How to handle the City hiring freeze
Hiring in the asset management industry is on pause while the uncertainty about Brexit and the pandemic spreads. Pippa Stephens talks to hiring managers and recruitment consultants to assess what to do to find work or a new position in the current environment.
More than a trillion pounds worth of assets; thousands of jobs, hundreds of companies; Britain’s loss after Brexit is the EU’s gain.
Coupled with the financial pressures of COVID-19 and the challenges of hiring during social distancing, the City of London is feeling the pressure. This is particularly evident in the asset management industry, where movement is minimal, according to research by the industry body the Investment Association (IA).
It found employment levels were largely unchanged since the end of 2018, in its most recent annual report into investment management in the UK. But on a broader scale, and Europe-wide, there is movement, such as to Luxembourg, which has seen fund managers like M&G move assets there from Britain.
It’s not just Luxembourg: cities across Europe, namely Paris, Amsterdam, Dublin and Frankfurt are likely to see a boost in their financial services sectors because of the referendum. Recruiters say that Brexit, along with COVID-19, has had a major impact on hiring in the City.
The shape of the industry
In a joint statement to ICAEW, Barclay Simpson recruiters David Hornsby and Ben Carter-Fraser said they saw a 35% drop in asset management recruitment, in governance, during the second quarter this year, compared to the first quarter.
Mr Hornsby, who works for the company’s investment management arm and Mr Carter-Fraser, who leads its European team, said recruitment is now at 40% below pre-pandemic levels.
Firms were reticent to hire due to uncertainty about Britain’s future relationship with the EU and with the pandemic, they said.
Compounding the pause in hiring is the concern that EU regulators - especially in Dublin and Luxembourg - may renege on agreements about staff and company infrastructure, and push for greater investment, which could hit businesses when profits are tight.
Companies are also “mindful that a level of duplication will likely be required between UK and EU teams at least initially” and are looking to avoid unnecessary additional hires, said Mr Hornsby and Mr Carter-Fraser.
Such reticence is leading to an intensely competitive industry. Director at recruitment firm Mason Blake Michael Henning said he’s seen an increase of up to threefold in the numbers of candidates applying for new jobs.
He said: “A lot of people are unfortunately out of work in the asset management industry. We have had a lot of mergers and acquisitions... and more recently because of COVID-19.”
With more time at home, due to unemployment or home office, people are likely to be evaluating their career, and have more time to apply for other jobs, and to be interviewed.
Adaptation and the new normal
Indeed, asset managers shouldn’t be put off looking for new jobs at this time, if they want to.
“There is movement, absolutely,” said Richard Ker, asset and wealth management partner at headhunter Odgers Berndtson. “There are some fantastic opportunities to move in this market.”
Firms may capitalise on strong fund flows such as equities or private markets, he said. They may also be focusing on succession planning, making strategies for passing on leadership roles internally to employees.
“We’re being asked to consider internal candidates more than we were historically which is a very positive sign for the talent development,” he said.
And companies were increasingly willing to hire people at a distance, said Mr Hornsby and Mr Carter-Fraser.
How to get ahead: AI, fund performance and regulation
Whether looking internally or externally for jobs, asset managers can hone their skills to be in with the best chance of excelling in their career. Mr Ker said for those already in the industry, putting clients first was the best move.
“How can you differentiate yourself. It’s by the best returns, the quality of investments, client relationship management skills and being able to offer a tailored product to those clients. Where you can bespoke as much as possible, that helps,” he said.
Technology is another key area for career progression, said Mr Ker, and professionals should be across how it could help differentiate clients and make more effective use of their data. The ways artificial intelligence could bolster research were also paramount, he said.
Along with being across technology, Mr Hornsby and Mr Carter-Fraser advised:
- Experience managing teams remotely;
- Knowledge about EU regulation on data protection and cyber security with the home office boom;
- An awareness of mental health issues, ensuring management style reflects the changing needs or a remote workforce juggling home and work life at the same time.
Ways in amid the pandemic
Getting a job when already employed tends to be a more straightforward task than starting afresh at the best of times.
The current situation with Brexit and COVID-19 means it’s especially difficult now, said Mr Henning.
He advised candidates not to sit back and wait for the right role to come along, and to consider jobs they might not have previously.
“Try to use your network as well, people you know who may be already working at companies. Even if they don’t have anything, it shows you are being proactive and that helps,” he added.
The recruiter said lots of people who come to him like the idea of research and corporate management but starting out there could be very competitive. He suggested looking at areas like distributions or operations, in jobs such as junior product specialist or fund manager assistant.
“As long as you’re in the right sort of company getting the right sort of skills there’s no reason why you can’t use that as an opportunity to move across,” said Mr Henning.
Mr Ker advised those starting out in a new role: “Be a sponge for as long as possible and absorb as much intelligence as you can from seniors - informal catch ups and group discussions will be important.
“There has been a huge swathe of new qualifications and accreditation around environmental social governance. Be as proactive as possible and access as much online learning as you can.”
Settling in the EU post-Brexit
Everyone working in the investment management industry, whether they are moving jobs or not, will be thinking about Brexit, as well as the pandemic.
Plans will have been underway to deal with it for quite some time, said Mr Ker. Preparations will have included setting up offices in Dublin, Luxembourg, Amsterdam or whichever EU centre suits best, liaising with regulators on the ground and putting in place the roles required around risk compliance and investment, he said.
Now, firms would be “bedding in those new structures and the governance for them to continue doing business post-Brexit,” he added.
Mr Hornsby and Mr Carter-Fraser said such structures are likely to be based on a “reasonable worst-case scenario” of no deal but with portfolio management in the UK from EU centres allowed.
They said other factors to think about were legal and trading arrangements, how to distribute and market products in the EU after January 1, 2021 and how to prepare for EU data regulation.
What’s likely to happen with recruitment after Brexit
Mr Hornsby and Mr Carter-Fraser said in the coming months, younger EU professionals may find working in London or other major UK cities less appealing in lockdown Britain, and wages could also drop if the pound sinks against the euro, exacerbating the trend, the recruiters said.
They added: “With large banks also transferring capital from London to the EU we may see younger more mobile professionals deciding to move back to mainland Europe so there could actually be a shortage of well qualified junior to mid-level professionals left.
“This could continue the trend we have seen for fewer hires of EU citizens since the Brexit vote which means there could be more opportunity for ‘home grown’ talent.”
Although London has long been a centre for asset management, if the pool of talent dries up, more business could move operations to mainland Europe, they added.
Luxembourg vs London
At a time when so many funds are moving assets and personnel to the EU, what are the career benefits of a centre like Luxembourg, versus London for an asset management professional?
For people in their mid to later career, working in an EU centre would mean being a bigger cog in a smaller wheel, affording greater oversight, responsibility and exposure to a different regulator than back at home, Mr Ker said.
This kind of experience will be vital for junior and mid-level candidates, particularly in regional leadership and advisory roles, said Mr Hornsby and Mr Carter-Fraser.
And such work may even pay better than in London, said Mr Henning.
There are less than two months to go until the UK must start life on its own - and potentially without a trade deal with the EU. With a second lockdown well underway across the country, it’s unlikely the hiring situation in the City will change any time soon.
But it doesn’t have to be a time for despair, if it be a chance for asset managers to streamline their skills and boost their funds’ performance.
And if fund managers can get through this turmoil, it is likely the future will be a comparative doddle, whether on Threadneedle Street or the Avenue de la Liberté.