They don’t want your money

The official national unemployment rate has fallen below 5 per cent, and a recent survey conducted by PricewaterhouseCoopers (PwC), along with feedback from recruitment industry representatives, suggests this low rate of unemployment is mirrored in the financial services sector.

In financial circles, much is written about the external market related issues and the trends affecting industry players, but this is only a small part of the story.

Some of the most important aspects impacting financial businesses are internal recruitment issues, with such concerns ranking high on many organisations’ list of priorities.

Research conducted by PwC in its 2006 Australian Investment Management Survey indicates that loss of key personnel ranks third in a list of the top 16 factors that present the greatest threat to investment managers’ profit objectives.

It also found that 55 per cent of those surveyed selected retention of key staff as one of the most important measures to evaluate their investment performance.

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These findings and others were confirmed in conversations with a number of recruitment professionals who focus on the finance sector.

According to Financial Recruitment Group managing director Judith Beck, one of the key trends she is seeing at the moment is organisations becoming increasingly aggressive in attracting candidates, even to the point of making counter offers when candidates have already accepted roles with a competitor and are within their probationary period.

“In a market that is increasingly favouring job seekers rather than employers, candidates are free to pick and choose between roles,” she says, but warns that such practices can be detrimental to their ongoing employability and can hurt the reputations of both the employer and the prospective employee.

To address these cut throat and ethically questionable tactics, Beck suggests that employers need to ensure they are constantly checking the bedding-in process of new employees throughout their probationary period, not merely waiting until the end of the period when a formal review is usually conducted.

Profusion Group head of financial planning Alison Loader agrees with the PwC survey findings and with Beck’s view that the current market favours employees.

“In the current environment, employers are becoming more inventive in order to attract staff,” she says.

Some of the innovative approaches she has seen are companies offering guaranteed bonuses to new staff, and ‘softer’ key performance indicators during the honeymoon period.

However, other recruiters urge caution in this regard because of the potential damage that can be done to the business and the individual.

Hancock recruitment managing director Thomas Hancock warns employers should not temporarily relax the benchmarks they set for new planners and advisers because it can create a false sense of confidence for the new employee.

He argues that this can give both parties the false impression that they are already performing to the expected standard, whereas further development or coaching may actually be required.

Speaking anecdotally, Hancock identifies a number of other trends within the industry.

He says he is seeing a decline in candidates’ responses to advertised roles.

“Ads are not working as well as they used to,” he says.

He also points to the rapidly approaching year-end period, referring to it as ‘bonus time’, when employees in financial roles are approaching the time when companies traditionally pay an annual bonus.

“It’s bonus time, people are more loathe to move jobs.

“Timing is an important component, December/January are very poor times for recruiting senior roles,” he says.

But he says that often, for employees who are disappointed with their annual bonus, this can be the trigger for a job change.

Another trend he identifies is a growth in roles offered in the Asian market, with the area experiencing a boom at the moment.

“The globalisation of jobs is affecting our role as recruiters,” he says.

Specific areas where they are finding it hard to fill roles are in quantitative roles and in listed property trust (LPT) roles.

With a number of companies beginning to set up operations within Asia as a way of getting staff on the ground in the greater Asia Pacific, there are many roles opening up here.

In particular, Asian roles within LPTs are in high demand, and candidates with experience in this area who also speak an Asian language are benefiting.

Hancock says that while some aspects of the industry are showing significant shortages, such as LPTs and quantitative, others are quite full.

“There are niches — some have space, others don’t.”

Aberdeen associate director Stuart James agrees there is strong offshore growth in Australian finance positions.

Within Asia Pacific, Aberdeen has a presence in Singapore, Thailand, Malaysia, Japan, Hong Kong and Australia.

He says it has had massive staff growth in these areas.

“It’s been massively [increased]. Malaysia opened last year, Bangkok has been open two-and-a-half years, we opened the Japan office a few months ago, but we’re moving into Hong Kong now as well.”

