Client Affairs

FEATURE: The Current State Of The “Talent Crisis” In Wealth Management

Amisha Mehta, Assistant Editor, London, 21 October 2015

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As the landscape of the global wealth management industry continues to evolve, concerns of an acute talent shortage are mounting. We spoke to recruiters and wealth managers to understand their perspective on the "talent crisis".

London is synonymous with terms such as “financial hub” and “digital powerhouse”. The city overtook New York as the finance capital of the world, according to this year's Global Financial Centres Index, despite concerns about the ongoing march of regulation harming the UK's competitiveness. Still, talks of a “talent crisis” persist in the wealth management industry and the challenge of finding skilled employees is now apparently even shaping merger and acquisition deals. According to a recent PricewaterhouseCoopers global CEO survey, a quarter of M&A activity is now driven by skills shortages as companies are making acquisitions first and foremost to buy the right people.

Mark Somers, who founded the Somers Partnership, a UK-based recruitment firm specialising in the wealth management industry, told WealthBriefing of the talent crisis in private banking specifically.

"The whole industry is rather like a soup bowl – broad and shallow in terms of talent. The private banking sector is growing so fast but it takes time to build value; you need to have been doing it for a long time," he said.

At the Somers Partnership, private bankers are divided into three categories: "the rainmakers" (the profitable ones) who Somers says make up just 10 per cent of the market, "the lawnmowers" (those that are content to manage existing clients and don't go out and get new business) who make up 80 per cent, and "the well poisoners" (active loss-makers who move from bank to bank) accounting for the remaining 10 per cent. The struggle of course, he says, lies in finding the rainmakers.

A culture of compliance has been brewing for some time now. Regulators have widened their clampdown on tax evaders. The UK chancellor, aka finance minister, George Osborne, for example announced in the Summer Budget that the government had set aside £750 million ($1.14 billion) for HMRC to raise £2 billion in its battle against tax evaders.

While more regulation may mean more headaches and drudgery for the wealth managers and financial institutions affected, it has fuelled demand for compliance professionals. Rising demand for compliance skills, coupled with the shortage of talent in this space, has pushed up salaries, making these roles both sought-after and hard-to-fill.

The average salary and bonus for compliance professionals at managing director level in London’s asset and wealth management sector was £107,617 in June 2015, according to data from global recruiter Morgan McKinley, and competitors have been willing to offer strong compliance candidates a salary increase of up to 30 per cent to move.

“Due to adjustments in recent regulation (UCITS V, AIFMD) affecting the asset management space, businesses have had to implement new controls, policies and procedures to ensure the firm remains compliant. After recent visits, the regulator has advised a number of businesses to increase their compliance staff,” said Ben Harris, manager at Morgan McKinley’s compliance desk. “The more niche the policy understanding required, the lesser the supply of that skill set. This simply creates a war on salary and inflates everything.”

In the first half of this year alone, HSBC, which provides private banking among its services, said it added more than 2,200 compliance staff.

“Top bankers who can juggle with ease business development and sharper compliance issues are a scarce resource,” Olivier Deslandes, head of human resources at Lombard Odier, told WealthBriefing.

Gina Le Prevost, chief executive of AP Group, which provides global recruitment services for banking, wealth management and finance industries, also highlighted the predicament, stating that it was becoming increasingly difficult to find suitable candidates to fill roles in compliance, risk and other jobs that involve onboarding of new business. Qualifications in compliance and risk are key now and essential requests from clients, she said.

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