by Brian DeChesare Comments (63)

Finance Headhunters: Friend Or Foe?

“My name is Rebecca Nicholson. I’m a recruitment consultant at Assbury Moron.” This HR chick has obviously mis-dialed and has no idea that this is not Assbury Moron, or wherever else she’s looking for.

“A recruitment consultant.  A headhunter.  Are you free to speak for a few moments?”

The Kruelberg Kretin Saga – Episode VI: The Headhunter Call, The All-Nighter

Ah, the infamous headhunter: you can’t hate them even though you really, really want to. You could try to love them, but do that at your own peril.

There are lots of misconceptions about what headhunters actually do, how they get paid, and who they work for.

So let’s fix all that right now.

What Headhunters Do

Back when I explained what investment bankers actually do, I likened them to Ari Gold. Bankers don’t create; they’re not there for the long-term; they just sell.

But if there’s anyone more deserving of the “Ari Gold” title than investment bankers, it’s headhunters.

What investment bankers actually do: Ari Gold

Recruiters are hired by investment banks, private equity firms and hedge funds to find potential candidates for hire. The recruiter does NOT work for you – he works for the firms that hire people.

When you get hired via a headhunter, he/she might receive around 30-33% of your base salary in compensation – from the firm that hires you.

So if you see any “Should I get a headhunter on retainer?” questions, please ignore them or find the person in real life and beat him/her into submission.

The fact that headhunters are paid on commission isn’t a bad thing, but you need to take it into account when making decisions: all else being equal, the headhunter is motivated to place you and get paid.

The Recruiting Process

The headhunter contacts you directly by phone or email and introduces himself/herself, and then sees whether or not you’re a fit for the opportunities he/she has available.

For private equity recruiting, this happens in the March/April time frame for the mega-funds and later on if you’re aiming for smaller places or you’re not at a bulge bracket bank; they may even contact you in January, midway through your first year, to introduce themselves.

Sometimes recruiters won’t contact you at all, especially if you’re not at a brand-name firm – in which case you need to be aggressive, get referrals from your friends at other banks, and do some cold-calling yourself.

Headhunters are not looking to “take a chance” on you if you’re from a non-traditional background – 99% of the time they want people whose qualifications match the job requirements exactly.

First Contact

You need to meet in-person so you can tell your “story” and so they can do a better job introducing you to the right firms. Meeting in person can also help you overcome a weaker finance background or a non-brand-name bank.

If you make a strong first impression – solid deal experience, a social/confident personality, and you can explain how you’ve made money for your firms in the past – then you get past the first round and will interview with the bank(s) / private equity firm(s) / hedge fund(s) directly.

The headhunter might stay involved past that, or they might back away and focus more on other opportunities – just remember that they are incentivized to make a “deal” happen because that’s how they get paid.

Good recruiters won’t tell you to take a horrible offer just so they can get paid – but if you’re on the fence and they think it’s a good fit, they will encourage you to go for it.

Why They’re So Prevalent In Financial Services

Recruiters exist in every field, but they’re most prevalent and most influential in financial services for 2 reasons:

  1. The highest pay  of any industry out there. Even junior-level employees make over $100,000, and mid-level hires will get between $500,000 and $1,000,000.  Try finding that in manufacturing.
  2. Incredibly high turnover at all levels. Some analysts switch firms multiple times per year, and some senior bankers have worked at pretty much every major bank. People get burned out quickly and lust after new opportunities equally as quickly.

Headhunters get paid around 1/3 of these six-figure salaries and everyone in the industry is hopping around a lot – that translates into nice cash money.

The other factor is that the finance industry – and especially the private equity firms and hedge funds on the buy-side – is very small, and even the largest firms in the world such as Blackstone have fewer than 500 employees.

As a result, it’s easy for a few recruiting firms to “own” all the relationships and have a monopoly (or oligopoly, to be precise) on the market.

That’s much harder to pull off in an industry like technology, where brand-name firms have tens of thousands of employees – no 2-3 recruiting firms can dominate the entire hiring process.

So, Should You Look for a Job Through Headhunters?

