The financial services industry has faced a challenging trading environment over the past two years. With pressure mounting to do more with less, many firms are scrutinising every aspect of their operations, including hiring strategies. One dilemma that often arises is how to approach a hiring decision when a candidate sourced via a recruiter is in competition with a direct applicant or someone referred internally. While it may be tempting to favour the seemingly easier or cheaper option, letting bias cloud these decisions can have long-term repercussions.

Firms turn to recruiters for many reasons, but central to their value is access to talent that goes beyond the obvious. A recruiter’s role isn’t just to send CVs—it’s to bring insight, networks, and expertise that ensure firms see the very best candidates in the market, not just those readily available in it. In a down market, this breadth of choice can be invaluable.

Recruiters also specialise in identifying individuals who offer a strong cultural fit or possess hard-to-find skills. These candidates are often not actively looking for a role, and without the recruiter’s intervention, firms might never encounter them. By focusing on talent that complements existing teams while challenging them with new ideas, recruiters bring the diversity of thought that businesses need to thrive in turbulent times.

When faced with the choice of a direct applicant, many hiring managers may instinctively lean towards the familiar. It could be a referral from a trusted colleague or someone with whom they’ve worked before. While this may seem like a safer option, it often perpetuates sameness within teams.

The danger is clear: hiring individuals who think and work like the existing team can lead to groupthink, stifle innovation, and limit the firm’s ability to adapt to changing market conditions.

Diversity isn’t just a buzzword; it’s a proven driver of success. Bringing in individuals from outside existing networks can infuse a business with fresh perspectives and best practices, often learned in different environments. In a market as dynamic as financial services, new ideas are essential for staying ahead.

It’s understandable that firms facing cost pressures may view recruitment fees as a potential saving. However, this perspective risks sacrificing long-term value for short-term gain. Sir James Goldsmith once said, “You can sacrifice the long term for the short term, but one day the long term arrives.” This is particularly apt in recruitment. Hiring the best candidate can generate far greater returns than the cost of the recruiter’s fee, while hiring the wrong person—or a less capable one—can cost a business far more in missed opportunities and underperformance.

Recruiters provide a second opinion, offering invaluable context on the wider talent market. They understand what good looks like and can benchmark candidates against both market trends and a firm’s specific needs. This external perspective is often the difference between hiring a good candidate and hiring an exceptional one.

From the candidate’s perspective, working with a recruiter often feels safer and more professional. Recruiters offer access to a wider range of opportunities, but just as importantly, they provide impartial guidance. Many candidates trust recruiters to find the best cultural fit for their skills and career goals, something a direct application process often overlooks.

Recruiters also play a crucial role in negotiation, representing the candidate’s interests in a way that keeps the conversation constructive and focused. This ensures that the relationship between the candidate and the hiring manager starts on the right footing. Even after an offer is accepted, recruiters can assist with onboarding, helping to smooth the transition and set the candidate up for success.

The financial services industry thrives on innovation, adaptability, and the ability to see opportunities where others see challenges. Recruitment decisions should reflect these values. While it may be tempting to prioritise familiarity or cost savings, the long-term benefits of finding the right person for the role—someone who brings fresh perspectives, challenges the status quo, and fits the culture of the firm—far outweigh any short-term considerations.

By engaging with experienced recruiters, firms gain not only access to top-tier talent but also a strategic partner who understands their business and the market. This partnership ensures that hiring decisions are driven by insight, expertise, and a focus on long-term success.

For firms trying to navigate today’s challenging environment, every hire counts. Choosing the right talent can be the difference between surviving and thriving. As financial services recruiters, we’ve seen firsthand how the best decisions are made by those who take the time to consider every angle, challenge their assumptions, and think about what’s best for the future of their business.