MORGAN MCKINLEY LONDON EMPLOYMENT MONITOR: MONITORING THE PULSE OF THE CITY JOBS FOR OVER TEN YEARS

London Employment Monitor June 2015 highlights:

  • Month-on-month figures in available jobs increase by 56%
  • Month-on-month figures show a 26% increase in professionals seeking new opportunities
  • Salaries increased by 19% on average for those securing news jobs in June 2015
  • Morgan McKinley research shows an attractive career path for compliance professionals back on track

“The growth in jobs and opportunities that we have been predicting throughout 2015 is back on track,” says HakanEnver, Operations Director Morgan McKinley Financial Services. “As we expected, the April-May figures turned out to be an anomaly, due to the short working month and the distractions of the general election.”

In June, professional opportunities rose by 56% month-on-month, wiping out and surpassing the dip in the previous month’s figures. “Overall, the first half of 2015 has been on a positive trend and we are seeing a huge appetite to recruit,” says Enver.

Professionals seeking new positions rose 26% month-on-month and the year-on-year figures were even more impressive with a significant increase of 120%. “There is a renewed confidence in looking for new opportunities and these were clearly on offer,” says Enver. “All the data we are seeing shows that there is a robust market for financial services jobs in the City. It’s an assertive market.”

Bumper wage increases

The past few months have been a bumper month for wages, with bonuses being paid out and a general increase in wages supported by low inflation. A report from the Resolution Foundation think tank showed wages rising at the fastest pace since 2007.  “With the holiday season fast approaching, we may see some slowing down in the market, but overall there’s no reason why this strong trend in jobs and opportunities won’t continue in the second half of 2015,” concludes Enver.

Clawbacks

The debate around bonus clawbacks is one of the few remaining headwinds facing the financial industry, with reports that regulators are planning on increasing clawbacks for senior managers to up to ten years. New clawback rules are likely to change the payment structure and bonus culture of the industry. “Clawback regulations will push up basic pay,” says Enver. “They are a challenge to banks as they increase costs and the industry is going to have to become more innovative about how it attracts and compensates new talent.”

Greece

Towards the end of June the crisis in Greece began to reach a climax… yet again. Greek banks and the stock exchange closed prior to the Greek referendum, with no information as to when they may open again. “This is way past economics now,” says Enver. “It comes down to a matter of trust; the trust between the differing parties has been completely eroded. Despite whatever agreement may be reached, implementation will be extremely difficult when there is such animosity between those involved.”

It’s all about the people

The demand for talent – something that we have been highlighting for some time in our monthly London Employment Monitor (LEM) reports continues. Finding skilled employees is becoming more and more challenging. The situation has gotten to the point that it is now driving M&A activity revealed in PwC’s 2015 global CEO survey. According to the survey, a quarter of M&A activity is now driven by skills shortages as companies make acquisitions in effect to buy the right people. Kevin Green, the chief executive of the Recruitment and Employment Confederation (REC) went even further, stating that: “There is an enormous skills crisis looming. We’re not producing enough young people with the skills employers are looking for.”

Finance and IT (discussed in-depth in last month’s LEM) were mentioned as some of the sectors with the most acute skills shortages and those with the necessary skill set can literally “name their price”. To some degree, this also applies to the Compliance field.

Compliance is still the City’s buzz word

  • Remuneration packages for compliance are not far from front office pay (salary = £45,000 for analysts, £220,000 for Managing Directors)
  • Banking still paying more than buy side institutions such as asset managers
  • Managing Director level is where it’s at: the gap is mostly felt at that level with total compensation £107,000 versus £212,000 in banking
  • US versus EU banks: similar pay structure apart from MD level: £181,000 versus £305,000 – much more aggressive culture when it comes to management reward

Compliance recruitment within the wider banking and financial services sector has stayed buoyant throughout H1 2015.  During this period, the key skill sets being required by a number of the major banking clients included those familiar with regulatory change/initiatives, CASS monitoring specialists as well as AML professionals across all levels and asset classes. For the larger investment managers, the majority of recruitment has been in Guideline/Portfolio Monitoring, Financial Promotions/Sales & Distribution and Regulatory/Policy advisory.

It has become more apparent that the larger buy side institutions are better positioned to adapt to new regulatory changes despite the subsequent cost that this brings, including new people, processes and technologies.  Ben Harris, Manager, Compliance desk, Morgan McKinley said, “due to adjustments in recent regulation (UCITS V, AIFMD) affecting the asset management space, businesses have had to implement new controls, policies and procedures to ensure the firm remains compliant. After recent visits, the regulator has advised a number of businesses to increase their compliance staff.”

With continual changes to controls and policies, a number of firms have been seeking specialist regulatory/policy compliance professionals to act as advisers to key senior stakeholders and portfolio managers. Competitors have been willing, on occasion, to provide candidates with a salary increase of up to 30% to move. Harris continues, “the more niche the policy understanding required, the lesser the supply of that skill set. This simply creates a war on salary and inflates everything.” Whilst some salary differentials still exists within the banking and asset management sectors, it is clear from the Emolument data provided in charts 4-8, that compliance staff are still paid better than most when compared with other disciplines.

Banks looking to hire regulatory change/initiatives professionals ideally like to hire qualified lawyers to carry out these roles due to the large reading and report writing elements of the role. These positions have been driven by the near endless stream of new regulations and subsequent focus on MiFID 11, MAR, and the Senior Managers and Certification regime. Salaries in this area have risen by on average 20% in this space during the last year.

“Fixed Income professionals have also been in steady demand since the LIBOR saga started, and with more investigations and fines pending due to alleged FX market manipulation, it is not surprising that firms are really looking to bolster their front line advisory departments in this space,” said Harris.

In light of the new regulations dictated by the FCA around transaction reporting, EMIR and CASS regulations, firms are looking to increase the teams who monitor this activity. This has been mostly at the AVP/VP level and firms are looking for professionals to carry out the day to day transactional work.

”In general, compliance recruitment has been driven by new rules and regulations from varying regulatory bodies, and with tighter regulation on the way, combined with a diminishing pool of available talent, the competition to hire is as fierce as ever. Salaries continue to rise and the demand for compliance recruitment continues to increase year on year.”

Financial services jobs new to the market June 2015

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Professionals seeking new roles, both in and out of employment June 2015

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Monthly average change in salary, for those starting new roles over the past 12 months

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Morgan McKinley compliance salary results

Chart 4: Average Salaries and Average Bonuses for Compliance Professionals in Asset & Wealth Management, London – June 2015

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Chart 5: Average Salaries and Average Bonuses for Compliance Professionals Investment Banking, London – June 2015

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Chart 6: Average Salaries and Average Bonuses for Compliance Professionals in US Investment Banking firms, London – June 2015

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Chart 7: Average Salaries and Average Bonuses for Compliance Professionals in EU & UK Investment Banking firms, London – June 2015

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Chart 8: Average Salaries and Average Bonuses for Compliance Professionals in Retail Banking firms, London – June 2015

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