You pretty much have to if you’re ever interested in working at a private equity firm or hedge fund: almost everyone uses them.

Investment banks, by contrast, don’t rely on headhunters as much because they are much larger and have dedicated HR teams. So you have to think about headhunters more once you’re already working in the industry and you’re looking to make a move elsewhere.

I stress the importance of investment banking networking, and it’s no different here: headhunters can get you introductions, but you have a much higher chance of success if you have already spoken with people at the firm.

Networking for exit opportunities can be more difficult because the firms are so much smaller than banks – but it always helps, and if your resume doesn’t match the job qualifications 100% you need to network your butt off anyway.

Buyer Beware

But watch out for a few points when going through headhunters:

Introductions, Not Decisions

Never rely on a recruiter to make a decision on whether or not to accept an offer.

It’s not that they’ll try to lead you astray or force you into something you don’t want – it’s just that the decision needs to be yours.

So don’t just stop at the recruiter’s opinion – ask around, see what others have said about the company, and get a feel for its reputation. As bankers would say, do your own due diligence.

The Tough Market

Besides financial institutions, guess who else suffers when the market tanks?

When hiring slows down and the number of people being laid off exceeds the number hopping between firms, headhunters lose their main source of revenue.

So in a recession, you need to be even more careful and persistent in how you approach the recruiting process – headhunters can still help, but you need to consider all angles and network on your own when you’re “in the market.”

Coming From Non-Bulge-Bracket Banks

Some headhunters will ignore you if you’re not from a bulge bracket bank. It’s just a matter of return on time for them – they are more likely to place candidates who come from “better” names, so that’s where they spend most of their time and energy.

Don’t just give up if you’re not at a top bank, but diversify your recruiting, network on your own and get referrals from friends.

Some recruiters also focus on middle-market firms, so seek those out rather than just going through the 3 biggest firms.

Closing Thoughts

If you want to work in finance for the long-term, you’ll have to work with headhunters – regardless of whether you’re hopping between firms or you’re starting your own firm and need to hire employees.

So get to know them, and speak with as many as you can to get introductions – they are very well-connected.

But keep in mind that you also need to do some work on your own, and that you shouldn’t rely on headhunters for everything.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi Brian, does my LinkedIn name need to match up perfectly with my work email so that headhunters can contact me? Like what if the format for the bank is weird?


    1. Not necessarily, but it should be as close as possible. You want to be easy to contact.

      1. Thank you!

  2. I am currently working at a firm that utilized local headhunters .. small valuation shop. Is it safe to utilized headhunter ? Would I run into the risk of my employer knowing ?

    1. It is probably safe, but there is always non-zero risk.

  3. Another great article with very helpful information to include the replies to user comments. Great job and thank you!

  4. How much does your undergraduate institution and SATs play in HH recruiting? I’ve heard some HH ask for SATs score as a way to screen people. Can a non target with a good undergraduate GPA at a top BB group who can network well but has a average/slightly below average SAT still have a chance at MFs?

    1. Avatar
      M&I - Nicole

      I am not 100% sure if HHs ask for SAT scores. I’m not quite sure what you mean by MFs. But if you’re already at a top BB group, I wouldn’t worry about your SAT scores or non target degree. As long as you are one of the top performers at the BB group you’ll be fine.

  5. i already posted this question , but i can’t find where, could u paste the link or the answer please ??

  6. Hi, I’m an student in an italian business school; I just have a doubt about how italian GPA is evaluated. Here, grades are out of 30; so do you know wheter a 27/30 is enough to get into Investment banking? Or a 28-29/30 is required?
    Waiting for you answer, hope you understood ( my english is not so good).
    P.S. I don’t know if it’s the right articles to comment on with this.

    1. Avatar
      M&I - Nicole

      Please refer to my previous comment.

      1. Maybe i misunderstood, what’s your previous comment i have to look at?

  7. Avatar

    If someone calls themselves one of the top financial recruiting firms in the country, can the claim be disputed or even questioned if there if no formal ranking out there?

    1. Avatar
      M&I - Nicole


      1. Avatar

        To clarify, not looking for top employers, looking for top placement firms for advisors. Sorry. Does anyone rank the placement firms?

