Most job seekers in asset management know what an agency recruiter is. Fewer understand how one thinks, and that distinction matters considerably when you are deciding how much time to invest in the relationship.
Agency recruiters, also known as contingency recruiters or ‘recruiters’, are the type of headhunter who actively tries to find candidates jobs. Unlike executive search firms, they are paid only when a candidate they have introduced is hired: their fee is contingent on a successful placement. This means they have a fundamentally different incentive structure from a retained search firm, which is paid a proportion of its fee upfront regardless of the outcome.
The analogy that fits best is the estate agent. Like an estate agent, an agency recruiter takes a commodity, in this case you, and tries to sell it to a potential buyer. Although it may feel as though they are working for you, you are not their client. The hiring company is. That matters when you are interpreting their advice or assessing how much weight to give their views on a particular opportunity.
That said, agency recruiters are the only type of headhunter who actively markets candidates to the market, which gives them a utility that search firms do not offer. Before LinkedIn, agencies relied on advertising and branding to attract job seekers. LinkedIn now gives them access to the same candidate universe that search firms once monopolised, enabling them to offer a more targeted search service, and they are increasingly working at more senior levels as a result. The boundaries between agency recruitment and executive search have blurred considerably. Even so, how they operate remains fundamentally different, and there are reliable markers that tell you which type of firm you are dealing with.
How well do they know the market?
Agency recruiters are sales-driven businesses. They do not usually maintain systematic knowledge bases on the market and will typically have less detailed market intelligence than search firms. There are exceptions: some agency headhunters have worked their patch for many years and have become genuine sector specialists, though these tend to be the more experienced consultants. As a single marker, this is a weak one — but it is useful in combination with the others.
What does their organisation look like?
Agencies tend not to have dedicated researchers: most people carry the title of consultant, including graduate trainees who have just completed training. Agency firms are also considerably larger than search firms. It is quite common to find agencies with fifty or sixty consultants. Most search firms, by contrast, have smaller teams working on higher-value assignments.
How long have the consultants been in the market?
Agency consultants tend to be considerably younger than their search counterparts. Because there is no formal researcher grade, people become consultants as soon as they complete training, and the job carries a high burnout rate. In our experience, the average search consultant has something in the region of twenty more years’ experience than the average agency consultant. If the person you are speaking to has fewer than ten years in the industry, they are almost certainly on the agency side.
How many firms do they work for?
This is probably the clearest marker. Like a stockbroker, the better the agency, the broader the client list. The best agencies work for fifty to sixty firms and will often list them on their websites, something search firms rarely do. Their relationships with these companies tend to be shallower and more transactional: no retainers, no exclusivity, limited insider briefing. In exchange, they offer no ‘off limits’ restrictions, which means there is no natural cap on the number of clients they can serve.
They are also more candidate-driven. I know agency headhunters, particularly on the sell side, who have moved the same candidate four or five times over the years.
Are they working on a retainer?
Agencies usually work on a contingent basis. Because they are not retained, their mindset is shorter-term: for entirely rational economic reasons, they focus on candidates they can place quickly. If initial introductions do not land, they will tend to move on. This is not poor behaviour; it is a function of the incentive structure. Since candidates give agencies no exclusivity, a recruiter could diligently represent someone for months only for that person to accept a role through another firm, leaving the recruiter unpaid for all their work.
There is a relatively recent variant called ‘Retingent Search’, which combines elements of both models: the agency is given exclusivity for a fixed period, typically three months, during which they hold the sole mandate for the role, but there is no up-front retainer and the fee remains contingent on a successful hire.
Are they the sole gatekeeper for this role?
Agencies rarely have exclusivity on a role. Hiring companies typically hold an ‘agency briefing’ with three or four firms simultaneously, brief them all on the requirement, and operate a first-past-the-post system: whichever firm introduces the placed candidate gets paid; the others receive nothing.
Because of this, agencies are often reluctant to name the client. There is a genuine risk that candidates will approach the company directly, or that other agencies will introduce competing names. A recruiter who is unwilling to name the client is almost always on the agency side. Search firms are generally more relaxed about this, unless the search is explicitly confidential.
Because of their short-term perspective and active sales approach, agency headhunters are most useful when you are actively looking for a role. They tend to work on less senior positions, making them more relevant in the earlier stages of a career. For Head of Department or C-Suite roles, mandates typically go either to search firms or are handled directly by in-house Talent Management teams. The right level of engagement depends on your situation:
Do not speak to them.
In this situation, it makes sense to speak to one or two experienced agency headhunters. Make clear from the outset that you want them to seek your permission before introducing your CV to any firm. If they send your details without consent, you have recourse: a complaint to the Information Commissioner’s Office will bring them into contact with GDPR enforcement, and most recruiters are acutely aware of this.
Keep a record of which agencies have introduced you to which firms, and track the outcomes. Because agency relationships with hiring companies tend to be shallow, the fact that one firm has failed to get traction at a particular company does not close the door — a search firm or a different agency may have better contacts there, and it is worth trying.
Treat their advice on specific opportunities with appropriate scepticism. They are salespeople trying to transact, and a second opinion is usually worth seeking before committing to anything.
Speak to two or three experienced agency headhunters and give them a couple of weeks to come back with introductions. If nothing interesting has materialised within a month, they have probably drawn a blank and moved on. Select another couple and repeat the process.
Agency recruitment is one of four channels worth covering when you are active in the market. For the retained search side of the picture, see our guide to executive search firms. For the fourth channel most candidates overlook entirely, see our guide to in-house Talent Managers.
If you would like to discuss how to navigate the asset management job market, or to explore whether a retained search firm may be a more appropriate route for your background, please contact us.
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