Is the war for talent in financial services set to resume?

Does the drop in Australia’s unemployment rate translate into more opportunities in the financial services sector, and is the war for talent about to recommence from where it left off before the onset of the global financial crisis? Caroline Munro investigates.

Optimism about the drop in Australia’s unemployment rate to 5.5 per cent in December 2009 may be justified in some quarters, but this is not necessarily a forerunner to a boom in jobs within the financial services sector.

Employers, employees and hopeful candidates in this industry may be better off treading carefully while they wait to see what happens next.

Austrade, quoting findings from the Australian Bureau of Statistics (ABS), recently stated that the financial sector is the largest contributor to Australia’s national output, employment and economic growth.

It stated that the sector continues to grow more rapidly than most other sectors of the economy and directly employs about 400,000 people (accounting for 3.7 per cent of total employment).

In terms of growth, Austrade stated the finance and insurance sector is one of the highest performing industries.

According to The Olivier Job Index, job advertisements for financial services were up 4.3 per cent in December, and financial planning in particular experienced a boost.

These statistics may spark some optimism, but not everyone agrees that things bode well for job seekers in 2010.

Let’s wait and see

Some of the bigger companies Money Management approached were not keen to comment on their recruitment plans for 2010.

Some said they are still consolidating or restructuring, while others simply said they did not comment on such issues. The more cynical may point out that perhaps there’s no good news to tell, but maybe they are adopting a ‘wait and see’ approach.

The financial reports of some companies have shown stronger than expected profits, leading to more speculation that the financial services industry will boom in the year ahead.

However, investment researcher Stephen van Eyk said share markets are currently in a ‘sweet spot’ ahead of further volatility.

Van Eyk said that when things go bad in the market, companies would naturally lower costs, and may even cut more than they need in anticipation of things getting even worse.

However, when things improve, "this may give them an inflated profitability figure for a while," he said.

He agreed that perhaps companies realise that their profit figures may be exaggerated due to a lowering of costs as opposed to an increase in demand, and know that things might level off later on. As a result, he agreed they might opt to hold off building up staff numbers.

Finance Sector Union national director Rod Masson described the current environment in the sector as "schizophrenic".

"I think there’s still a concern within the industry that the full fallout of the financial crisis, in terms of people being able to manage debt and the like, has not been realised. So whether that will have an effect probably needs to be thought about a bit," he said.

Added to that, there are still ongoing restructurings and acquisitions in the pipeline.

"Suncorp continues to restructure given its poor performance and its need to realign its operations; the Westpac and St George merger is moving ahead at full steam and they’ll be looking to produce the cost savings or the so called ‘synergies’ from that merger; and of course the Commonwealth Bank and Bankwest merger is still ongoing," said Masson.

"But there’s also an emerging view from the industry that the time is ripe to start reinvesting in people and in skills because there is a rebound," he added.

"It may be that there is still tentativeness about full-scale hiring, because they want to wait and see the wash-through of the GFC in terms of lending and interest rates. But I think in general there is now a view being formed that they need to start planning for their capacity into the future as the economy starts bouncing back."

Recruiters’ outlook varied

Recruiters have a varying outlook on the year ahead and the level of opportunities that will become available. Although there is consensus that it will improve to a point, this may not translate to a concerted recruitment drive across the board.

Ashton Bilbie, founding partner and director of financial services recruiter Profusion Group, is among the more optimistic recruiters. He expects strong growth in 2010 — so much so that the company is building on their own capacity to meet demand.

"We’ve just had one of the strongest quarters we’ve ever had to finish off the 2009 year," said Bilbie.

"We’re expecting 2010 to be a very strong year for the Australian financial services industry."

Although The Olivier Job Index reflected an increase in financial planning roles, managing director of eJobs Recruitment Specialists, Trevor Punnett, said his company’s own statistics show that while the number of roles in many areas of financial services may have gone up, the number of financial planning roles (which includes client services officers, paraplanners, financial planners or practice managers) actually dipped from October highs in November and December.

This was seen as a result of practices slowing down towards the end of the year to take stock and decide what the plan of action would be in 2010.

He said expectations of job increases in the financial services industry in 2010 is merely speculation, and a result of people being in a bullish mood following a difficult year.

"I’ve been reading articles that are saying job numbers are going up and demand is rising, but I have yet to see the evidence of that in the numbers," said Punnett, adding that since November 2008 job numbers have halved and have consistently headed downwards.

"They started to go up in October 2009 but they were down again in November and December," he added.

"However, I am bullish and I do see it picking it up as well, but for different reasons — it’s just that it’s a new year and everyone is looking to make the most of it by building on their businesses."