        1. We don’t rank placement firms but generally the top 3, at least for buy-side opportunities in North America, are Oxbridge, SG Partners, and CPI, with Glocap also doing some. So it depends on what they recruit for specifically, but outside of those firms there aren’t many who do a lot of PE recruiting.

          1. Avatar

            What about top firms who recruit for financial advisors, like a Diamond Consultants? Any ranking in this area?

  8. Avatar

    Great article. Basic question: is there an agency that ranks the topp financial recruiting firms nationwide? If not, how do you know which firm to engage? Many thanks in advance.

    1. Avatar
      M&I - Nicole

      I’d refer to Dealogic deal tables to figure out which banks have done most IB deals if you’re looking for top IBs

  9. Avatar
    Meaghan Burns

    Can you provide the top three hh’s in the industry?

    1. Avatar
      M&I - Nicole

      Top – it is hard to “define” top.
      A few global firms came to mind: Global Sage, Heidrick & Struggles, Glocap (more US based), Korn Ferry, Russell Reynolds. I think most of the ones I mentioned are focused on mid-senior level hires though

  10. Hello-
    Thanks for the helpful article. I was wondering what is the best way to introduce yourself via email to a recruiter you found on Linkedin.

    Are recruiters generallly receptive to this type of intro? Should you explain exactly what type of role you are looking for or leave it open ended? I am coming from a S&T background at a BB and am open to several different positions (trading, IR, Bus Dev, Research).

    1. Avatar
      M&I - Nicole

      I presume the headhunter has already seen your profile. I’d just give a brief description of where you’re working, where you graduated from and what you’re looking to do and why. Yes, a lot of recruiters contact candidates versus LinkedIn. I’d be specific (List top choice, then 2nd). If you list too many options you will look like you don’t know what you are interested in doing.

  11. What is the difference between an employment agency and a headhunter (recruiter)?

    1. Recruiters tend to focus on higher-level and higher-paying positions and work with a lower number of candidates. Sometimes they only place a few per year. Employment agencies work with larger numbers of people but place them in more standard positions.

  12. Hi Brian,

    I think you have mentioned a recruiting agency’s name for Asian region. I searched the site but couldn’t find it. The name is similar to ‘Apax’. Can you let me know the name again?


    1. Not sure offhand as I don’t remember the specific reference – I will see if we can cover it in a future interview.

  13. Why don’t more people just become headhunters? I know some people who have posted in the comments are actual recruiters. Could one of you elaborate on the pros and cons of becoming a recruiter?

    1. Avatar
      M&I - Nicole

      Just like any jobs there are pros and cons. Pros : (1) passion – some people genuinely enjoy connecting people and have a decent heart to place the right place in the right roles at the right environment (2) access to executives (from juniors to seniors) etc across financial or other major institutions (3) every connection you have is worth a lot and the money you make (if you’re good) is not bad
      Cons: (1) treating people as commodities (2) cyclical business (3) people can be fickle and you can’t really control the outcome as much

      Not a recruiter myself so perhaps others who actually are recruiters can provide better insights

  14. Thank you for the article. Can you please explain why smaller PE/HF/Corp Fin firms don’t use standard job search websites (like efinancialcareers), it’s a lot cheaper for them and candidates who apply through them will be the ones who are actively seeking the job? I understand this is different with large PE funds who don’t mind paying to HHs, want to keep it confidential that they are hiring, and don’t have time to look through resumes. But is this also the case with smaller or younger firms?
    Another question I had was if I was to write to PE firms directly to their regular “information” email shown on their websites, would they ignore my CV because it didn’t come from a HH or would they still consider it, assuming they are looking for a hire with my experience?
    Many thanks for your help!

    1. Avatar
      M&I - Nicole

      Firms like to hire people who are referred to them by their contacts. It can be time consuming for firm reps to look for candidates on online sites, and the quality of candidates applying through such sites might not be the same caliber as those through their networks.

      There is a slim chance that PE firms would consider your application if you send it through to their info email. Always address your app to the person who has the power to hire you.

