Michael Henning / 03 October

Market Commentary 2019

Market Commentary, 2019

Investments

ESG has been an area that has grown substantially over the last few years, but in the last 12 months we have seen a significant spike especially within sustainable investment roles. As more asset managers dive into this space due to its lucrative nature they have continuously sought after more ESG specialists to join growing research teams; with the majority of these roles being focused on ESG integration across the full investment process. Additionally many firms have launched sustainable or impact funds and have hired experienced equity analysts who have an interest and desire in this space to work on these dedicated funds.

We have also seen a large influx of roles in the equity research space especially within Asian equities, with a particular focus on candidates who are native Mandarin speakers.

As investment houses try to keep up with other industries there has been an increase in the number of Quantitative/Data Scientist roles, as traditional asset managers become more tech-savvy and forward thinking they are happy to look at people outside of the sector to bring in new ideas within this space.

Within the investment space there has been a historical issue of it being a heavily male dominated area, however the last year has seen a significant push by many asset managers to attract female applicants into investment opportunities. With firms using a wide range of efforts to try to lure in female talent, a key initiative being clients requesting a diverse shortlist from recruitment agencies with female representation.

Distribution

A major trend we have seen in the distribution space is the requirement for European language skills as investment management firms expand their client base in Europe. There is particular demand for German and Italian speakers which has inflated the salaries for these positions. With Brexit looming, firms have expanded their regional presence with more sales people based out of local offices. Client relations and sales support functions continue to be based out of London.

This year we have seen an unprecedented demand for RFP Writers, as investment management firms focus on expansion and winning mandates in a highly competitive market. Firms have hired experienced writers with 7+ years’ experience that can add real value to the sales process. In line with this, there has been a surge in salaries, particularly in the temporary market where professional contractors can attain higher salaries due to demand.

Investment management firms have continued to invest in digital marketing. We have seen an increase in specialist roles, notably the tracking and analysis of marketing campaigns and impact on investor retention. This will continue to be a growth area for investment management firms as they enhance their digital impact and capabilities to reach investors.

Product

Overall 2019 has been extremely busy for recruitment in the product space. Encouragingly, it is an area that has seen a lot more growth than consolidation over the last 12 months as firms look to broaden their product ranges and branch out into the less traditional investment products. Across the industry, there has been a substantial increase in the demand for individuals with fund launch experience across alternative products such as real assets, real estate and infrastructure as well as structuring knowledge of OEIC and SICAV and non-UCITS funds.

A number of large asset managers have also been hiring aggressively in the multi-asset space with a significant interest in candidates with strong fixed income backgrounds who are looking to gain more exposure to a wider range of products. As well as this there have also been a number hires across the city for ESG in product specialist teams. Largely due to investors becoming more cautious about the products they are investing in and the importance of pushing ESG/responsible investment products becoming a priority for many houses.

2018 saw a significant increase in the volume of contract opportunities within product, largely due to Brexit, The Asset Management Market Study and the ever changing regulatory land scape. However, 2019 has been quite the opposite and there has been a decrease in the amount of contracting opportunities that are in the market as firms look to tighten their spend on contractors opting for more long term and permanent options to join their teams. That, coupled with the imminent threat of the new IR35 regulations coming into play in April, there has also been a considerable increase in career contractors seeking permanent roles.

Operations

2019 has been an interesting year within the operational space with a number of trends being witnessed across the investment management sector. The first of which has been a rise in companies seeking candidates with a broad operational skill- set along with expertise within project management and process improvement for a wide range of roles.

Another area which is undergoing a surge in expansion is the oversight area within operations. As a number of clients continue to outsource their middle/back office functions to third party administrators, they still need to have a strong oversight presence within their London based offices to manage that relationship and oversee the production of work completed out- side of the business.

Across performance, client report, trade oversight and fund accounting; small, medium and large sized investment houses have found the need to seek out candidates who will consistently look to improve procedures and consistently raise the bar; so a need for technical Excel/VBA or other programming languages is seen as desirable. Unlike last year where we saw a rise in the increased volume of recruitment in Ireland and Luxembourg due to Brexit plans, this year has seen slower growth within this space. This can be attributed to the fact that most large asset managers have now done the bulk of their hiring in these areas.

Technology

Tech-savvy firms are putting pressure on many traditional investment managers in the current market. Most asset managers are already planning for the disruption that could be caused by the new wave of technology-based entrants. These disruptions could potentially shake up the entire online fund distribution process along with digi advice and micro-investing with the expertise they have within the digital experience delivery sector and dealing with large consumer bases. These potential new entrants are going to provide low-cost services, coupled with digital-age capabilities, aiming to build relationships with Millennials and Gen Z investors before they are targeted by incumbent firms.

Passive/ETF

Over the last few years the industry has seen a race to the fee-bottom where investment managers have tried to get fees as low as possible. But in the past year a brand new pricing model for passive funds has emerged for consumers in which they charge zero fees. The announcement of this no-fee product has led to an enormous shift for the investment management industry. With a number of investment managers following suit with the launch of zero-commission platforms, these firms’ revenue-generation has now moved towards securities lending, order-flow payments, and shareholder-servicing fees. The larger asset managers are likely to use a range of these zero-fee products to help to sell other offerings within there funds platforms and keep them within the fund family. On the back of this active funds are also seeing resurgence of a pricing model. A performance-based fee that adjusts up or down based on outperforming or underperforming a benchmark known as a ‘Fulcrum Model’.