Compliance jobs in investment banks are never as sought-after as front office roles, but as someone who’s worked in J.P. Morgan’s middle office for over three years, I’d say that anyone who’s dismissive of these positions is missing out.
Despite the political environment, regulations will continue to play a key role in the financial services industry. There appears to be a push for thoughtful and meaningful regulation as opposed to more regulation. So, it’s not just a case of working in an area banks have to hire for, it’s a part of the business that’s actually becoming more fulfilling as a career.
First and foremost, working in compliance gives juniors the chance to work alongside the front office and senior management in investment banking. This isn’t simply a case of sitting alongside the rock stars as a silent policeman. There are numerous regulatory and compliance issues that arise daily and some of them are recurring over a long period of time. So, you have a fast-track to learning about all the regulations and their impact, while sitting alongside sales and trading professionals and learning about their jobs.
It’s a technical role, but legal and compliance executives also need develop the business and interpersonal skills. For example, while on the trading floor, associates learn to address sensitive issues under difficult time constraints with the most senior individuals involved in the business. It is a great opportunity to build a network, provide solutions to pressing problems and learn about a particular business while understanding the legal and regulatory implications.
As a compliance executive who is directly responsible for the regulatory issues concerning various facets of the business, there is a “seat at the table” for someone in my role. Regulatory issues can be complex, but they need to be solved quickly because it can endanger a business deal. In these circumstances, you have the opportunity to develop a creative solution, pitch the solution to the business and execute it.
Coming up with a creative solution requires a professional to look beyond the rule of the law and understand the business from a financial, risk-management and operational perspective. It is pertinent to understand clients and how they make money, as well as the profit-drivers for the business. There was no magic number that would satisfy the regulatory requirement. When we offer our solution to the business, we illustrate how and why the number reasonably fits the business needs and satisfies the regulatory requirement.
Dealing with the business is not entirely easy. The business has and will continue to see themselves as the “money-makers,” and any individual who is not in a front office role is perceived as “getting in the way” as they try to make money.
Trust is key here. Front-office employees need to believe that, as a compliance professional, you will seek to find alternative and creative solutions as opposed to just saying “No”. The problem is that there are a lot of ‘grey’ areas in trading and if the business can find a short-cut to avoid a certain compliance push-back they will. The issue is that in compliance, like it or not, you are the person who has to say when something can’t be done, but if the business trusts you, then saying ‘no’ is a lot easier.
For example, the trading desk had to set a certain credit threshold limit for their clients in order to comply with a certain SEC rule. The business initially proposed a limit that was set around $X million. Unfortunately, that was a really high limit and ran the risk of regulatory scrutiny. In fact, the business was not entirely able to justify why setting such high credit limits was reasonable to their business. But the real reason they set the high credit limit was because it would give them enough room to conduct their business. As compliance professionals, we had to say no to that credit limit. By pointing to various regulatory cases and the intent of the relevant rule and by running a series of hypotheticals, we finally convinced the business that the number needed to be lowered and we successfully reduced the number to about two-thirds of the original figure.
Some of the drawbacks to working in compliance is that, from a branding perspective, it is not considered “sexy.” But when an individual grows professionally to be a trusted partner in the business, then your expertise is sought-after.
For individuals who are law-school graduates, compliance does not offer the type of legal work that most JDs are looking for. If your interest lies in traditional legal work, then you should consider a traditional law firm. However, if your interest lies in developing an expertise in the banking business, securities law and financial regulations, then a compliance role at a big bank offers that.
Stacey Kelly is the pseudonym of an executive at J.P. Morgan.
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