  15. Hello!

    I’m a rising senior. Just signed a BB offer (industry coverage at CS/Citi/BAML) and was wondering when I should start contacting headhunters.

    Spoke with some of the current analysts in my group and only 1/8 got a PE offer. The rest got interviews but nothing worked out.

    Looking through the alumni database at my school, I found a few people who work at glocap and SG Partners, as well as quite a few people in large and mid cap PE. There are also a bunch of former analysts from my group in PE.

    How important is networking for PE recruiting? Should I use a different approach compared to banking networking? How/when should I approach alumni headhunters? Can’t ask as many typical informational interview questions. How/when should I reach out to school/bank alumni in PE?

    Apologies for the long-winded question. Thank you so much for your help!

    1. Avatar
      M&I - Nicole

      Always good to start networking so you can start contacting HH. However, most HH are not receptive to fresh grads because many work with senior-mid lvl hires.

      Networking is crucial for PE recruiting because the industry is small. Try to attend PE conferences such as
      Alumni headhunters/bank alumni – anytime. Just email them.

      This shd also help –

  16. Hi!

    Consider hypothetical scenarios:

    A) towards the end of my graduate scheme (3 years) working in UK equivalent of SEC (debt/equity issuance approval, sponsor supervision) I am contacted by a headhunter

    B) same period and everything else but this time I am seeking to jump across the fence by contacting recruiting banks directly

    How many stages of recruitment (online applications, psychometric/numerical tests, assessment centres!?) I would be expected to go through?

    Is it the case that for experienced hires there is less hassle and what would mean experienced hires (will the above qualify) in the context of iBanking/PE/HF etc.

    Many thanks


      I don’t know that there will be a huge difference – going through a headhunter may add some time though since you have to go through 2 firms then

      1. yes but in terms of contents of teh process you wouldn’t expect e.g assessment centre at this stage

        I’m wondering what else is dropped -numerical tests?

        1. Yes that’s possible, I think those tests are more for new graduates.

  17. As a recruiter, I actually found the article pretty accurate. Just like in any industry, you have good and bad (insert position title here). I know many retained recruiters that I wouldn’t recommend to anyone, and many contingency recruiters that I would recommend to everyone.

    I think it’s important to note that this article is a generalization, and there are exceptions to this rule. So, while there are many good and bad recruiters in the financial field, this, to me, simply spoke about what to look for, and what to look out for.

    As I look at my personal business directives and philosophies, my network grows through referrals and networking. If I simply try to “sell” someone on an opportunity, I’m not looking out for their best interest, which in turn, goes against my best interest. I don’t want a phone call 6 months after a placement is made indicating that either (or both) the client and candidate are not happy in their working arrangement. I’m in this for the long-run, and if that means I tell someone to turn down an offer from a client of mine (knowing that I may not be compensated as a result), I’ve earned both my client’s and candidate’s respect and trust, and they will feel comfortable working with me in the future, since I kept their best interest in mind.

    1. Sure. But everything is a generalization and there are exceptions to all rules (well, except for Newton’s laws maybe). But yes, it does depend a lot on the person and some recruiters are reputable while others are not… just like bankers, doctors, lawyers, or anyone else.

  18. How do headhunters obtain your contact info/how do they figure out how good an analyst you are? I’ve heard that they do this based on bonus figures but how would they find this out?

    – Southern M&I fan

    1. Usually they have sources at banks

  19. Quick question, do recruiters usually follow up with you after the initial meeting. I am asking because some of my fellow analysts got followup emails an hour after the meeting and I did not even though we met the same person. Does this mean I am not on their “top candidates list”? Any significance to this at all?

    1. Sometimes they do, sometimes they don’t – just follow-up yourself and ask.

  20. Brilliant article again :).. Could you pls write one on how to prepare for recruitment while in college? Getting into an ivy league is one thing. Bagging a bulge bracket offer after that is another thing.

    1. Um, see everything under Recruiting at the top of the page… use the search function…

  21. Avatar
    Bob Smith

    How do you actually contact headhunters?

