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Morgan McKinley London Employment Monitor: Asset Management the Shining Star in the Financial Industry

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After strong jobs numbers in January that coincided with a historically weak start to the year, it was expected that a negative knock-on effect in jobs figures would be felt in the February figures. This didn’t materialise and considering the negative sentiment lurking in the financial markets, the numbers can be classed as a positive surprise. Available jobs grew by 8% year-on-year to 8,325. On a month-on-month basis, there was a 9% decrease, although looking at the January to February numbers from 2015, there was a similar drop month-on-month. Job seekers increased month-on-month by 2% to 17,219.

“From a recruitment perspective, February did feel quiet compared to January,” said Hakan Enver, Operations Director, Morgan McKinley Financial Services. “As the numbers confirm, this was more psychological than anything. The London markets had a shocker of a start to the year as markets headed south, but simultaneously, demand for talent and job seeker activity was off the scale in January.”

The January surge in job seekers flattened out in February remaining slightly positive, the long-term trend remains strong with job seekers willing to look for new challenges. Despite the continuing negative sentiment, there was a healthy increase in jobs on offer. In light of this, the financial markets reflect the resiliency of the UK market, with one industry in particular bucking this trend and performing well.

“The growth in jobs was driven by the asset management industry,” said Enver. “There is growth and demand in that sector and the UK is in prime position to take advantage of this trend, which we believe will be a theme throughout 2016.”

Asset management industry in focus

As financial services firms report full year results, asset management is proving to be the top performer. This sector is showing both top and bottom line growth, which in 2014/15 resulted in a record amount of mergers and acquisitions, with many of these made within Europe. The UK and the City in particular stood out as an attractive location to global asset managers. The City has the relevant industry infrastructure in place and gives asset managers access to the best talent. Proof of this was the acquisition of TwentyFour Asset Management in the UK by Swiss based Vontobel Asset Management, which won the Financial News 2015 Deal of the Year Award.

“For job seekers in 2016, asset management is the industry to be in,” said Marcus Williams, Manager, Morgan McKinley Investment Management Finance and Front Office. “Professionals with multi-lingual skills and relevant industry experience are in a strong position to secure attractive packages.”

Asset managers are now looking for talent across the business. For front-office staff, there is a demand for active portfolio managers and analysts. As asset management firms of all sizes seek to expand internationally, there is also demand for support roles, particularly for those with relevant skills in navigating the regulatory environment.

“Linguistic ability is an advantage when influencing business leaders in Asia,” says Williams. “This is even more important in mid-market asset managers, who don’t have offices in these locations. Therefore, those able to converse in these areas are able to command the top-salaries within the industry.”

EU referendum approaches

The setting of the date for UK’s referendum on remaining in the EU made Brexit one of the main news items for the month. The vote will be on the 23rd of June and soon after the announcement was made prominent politicians began taking sides on the issue, including the Mayor of London, Boris Johnson, who came out in favour of leaving the EU.

Sterling reacted to the setting of the referendum date by declining against other currencies, which indicates that the markets consider the outcome of the vote uncertain. Within the world of finance there are now proponents for both sides. Jamie Dimon came out strongly in favour of the UK staying, warning that JP Morgan would scale back in London and transfer business units elsewhere citing a fear that UK based banks would no longer be able to sell services within the EU. Others have argued that the City could even thrive without being shackled by Brussels.

“Referendums are rare events and they are very emotional affairs for voters, as this one is tight and both sides feel it is winnable we’re likely to see a heating up of rhetoric on both sides as we approach the date,” said Enver.

Bright future for UK financial services

Despite a poor start to the year for financial markets and the looming uncertainty around Brexit a group of forecasters are upbeat about the prospects for the UK financial services industry. According to the EY Item Club mortgage lending and consumer credit are set to grow this year. Business borrowing is also likely to expand after being in the red for several years.

Omar Ali, UK financial services managing partner at EY, said:

“2015 was the first year for some time that the underlying economic fundamentals were good enough to support an across-the-board return to growth in borrowing by consumers, home buyers and firms.”

Despite the rosy outlook for financial services the Office of National Statistics (ONS) reported figures that productivity in UK’s financial services has been decreasing since 2009. Currently the UK is still marginally ahead of Germany, but has fallen behind France, Italy and the US.

Bonuses are out, fixed pay is in

Employers are continuing the trend of cutting bonuses in favour of increasing fixed pay. This was the finding according to a study by Mercer, which reported a 5% decrease in bonuses and a similar rise in fixed salaries.  The trend towards fixed salaries is the result of regulatory changes and European rules which limit bonuses to twice the fixed pay for key executives and require up to 40% of the amount to be locked in for at least three years.

“Banks are contesting the regulatory changes to bonuses,” says Enver. “They will remain a part of pay in the financial industry, but for now, the trend is clearly towards fixed pay.”

The average salary change for those changing jobs in February 2016 was 24%.  This is in stark contrast to Mercer’s report that suggest that 61% of organisations had increased their employees’ fixed pay by more than 5% while 58% percent had reduced variable pay by a similar amount. They continue to say that total compensation levels are expected to remain stable throughout 2016 with many institutions not planning further changes to their pay structure. Enver states “Clearly it is beneficial for those looking for improved compensation packages to consider moving to another house”.

Financial services jobs new to the market February ‘16

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Professionals seeking new roles February ‘16

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Average change in salary each month February ‘16

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