Singapore is its traditional staff base within the region, which opened originally with five staff.

“It’s now got a few hundred staff, and it’s growing rapidly.

“We’ve seen a lot of demand in Asia,” he says.

This is fuelled not only by Asian-based investors but also by demand from the US and Europe for investment opportunities in the Asian marketplace.

“A lot of our time is spent servicing our offshore clients, so it’s a huge part of our business.

While Aberdeen has had great success in attracting quality staff to its offshore positions, this success has not been universal.

Hancock says there are indications that some of the approaches adopted by companies to try and retain staff are no longer working.

One of the more recent ways firms were trying to encourage staff to stay on board was by offering equity in the company, but Hancock says this is not necessarily working any more, and neither is the offer of more generous bonus payments.

“On a scale of one to 10, money and bonuses are rated more around a five or a six … people value the cultural fit and intellectual challenge more.

“Money is not the key driver any more,” Hancock says.

The field of paraplanning is a good example of the need to offer more than just a competitive salary and bonus.

Paraplanning roles are traditionally seen as entry-level positions, with the average career lifespan in these positions in the vicinity of four to five years.

As such, in order to retain quality staff in this specialisation, employers have been required to think outside the square.

Loader says clients who are more successful in retaining staff within their organisation are increasingly viewing it as a pathway, a learning role.

She says they need to offer a more structured, progressive career path that clearly shows the possible career trajectories for successful applicants.

While prospective financial services employees are increasingly looking at non-monetary factors before deciding on the role that is right for them, employers are also thinking about such things.

Increasingly, senior employees in the finance sector are placing greater emphasis on roles that position work-life balance as more important than a higher salary.

This imperative to achieve a good fit between the company and the employee is a process that works both ways.

Centric Wealth managing director Michael Pillemer says he looks closely at individuals’ cultural fit with the organisation before hiring.

According to Pillemer, appropriate vision for what they want to achieve combined with strategic alignment with the organisation’s objectives are crucial factors.

He says when the business was established around five years ago, it was set up in such a way that management was able to handpick staff that were an appropriate fit for its business model.

Another trend identified within the PwC research was a tendency for more organisations to now look at ‘poaching’ whole teams rather than individuals, because of a recognition that an individual star performer may find it hard to replicate their performance at a different organisation.

This rings true for Pillemer, who says Centric has a strategy that involves acquiring financial adviser groups in order to grow the scale of the business.

Using this approach, it looks at advisory businesses with a minimum of at least $1 million in revenue for acquisition.

He cites a recent example where Centric acquired a firm of 35 advisers, and says they have adapted this hiring method as a valuable part of its recruitment process.

It is also important for financial services employers to realise that there are two distinct profiles that distinguish more junior employees from those who are more senior.

For the lower end of the demographic, those employees just starting out in the industry, career development is king.

“This group of employees demand progression plans and mentoring to spark their interest and hold them in a position for longer,” Hancock says.

He points out an interesting phenomenon when he says that while being mentored is important to younger employees, in many cases older employees also want to be the ones providing the mentoring, once they have the benefit of knowledge and experience acquired from years in the industry.

“Your needs change as you go on. You go from wanting to be mentored to actually being a mentor,” he says, with many senior staff deriving great satisfaction from mentoring more junior staff.

Recognising the different career checkpoints of employees is very important, Hancock says.

For example, knowing when a senior staff member has reached the zenith within a company.

Instead of simply allowing senior staff who exhaust the level of promotions available to them within any given company to stagnate and eventually leave, Hancock says the employer should have an up-front discussion with them and identify what they want to do.

This increased level of transparency is also important from the employer’s viewpoint.

Another by-product of the current environment is a need for employers to be more receptive to the needs of individual candidates.

Interviewees should be completely honest with prospective employers about what they want from a role.

“In the current environment, employers are much more receptive to that,” says Hancock.

“It’s just about being a smart employer.”