    1. Find their names online, then call or email them…

  22. I’ve really enjoyed your article, and I thought it was fair and balanced. Refreshing! Most articles bash recruiters unfairly. Usually written by people who are unemployable and looking for an outlet :(

    I would like to establish – there are a few truths in this document which aren’t universal (perhaps you’re refering to the US market specifically? I think bankers globally will be interested in what you have to say, however).

    Three points as a prelude:

    1. Yes, search firms will charge up to 33% of the candidates package (and charge this to the EMPLOYER, which I believe has been clarified – in most countries it’s not legal [or at least not ethical] to charge the job seeker) and contingent agencies charge anywhere between 15-25% globally.

    2. It may sound like the recruitment agency is making a pretty penny … and they are … but they’re certainly working hard and absorbing a lot of risk on the employers behalf – not to mention the hard-to-measure value of the introduction.

    3. As further distinction, search firms also charge part of their fee to the employer up front, while contingent firms are ‘paid on delivery’.

    SO: to my main point. The above definition between Search/Retained/Headhunting firms and Contingent/Selection firms isn’t entirely acurate.

    I would argue that relationships with employers (the client) is equally as important to both types of agencies. This is merely a distinction in methodology, and doesn’t necessarily denote the quality of the service, or the longevity of the relationship with either the client or the candidate. From the candidate perspective, it shouldn’t make a difference.

    Search firms will often be engaged for high-end executive headhunting, while contingent agencies will generally do middle to upper management, where a faster turn-around solution is required.

    The key difference is not the amount paid or the relationships formed – it’s purely a headhunting V database/advertised search divide. Clients use each different agency depending on the methodology they wish to engage for the particular procurement needs they have.

    Let’s face it – headhunting isn’t required for every job (even in a small market like IB/PE/HF etc… there are still bankers actively seeking jobs, and not waiting around to be tapped on the shoulder!!). PROACTIVE job seekers find contingent agencies to pair up with, in order to gain valuable information regarding their market positioning. When it comes to finding a new job, you can’t afford to let your ego get in the way – being headhunted isn’t that flattering!

    Headhunting suits candidate-short markets (for example, at the exec level, and previously in the ivy banking sector) however due to the changes in the world lately…. we’re no longer candidate short… headhunting is out and contingent is the new black.

    Just like any market turns and goes through cycles, so too the recruitment methodologies of the world change. All those who were waiting to be headhunted, will now we approaching contingent recruiters to join ther databases (this doesn’t have to be as cheap as it sounds – being on THE RIGHT database is INVALUABLE as the employment landscape changes… being refered to one of those good quality recruiters like Elizabeth could be the best thing that happens to you this year :)

    So – I agree with the author – you DON”T need to pay your recruiter, but you DO need one. The value your resume had last year has all but gone down the drain this year… and there are thousands of others like you, I’m sorry to say. Basic supply and demand: there are too many bankers on the market right now, so being paired with the RIGHT consultant could be your make-or-break. On the other hand – you can’t expect them to pull a rabbit out of the hat – please don’t take your frustration at the world markets out on them!

    (Also, as a side note – moving to Asia is not an option unless you have native Mandarin/Cantonese/Other skills. I’m not sure how this myth originated).

    Good luck – contingent, search, or otherwise :). There are still jobs to be had – we just all need to work harder and making ourselves stand out above the crowd.

    1. Thanks for the long and (very) detailed response. I’m glad I’m not in the job market anymore. :)

  23. Avatar

    Thanks for the post. One “rookie” question:

    Assuming that I’m alright with dedicating 20 to 33.33% of my base, is using a headhunter a realistic option for me? I ask because I am looking to get INTO the business with little financial experience. It sounds as if headhunters may not even look at me if I don’t already come from one of the firms that gives them an attractive commission. Thanks again.

    1. Not sure I understand what you’re asking for here – you can’t really “retain” a headhunter, at least I’ve never heard of such a thing. I was just illustrating above what % of your salary they get from the hiring firm when you get hired.

      If you’re trying to break in with little financial experience, I would start by getting some kind of finance/business experience (even small places are fine – you just need something) first, then going the headhunter route – will be very difficult to get them to pay attention to you if you don’t have the finance experience.

