Fa­ther/Daugh­ter Re­cruiters Have a Unique View

The Bond Buyer - - Front Page - By Kee­ley WeB­ster

LOS AN­GE­LES — Erin Bag­gott never dreamed of be­ing a pub­lic fi­nance re­cruiter.

That was her fa­ther, Richard’s, job.

“Grow­ing up, I had no idea what a bond was and lit­tle in­ter­est in any­thing that in­volved fi­nance or num­bers,” Erin said.

She ul­ti­mately changed course, join­ing her fa­ther’s busi­ness and adding her own gen­er­a­tional in­sight as pub­lic fi­nance faces trans­for­ma­tional changes wrought by tech­nol­ogy and dif­fer­ences in the way that mil­len­ni­als work.

As with prior gen­er­a­tions, work­ers in their 20s and 30s are drawn to pub­lic fi­nance be-

cause pro­vid­ing fi­nanc­ing for government pro­jects and school build­ings feels like work­ing for the greater good.

Mil­len­ni­als har­bor no il­lu­sions about the loy­alty of com­pa­nies that could lay them off if a re­ces­sion hits. With tech­nol­ogy skills in abun­dance, mu­nic­i­pal bond com­pa­nies have to com­pete with Sil­i­con Val­ley fi­nance com­pa­nies that are of­ten cul­tur­ally a bet­ter fit for the younger gen­er­a­tion.

Ac­cord­ing to 2015 data from the U.S. Cen­sus, 420,000 full and part-time pro­fes­sion­als work in fi­nance ad­min­is­tra­tion for state and local gov­ern­ments.

A mu­sic ma­jor at the Berklee Col­lege of Mu­sic in Bos­ton, Erin en­vi­sioned a life as a mu­sic in­dus­try ex­ec­u­tive. Af­ter grad­u­at­ing, Erin had a choice: move to Los An­ge­les to work in the mu­sic in­dus­try or stay in Den­ver and work with her fa­ther.

An in­tern­ship with her fa­ther in 2007, and the pull of her Den­ver home­town in the beau­ti­ful Rocky Moun­tains, ce­mented the de­ci­sion.

“It wasn’t in my plans and I never grew up dream­ing of be­ing a re­cruiter, but I en­joyed the in­tern­ship and it some­what or­gan­i­cally turned into a ca­reer op­por­tu­nity,” she said.

“It was en­joy­able to spend time with my Dad when we first started work­ing to­gether,” Erin said.

“For the first time, I saw him as some­one other than ‘Pops,’ and he started to learn what I could of­fer his com­pany as a younger busi­ness-minded in­di­vid­ual.”

It was nat­u­ral, the 33-year-old Erin said, for her to start re­cruit­ing an­a­lysts and as­so­ci­ates who were close to her in age.

She also brought mar­ket­ing skills and the younger gen­er­a­tion’s ease with tech­nol­ogy. She went on to earn a mas­ter’s de­gree in mar­ket­ing from the Univer­sity of Colorado in 2016.

The se­nior Bag­gott said he wasn’t en­tirely sur­prised when his daugh­ter de­cided to work with him at Ex­ec­u­tive Search Place­ments, the firm he founded in 1989.

“I talked about the busi­ness around the house, all the time, as she was grow­ing up; she learned the jar­gon that way,” he said.

Richard Bag­gott worked as a re­tail mu­nic­i­pal bond sales­per­son, trainer, man­ager and bro­ker­age owner be­fore launch­ing the search com­pany.

He started sell­ing bonds in 1978, when they were still bearer or un­reg­is­tered se­cu­ri­ties, and moved into re­cruit­ing in 1989.

His ac­com­plish­ments as a re­cruiter in­clude plac­ing a 22-per­son cap­i­tal mar­kets team with­out word hit­ting the street.

A manag­ing mem­ber of the com­pany the team had aban­doned called Bag­gott up and said: “Richard, you raided my en­tire team.”

Bag­gott said, how­ever, that he doesn’t “raid” pub­lic fi­nance firms. He has just cre­ated a net­work of pub­lic fi­nance pro­fes­sion­als by at­tend­ing con­fer­ences and mak­ing cold calls. When some­one be­comes dis­sat­is­fied with a job, he or she gives him a call.

“If some­one is no longer happy in their job — it is bet­ter for the com­pany, if they do leave,” he said.

Com­pa­nies don’t want dis­sat­is­fied work­ers, and who can blame pub­lic fi­nance pro­fes­sion­als for want­ing to be in a po­si­tion where they can ad­vance in their ca­reer, he said.

The Bag­gotts’ role in the re­cruit­ment in­dus­try gives them a bird’s eye view of the trans­for­ma­tion the mu­nic­i­pal fi­nance in­dus­try is un­der­go­ing.

