Growth in financial services recruitment defies market gloom

Bela Moore and Andrew Tsanadis find some pockets of the financial services industry are on the hiring hunt, while others have brought their recruitment activities to a halt.

The financial services industry is big and complex, comprising many sectors driven by their own dynamics, often independent of broader market trends.

While legislative changes, including the Future of Financial Advice and Stronger Super reforms, present many challenges for the industry as a whole, many sectors are quickly moving to seize the opportunity for growth.

A classic example of this is the Government’s push for simple advice.

Ever since scaled advice was first mentioned, virtually every institution with enough scale has moved into this space, with AMP and Mercer leading the charge.

This, recruitment experts say, is why large institutions are still on the hunt for back-office staff as well as those who will face the clients in need – financial advisers.

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The life insurance sector has defied all market trends in recent years and has continued to record remarkable growth, which is also reflected in recruitment.

But at the other end of the scale sit boutique licensees who have been hit hard by the legislative change, having to switch to the fee-for-service remuneration model for their advisers and dump commissions.

This has made their holistic advice offering all the more expensive at a time when clients continue to focus on cost.

Fund managers, too, have experienced a tough period ever since the global financial crisis.

So it is safe to say the recruitment market ground to a halt for some areas of the financial services industry, while pockets of opportunity sprung up in others, according to the industry experts.

Money Management’s Salary Survey 2012 found wealth management was an area of particular focus for an industry facing increased scrutiny and segmentation of advice roles.

Compliance and risk specialists continued to be at the forefront of most boutique and institutional hiring efforts, while insurance flatlined but did not contract, appearing to have sidestepped much of the impact of the global recession.

I don’t think career change is driven so much by salary as it was three years ago.
 

Banking, superannuation and insurance sector data from SEEK's May quarterly report revealed funds management, risk consulting and underwriting advertisements were all up significantly – however, the big four and independent financial advisers were on the hunt for experienced financial planners, according to recruitment houses.

At the beginning of the year, candidates asked employers for training, job flexibility and a defined career path.

The industry appears to have responded with more cases of jobs tailored to the individual’s skill requirements or family/work balance.

While high-level executives and the industry at large face a contracted pool of jobs, retention has become even more important to employers trying to hang on to the most talented staff in a depressed recruitment market.

Higher net ground

A turbulent six months in the financial services industry created pockets of growth and slow signs of recovery for the finance employment market, according to recruitment experts.

Hudson’s Employment Expectations report for 2012’s first quarter found employers – particularly in the financial services sector – would take a ‘wait and see’ approach to hiring for the second quarter.

Caution drove some companies to expand little, with some areas “on hold”, according to Edmund Gill, director of Hays Corporate Accounts.

Gill said sectors such as compliance and risk remained solid, but hiring had plateaued. 

He said although rationalisation had been the buzzword from June to December last year, the industry seemed to have a cautious handle on it.

George McFerran, head of Asia-Pacific for eFinancialCareers agreed with Gill, saying hiring remained reasonably flat, although banks were still after risk and compliance people.

Andrew Hanson, director of the finance division of Robert Walters Sydney, said outside of the traditional end of year surge for general accounting professionals, hiring levels had been lower than last financial year, across both the institutional and boutique space.

But director for Profusion Group Alison Loader said the market started to pick up because of major restructures and mergers.

The Future of Financial Advice (FOFA) and a demand for scalable advice were driving an increased focus on customer experience and efficiency.

Restructuring and rationalisation took a different turn two weeks ago when Perpetual announced it had trimmed board remuneration and sold out of the mortgage lending game to focus on new opportunities – one being its financial advice function through Perpetual Private Arm.

The company’s increased focus on advice was one echoed in the market, with wealth management an area that grew significantly and an increasing focus among the big five and boutique advisers, Gill said.

Hays banking hiring report for March 2012 said accounting firms and planning dealerships had been on the hunt for wealth management professionals, which Gill said held true for the first six months of the year.

Underwriting and financial planning were areas still in short supply, according to Gill. 

“That is where most of our institutional and financial services clients are looking to grow and that’s right across the spectrum – from the paraplanner through to the back office support area, through to the qualified CFPs,” he said.

However, Loader said they received little interest for financial planners but had indications it would pick up due to an increased demand for phone-based advice roles.

Slim pickings

Gill and Loader said executive hiring had been scarce over the past 6-12 months. Gill said high level roles and responsibilities had been merged causing a marked slowdown in demand for positions above general manager.

While restructures in response to legislation created new roles, internal reshuffles had trimmed the fat off the top, said Gill. 

A recent example is the departure of Brian Bissaker from the top job at Colonial First State, though he is not the only one. Former chief executive of Snowball Tony McDonald and general manager investments at Zurich Matthew Drennan were both made redundant following company reshuffles.

“We’re seeing more consolidation of senior and executive roles because the areas of expertise are very (well) defined,” he said.

But while restructuring saw a number of executives pushed out in the latter half of 2011, Gill said it had slowed down in 2012.

He said tighter margins and limited liquidity had created a higher level of hysteria in the media than was warranted.

McFerran said executive hires had slowed because employers had appointed a number of senior executives in 2009 and were more confident their choices would build and grow the business.

Both Gill and Loader said business development management (BDM) roles were always in demand.

“Even when recruitment slows down, they will always keep an eye out for someone with good BDM expertise and well-developed client lists,” Gill said.

Loader said “talented, successful people (with) strong reputations in the market, who are trusted by their peers” would always be sought after.

