Promotion Bottlenecks, Pay Frustration and Why Top Talent Is Leaving
Promotion has traditionally been the most effective retention tool in financial services and is more powerful than pay because it carries pay with it. In 2026, those benefits aren't as powerful as they once were. The industry is becoming flatter: Johnson Associates notes that financial services headcount has grown 77% since the financial crisis and now projects it falling 10–20% over the next three to five years, with "pay pools accruing more to remaining staff" (Johnson Associates, November 2025). Fewer layers means fewer rungs and therefore fewer opportunities to retain your top talent. Gallup's latest global data shows what that feels like from the inside: manager engagement has collapsed from 31% in 2022 to 22% in 2025, a fall Gallup attributes directly to organisational flattening and the cutting of management roles (Gallup, State of the Global Workplace, 2026).
The result in the teams we recruit for in London and Paris is a widening gap between expectation and reality and rising attrition precisely among the people firms can least afford to lose – the team's high performers.
1. Progression Is Slowing
The numbers are stark at the top of the ladder. Goldman Sachs invited 638 people to become managing directors in its most recent class (roughly 46,000 employees), and with the process running only every two years, that is a rationing exercise, not a career path most can plan around. The pattern extends across professional services: EY UK admitted just 59 new equity partners in FY2025 even as profit per partner rose 9% to £787,000, and Deloitte UK cut promotions by roughly a fifth year on year, to around 5,500 from 6,800 (Personnel Today, October and May 2025). The pie is growing; the door to the room where it is shared is narrowing.
Candidates have noticed. Randstad's Workmonitor 2026 found that 72% of employers themselves now describe the traditional corporate ladder as "outdated" (Randstad, January 2026). For an ambitious VP in M&A, the conclusion is straightforward: if the internal maths no longer works, the external market becomes the promotion committee.
2. Pay Is Becoming a Substitute for Progression
Where promotions are delayed, compensation is doing the retention work – and 2026 budgets allow it, but this often has a knock-on effect on reducing the number of external hires that are possible. Johnson Associates projects investment banking advisory bonuses up 10–20%+ this year, on top of the 10–15% rise in 2025 that was already the best round since 2021 (Johnson Associates, May 2026). Yet averaged across financial services, the picture is thinner than the headlines: eFinancialCareers' 2026 survey of some 3,000 professionals found the average bonus rose just 5.3% to $119,000. The money is being aimed, not sprayed — Morgan McKinley's 2026 UK guide notes that the big pay jumps for movers have tempered, with premiums reserved for genuinely scarce profiles in hot sectors like digital infrastructure, FIG or healthcare.
Used this way, pay buys time but not resolution. It creates internal inequities — CIPD data shows 40% of UK employers making counter-offers, rising to 58% in London, while only 45% believe a counter-offer retains the person even for twelve months (CIPD, via Personnel Today). It resets expectations for the next cycle. And it leaves the underlying frustration untouched: LinkedIn's 2025 Workplace Learning Report is blunt that career progress is professionals' number-one motivation and that "when employees don't move ahead, they leave and take their skills elsewhere" (LinkedIn, February 2025). We see this weekly: candidates who accepted a well-constructed counter-offer eighteen months ago are calling us again with the same frustrations, but they've now priced themselves out of a move.
3. External Opportunities Are More Visible Than Ever
The information asymmetry that once protected slow promoters is disappearing. The EU Pay Transparency Directive reaches its transposition deadline on 7 June 2026, and while most member states will miss it — France only sent its first draft bill to unions and lawmakers in March — the direction is set: pay ranges disclosed to candidates, salary-history questions banned, and gender pay gaps above 5% triggering mandatory review (Directive (EU) 2023/970; Personnel Today, May 2026). Employers are moving ahead of the law: WTW found 70% of UK companies plan to share pay ranges with external candidates regardless of legal requirement (WTW, 2025).
A professional who can see, in writing, both the title and the package on offer elsewhere no longer needs a headhunter's call to know they are undervalued, though they are taking those calls too, as they can often provide a more holistic view of what the market is paying. Morgan McKinley finds 49% of UK employees planning to actively look for a new role within six months; in the US, Gallup puts the share of employees watching for or seeking a new job at 51%, the highest since 2015. When internal progression stalls in that environment, attrition is not a risk, but rather a matter of time.
4. Retention Now Requires Structural Change
The wrong conclusion from all this is fatalism. Gallup's study of employees who actually quit found that 42% believed their exit was preventable — and the cost of getting it wrong is roughly 200% of salary for leaders and managers before counting the deals and relationships that walk out with them (Gallup, 2024).
Addressing promotion bottlenecks, therefore, means building progression that does not depend on a title becoming vacant: genuinely expanded mandates — sector ownership, a first coverage relationship, and geographic responsibility across offices — with the scope change made visible internally; honest conversations about timelines, because a credible "eighteen months, and here is what it depends on" retains better than a vague "soon"; and compensation reviews that check internal equity mid-year, before a lateral hire's package calcifies a strong performer's resentment into resignation. Firms that treat progression as an annual administrative event will keep funding other firms' senior classes.
Conclusion
Promotion bottlenecks and pay frustration are now structural features of front-office finance, not a cyclical inconvenience. Structures are flatter, and transparency – regulatory and cultural – means high performers can easily know their value. Pay alone rents their attention; it does not buy their future.
For employers, the task is to offer both recognition and forward momentum and to be honest about where their career can go internally. For candidates, the calculation is equally clear-eyed: the market will tell you what your progression is worth. The firms that thrive in this environment will be the ones that answer that question internally before someone like us asks it externally.
Sources: Johnson Associates, Financial Services Compensation projections (November 2025, May 2026); Gallup, State of the Global Workplace 2026 and preventable turnover research (2024–2026); Goldman Sachs, Managing Director Class of 2025 announcement (November 2025); Personnel Today, on EY UK partner admissions (October 2025), Deloitte UK promotions (May 2025), CIPD counter-offer data (2023) and EU Pay Transparency Directive transposition (May 2026); Randstad, Workmonitor 2026 (January 2026); eFinancialCareers, Compensation and Lifestyle in Financial Services 2026; Morgan McKinley, 2026 UK Salary Guide; LinkedIn, 2025 Workplace Learning Report (February 2025); WTW, 2025 Pay Transparency Survey; McKinsey & Company, Great Attrition research (2022).
