce Consultant (CEC) from the Institute of Certified Ecommerce Consultants (ICECC), Certified Information Technology Professional (CITP) designation from the American Institute of Certified Public Accountants (AICPA), the Certified Information Systems Auditor (CISA) from the Information Systems Audit and Control Association, Certified Management Accountant (CMA), Certified Internal Auditor (CIA), the Certified Fraud Examiner (CFE) and the Certified Information Systems Auditor (CISA).

7. Now how do I get a job?

The program attended, be it a professional qualification/degree program or a professional certification, should have a career services function.  By example, the Diamond LLM program department of the law school actively seeks out jobs announcements directly from firms, via internet and telephonic research, and from placement agencies to provide its students and alumni with numerous options, over 300 high paying ones last year from well over a thousand opportunities. The career services function should also provide students/alumni example resume/CV formats, writing samples, salary surveys, as well as networking opportunities.

The most important function to entering the job market is still networking.  But most entrants do not realize the amount of time and research required to land the fulfilling job. By example, placement firms estimate between 3 and 6 months to find a job, and 16 hours a week or research about firms and networking to do so if you are already employed in the industry, whereas 30 hours if not. That is, searching for employment is a job in itself.

Contacting and meeting with placement firms and potential employers generally requires two to four interviews each if an opportunity crystallizes into a written offer.  And this step can only be obtained pursuant to weeks of research on the types of jobs available by jurisdiction, salary levels, firm profiles, and contacting HR departments for hiring protocols. Finally and perhaps most importantly, employment research also includes examining potential compensation packages, because base salary is only part of the equation. Applicants should prepare different package opportunities for themselves, such as paid for ancillaries (housing, car, travel, education, professional memberships), bonus, employee equity programs, pension programs, medical insurance, vacation/family time, signing compensation (such as payment of incurred education expenses) and garden leave after termination.