Peter Dawson, of newly formed advisory consulting firm The Freshwater Partnership, said his company sources talent at the senior executive levels — and he believes there will be plenty of opportunities for candidates looking for these types of roles.

"I think we’re going to see significant growth over the next three to six months," said Dawson.

He said a lot of companies were "dusting off their business plans" towards the end of 2009 and taking on people in the final quarter, readying themselves for further expansion in the first quarter of 2010.

"And we’re seeing those roles coming to fruition now," said Dawson.

Compared to the same time last year, where many companies were placing freezes on recruitment and were even looking to downsize their executive management, he said that a number of companies in the market place are looking for senior people.

"We can see that the impetus that was growing will continue through the year," he added.

Where the opportunities lie

In considering which opportunities are out there, Bilbie said the insurance sector has remained steady during the global financial crisis (GFC), while asset management and advice roles increased in the middle of 2009 and have remained strong.

"On the advice side, there’s been a number of head office roles and a lot of financial planning and paraplanning roles," he said.

"But interestingly, there seems to be a real focus on education at the moment — with a number of dealer groups recruiting for training and learning and development roles. I guess this is in line with their ongoing commitment to beef up the educational standards of their advisers."

Bilbie said they are also finding it difficult to fill the distribution/sales and marketing roles, while they expect that businesses will be on the lookout for the technology savvy as they seek to build their profiles again and get their operations up-to-date.

On the advice side, he said there is a definitely a preference for experienced advisers.

"A salaried adviser with a book can get a job in two seconds, and there certainly seems to be more demand for paraplanners," said Bilbie. "Our financial planning consultants are extremely busy at the moment."

Macquarie Group was one of the firms that saw a large number of redundancies in the wake of the GFC, but Macquarie Private Wealth’s wealth management business is one division that always has its feelers out for quality advisers.

Executive director and head of wealth management, Jane Watts, said that they would continue to selectively recruit advisers within their offices across Australia.

"Our wealth management business focuses very much on bringing quality advisers into the business, rather than quantity, as a key metric," she said.

"This approach held us in good stead throughout the challenging period in financial markets and will continue to do so."

Suncorp is another company that saw huge redundancies, and it continues to engage in a consolidation process.

But there are opportunities for quality professionals. Suncorp’s group executive of human resources Scott Alomes said the priority at the moment is to retain employees, and that any recruitment done is aimed at attracting specialist skills.

The war for talent begins again

One of the main challenges faced by companies is a skills shortage, and this is not peculiar to the advice sector. Companies may be adopting the ‘wait and see’ approach, but some argue that so too are candidates.

Bilbie said when it comes to filling the more experienced roles across the board, in some areas such as funds management they are finding it extremely difficult to find the right people for the job.

"Sales people that have the funds management experience but also adviser contacts, for example, are extremely rare," he said.

Punnett said that financial planning principals have a perception that there are a lot of people out there willing to take the positions that they might offer, but he said in reality this is not the case.

"The qualified people are already employed and there is not a lot of turnover because candidates are still waiting to see what happens. Now that the New Year has come, perhaps they will start looking again," he said.

Bilbie said the "desperation level" is lower as candidates realise there are more options available.

"Now that there are a few options for qualified people with experience, they can now be a bit more selective about what kind of institution and what kind of role they will consider," he said.

"I think the thing to remember is that we are certainly expecting high turnover in February/March, following bonuses which will be paid by many of the global businesses that run on the calendar year," he added.

"I think to some degree people have been ‘prisoners’ in roles that they haven’t been able to move out of. But when they get their bonuses they will look to resign and move on to another institution."

Bilbie believes that will be the start of a kind of musical chairs scenario.

Dawson agreed that the sector would revisit the war for talent as businesses battle against the scarcity of people with the right skills and experience for senior roles.

"There’s no doubt about that," he said. "It’s going to be a testing time to get the talent that you’re after in the marketplace."

Even at the entry level, Bilbie said that although there seem to be opportunities for graduates and a lot of activity at that level at the moment, his company is finding that on the financial services side there are very few candidates.

Dawson said that while mergers and acquisitions expected in 2010 may heighten concerns of more job losses, they do help to alleviate the problem that companies have in sourcing talent.

"What we have found is that through these M&A activities (and some of them are quite substantial) the companies that are looking for talent move quickly to pick up executives who are leaving, and that’s from middle management to senior management.

"Good people who come out of those organisations aren’t sitting on the bench too long — they are actively sought out," he said.

Damien Green, chief executive of life risk specialists at AIA Australia, agreed that the war for talent will heat up in 2010. He said there are a few people out in the market due to consolidation at some of the life insurers.

"But generally, I think the Australian market is very competitive," he asserted. "We’ve got some strongly growing organisations, and organisations such as ours and others have to be on their toes in terms of employee value propositions."