A long way to the top

Employers seem to be responding to an eCareerJobs report earlier this year that warned 62 per cent of Australian finance professionals had considered changing careers in 2012, wanting a definite career path and flexible working arrangements.

McFerran and Gill said training and flexibility now came part and parcel with many job roles. 

Gill said entry-level general advice roles offered training and flexibility – experience always won out. 

“Education certainly doesn’t guarantee you any position or just because you have a certain qualification means you have a right to a position. It won’t open doors automatically,” he said.

He said planners could begin with the RG145 and work their way to the top. Junior level phone and web-based advice roles were most likely to offer training and flexible working hours, said Gill. 

“That’s where a lot of organisations are actually assisting with people that want to do that so they bring them in at entry-level,” he said.

He said larger institutions continued to build out their scaled advice capabilities by recruiting RG146 graduates for part-time roles, giving simple advice.

Hudson’s Accounting & Finance Salary and Employment Insights 2012 report said competition was still fierce for the most talented candidates, especially for senior strategic and managerial roles.

It said skills shortages put pressure on candidates to do more to impress employees, with financial modelling and commercial management skills particularly sought after.

McFerran said employers were offering training to address the skills shortages. This can be seen in professional development programs run by most of the large financial services institutions.

The 2012 Hays Salary Guide said accountancy and finance shortages were up four per cent on last year, mainly for junior to mid-management roles.

Hays and Hanson agreed that flexible workplaces were also an attempt by businesses to retain talented staff. 

Hanson said there is a marked shortage of paraplanners, particularly those involved in self-managed super funds or geared structures due to a shortage of junior candidates.

While major organisations offered training, support and development as lures to attract and retain new talent, boutiques were the ones providing individuals more choice in guiding their career, according to Gill.

And that’s what counted said McFerran.

“When it comes to retention, what people are really interested in is the opportunity for career development and having a career plan mapped out in front of them,” he said.

Balanced options

The experts say remuneration has changed little over the past six months, as employers continue to rationalise and employees demand more than just money in return for hard work.

Hays’ last job market review found that 51 per cent of financial services industry employees increased salaries from 3 to 6 per cent.

But Loader said base salaries had hardly changed in the past six months. She said an initial rebalancing after the global financial crisis seems to have petered out, and in cases where salaries had increased, employers expected a lot more from chosen candidates.

Loader said a tight job market meant average performance would not be tolerated. She said employers have a small pot to split which would be directed towards high achievers.

“Reward for strong performance is the go,” she said.

Sales jobs were the highest paid, and despite FOFA and the ban on commissions, would continue to attract higher salaries, Loader said.

Although bonuses have neither risen or declined, commissions will be a major driver of salaries going forward – particularly as the big four continue to aggressively build their retail client base, according to Gill.

He said insurance, underwriting and financial planners have the real choice opportunities due to skills shortages.

And while business development and compliance roles attracted a higher than average pay packet, according to Hanson, on the whole it was a client-led market.

“While employees are taking a second look at their roles in terms of work-life balance, opportunities for progression and entitlements, it’s not a market where people are going to receive massive pay rises to move from one job to the next,” he said.

Employers have significant pressures to cut costs to make additional hires, according to Hanson.

“If there’s no give in the market moving forward, there’s going to be a few challenges ahead in terms of staff retention,” he said.

Employers, keen to retain the talent they have, have invested a considerable amount of time and resources into training and development in order to keep employees happy.

Gill said employers and employees had reached a level of mutual respect when it came to negotiating pay packets.

Job security was good for the highly regarded but not so for others, according to Loader – although employees were used to uncertainty in the market and had become willing to move.

Employers, for the most part, appear to be willing to compromise with employees and work towards a holistic pay package.

“I don’t think career change is driven so much by salary as it was three years ago,” Gill said. 

“Now it’s much more about career opportunities, development, training and job security,” he said.

The Hays report said 43 per cent of employers intended to increase salaries from 3 to 6 per cent, while 5 per cent would increase salaries from 6-10 per cent.

Back to the Future

Hays' June quarterly report brought positive news for the industry, with 26 per cent of employers expecting to increase staff in accountancy and finance departments, and most predicted to be full-time.

The market seemed to experience a recovery of sorts, after a period of immense change that also brought new opportunities.

Gill said they were expecting the next six months to be the same as the past six months, with the wealth management space continuing to grow.

While some areas would remain cautious, he said employers were not looking to rationalise unless something disastrous happened overseas.

“I would say that we’re going to have a positive six months – my only caveat to that is if anything does happen in Europe or the US, then that will have a profound affect on us,” he said.

Flexible phone-based advice roles also appeared to be gaining traction, according to Gill and Loader – no surprise, considering the focus on offering direct, affordable methods of scalable advice on the one hand and the demand for flexible employment options on the other.

Loader said competition would increase for talented sales people – either BDMs or financial planners – especially planners who can position themselves and sell advice for a fee.

She said the industry would continue to focus on efficiency, while McFerran also said employers would focus on rationalising one part of the business. Perpetual could be one early example.

A recent eFinancialCareers roundtable found that hiring would be limited and dominated by replacement hiring and trying to keep headcounts steady for the next six months, he said.

Gill said he did not expect massive future pay swings – although employers may be rewarded for good performance and having extensive client networks.

While executive remuneration had been stable for the year, the recent development of a number of roles due to restructures hints at mounting upward pressures on executive pay over the next six months, according to Loader.

Hanson said employers would pay a fair premium, however, he did not expect a huge increase in pay. He said employees and employers were more focused on achieving a work-life balance.

“Employers will pay reasonably well for professionals with a specific regulatory background, but on the whole, it is a client-led market,” he said.