  24. Congrads for reaching the 500 readers mark!

    1. Thanks Mark! Now just have to keep going until I hit 5,000…. :)

  25. Avatar

    Always a pleasure reading your articles.

    Could you expand on how candidates can make themselves more visible and/or attractive to headhunters at smaller firms?

    Thanks! Look forward to many more great posts.

    1. Thanks, glad you enjoyed it.

      As far as making yourself more visible: confidence plays a big role. If you come in and meet them and sound like you know what you’re talking about, that alone will go a long way toward making you more appealing in their eyes.

      Make sure you have an iron-clad “story” for why you want to be in PE or HFs – the general “interest in business/finance” that worked for banking is not going to work here. You need to convince them that investing is your passion.

      Good deal experience also helps a lot – even if a deal is small, if you can tell a good story around it or make it seem like you played a huge role, that also helps you.

      1. Avatar

        Author, your statement regarding the percentage of payment headhunter’s recieve is incorrect /not universal. Good, retained firms take 33 and 1/3% of the annual estimated total cash. Also the section that mentions headhunters “will almost always urge you to accept it. Unless there’s something else that would generate a higher commission.” Is false, we do not make recommendations to accept an offer unless we feel this will be a good long term fit. Again most good, retained, reputable firms will guarantee that the candidate will remain gainfully employed with the client for a certain amount of time.

        1. Elizabeth,

          You may be right on the compensation – I’m no expert. 20% was an estimate to illustrate just how well they get paid.

          On the second point, you’re right that some more reputable recruiters will not urge you to accept if the offer’s not right – but my point is that many recruiters are NOT in fact reputable and will do this.

          To be more specific, I had a recruiter at one of the top 3 firms in the PE recruiting industry (obviously won’t mention name here) try to get me to accept an offer that I didn’t like.

        2. Avatar

          There are many firms and headhunters that do not employ best practices however there are also many of us that do. While I enjoyed many points in the article it is not fair to “lump” us all together. There are many of us that encourage our candidates and clients to make the right long term decision rather than the easy money making decision. It is unfortunate to read bad press on headhunters as a whole, as many of us work heard each day to destroy these stereotypes.

        3. I’m sure you are reputable and yes, this article is somewhat of an over-generalization as it is introductory rather than comprehensive in scope.

          As I said in the article: I strongly, strongly recommend that everyone consult with recruiters as they think about next steps in their career. As with anything else, though, there are some things to be cautious of, especially given the market/economy we are currently in.

          I attempted to stay “fair and balanced” here (and not in that Fox News way) and show the good and the bad, so sorry if you considered this “bad press.”

  26. Another great post. Thanks and keep up the good work!

    1. Thanks, glad you enjoyed it!

    2. Avatar
      Robert Friedland

      In discussing recruiters, it is important to note the difference between firms that are retained and those that work on contingency. Retained firms are paid when the search begins; contingency firms only get paid when someone gets hired. Retainer firms conduct higher level searches wherein they examine the marketplace, personally interview all of the candidates, provide detailed written descriptions of the candidates, check references and act in a consultative manner. They do not send candidates to more than one client at a time. Contingency firms often don’t meet candiates, just send resumes and often send the same candidate to multiple potential hirers.
      The contingency recruiter works for him/herself, and cannot maintain objectivity or the candidate’s interests because of the transactional nature of their relationships with their clients.
      Retained search professionals do work for the clients who pay their fees. The fundamental difference resides in their desire to maintain long-term relationships with clients and candidates by seeking the most highly qualified candidate for the positions, even if that candidate makes less money than someone who is not as good.
      We always recommend that candidates ask the recruiter if they are working on a retainer basis or contingency. It is an important distinction and will be a good predictor of what they can expect.

      1. Excellent points Robert. I didn’t go into detail on retained vs. contingency firms here because it was more of an introduction to recruiters.

        Still, I feel it is important to note that headhunters always work for the firm(s) and get paid by the firm(s) rather than the individuals and that they should not be relied upon for deciding on whether to accept offers.

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