“Pops can speak bet­ter to this since my an­a­lysts and as­so­ci­ates are pri­mar­ily still gen­er­al­ists,” Erin said. She works with pub­lic fi­nance bankers, bond at­tor­neys, credit an­a­lysts and in­sti­tu­tional sales as­so­ci­ates.

Her fa­ther works with ex­ec­u­tive-level clients.

“It is in­cred­i­bly im­por­tant to be hon­est and trust­wor­thy in this in­dus­try,” Erin Bag­gott said.

She men­tioned can­di­dates who didn’t fully dis­close their back­ground to her, or all the de­tails about why they left a firm.

“That al­ways screws them over and ru­ins what might have been the per­fect op­por­tu­nity for them, if they were only up­front and more hon­est,” she said.

Many of the changes wrought in the muni in­dus­try have oc­curred as a re­sult of the con­sol­i­da­tion of firms, Richard said.

“Erin came up with a schematic of firms over the past 15-16 years, or so,” Richard said. “All of those firms have ei­ther gone out of busi­ness or con­sol­i­dated into four firms — that is a loss of 96 firms.”

When Richard first started in the busi­ness, he said, there were eas­ily 350 firms across the U.S. of vary­ing sizes. To­day, many of the local firms have been ab­sorbed by larger firms.

“That is one of the big­gest changes I have seen — large bro­ker-deal­ers have turned into bank hold­ing com­pa­nies,” he said.

As a re­sult, the muni busi­ness is not nearly as prof­itable as it once was.

“When I sold bonds, it was not un­com­mon to see $20 to $25 spreads in most of the bonds in the sec­ondary mar­ket,” Richard said.

“To­day, you are see­ing $7 and $8, the spreads have just nar­rowed tremen­dously.”

The se­nior man­agers or manag­ing direc­tors who are now be­gin­ning to re­tire are used to see­ing seven-digit com­pen­sa­tion lev­els, and they are not see­ing that now, he said.

The per­son­nel re­main­ing in pub­lic fi­nance changed dur­ing the in­ter­net phase, Richard said.

“We had a lot of bankers with just eight-to-10 years’ ex­pe­ri­ence leav­ing and go­ing to in­ter­net com­pa­nies,” he said. “And, even to­day, Google, Ap­ple, and many of th­ese com­pa­nies are go­ing af­ter good pub­lic fi­nance an­a­lysts.”

Those an­a­lysts have spread­sheet train­ing — and that ex­pe­ri­ence is trans­fer­able, Richard said.

“Good an­a­lysts are hard to find now. It is a shame that so many are leav­ing, be­cause with se­nior bankers re­tir­ing there are spots open­ing up and there will be great op­por­tu­ni­ties in pub­lic fi­nance,” he said.

The money may not be quite as good as it used to be for prior gen­er­a­tions of bankers, Richard said, but with the con­sol­i­da­tion, there will not be as many bankers to cover clients, so that might re­sult in big­ger pay­checks for those who choose to re­main.

And the coun­try’s in­fra­struc­ture needs a lot of work.

“Schools need to be built, trans­porta­tion, higher ed­u­ca­tion,” Richard said. “With­out the per­son­nel and com­pa­nies, the is­suers do not have as many peo­ple re­spond­ing to their RFPs. That will help spreads — but only time will tell.”

Changes wrought by tech­nol­ogy-driven firms like Neigh­borly are breed­ing fear that ex­ist­ing jobs in the in­dus­try will be elim­i­nated, said Susan Mun­son, a manag­ing direc­tor and se­nior port­fo­lio ad­vi­sor at Government Port­fo­lio Ad­vi­sors.

“There are some peo­ple who are con­cerned that those firms are try­ing to elim­i­nate the need for pub­lic fi­nance peo­ple, by cre­at­ing tem­plates for bond doc­u­ments, so they can cir­cum­vent The Street,” Mun­son said.

Those fears could be un­founded, said Mun­son, though she ac­knowl­edges that she does not know “how that all plays out.” She thinks the in­dus­try will al­ways need peo­ple.

Mun­son, founder of the Or­ange County, Calif.-based Fixed In­come Academy who re­turned to bank­ing this sum­mer, said she has “be­come in­creas­ingly in­ter­ested in [hir­ing trends] over the years as we see first-hand how stu­dents and grad­u­ates are us­ing our pro­grams to pre­pare cur­rent and fu­ture gen­er­a­tions for jobs in pub­lic fi­nance de­part­ments.”

“As a gen­er­al­ity, I am see­ing a lot of op­por­tu­ni­ties in Cal­i­for­nia, Texas and New York; and those cities with credit prob­lems like Chicago and Detroit have been more dif­fi­cult for all of our clients and can­di­dates,” she said.

Erin Bag­gott chose a ca­reer in pub­lic fi­nance re­cruit­ing along­side her fa­ther at Ex­ec­u­tive Search Place­ments over one in the mu­sic in­dus­try.

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