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Compliance

Compliance Market Commentary Q3, 2015

• Article by BRUIN Financial

Compliance Market Commentary Q3, 2015

MARKET OVERVIEW

The beginning of Q3 followed the same trend as 1H of 2015. Recruitment volumes remained high throughout July but as expected recruitment stalled due to a large proportion of decision makers being on annual leave. Managers being out of the office resulted in drawn out and disjointed interview schedules, and in some cases this jeopardised the outcome of the recruitment processes.

The quarter as a whole has seen large volumes of recruitment from the Investment Banks. As scrutiny increases from the regulatory bodies, particularly in light of MiFID II and Senior Managers Regime, each of the top tier firms in London look to make additions to their respective teams. As with Q2 of this year, the demand for Compliance candidates outside of London has grown significantly as some of the leading Banks expand their regional hubs most notably due to ring-fencing and cost cutting efforts.

Recruitment into the asset management space has been steady during Q3. Whist buy-side firms do not generally recruit in the same volume as investment banks, there is still a shortage of strong candidates particularly in areas such as advisory, monitoring and financial promotions. Alongside this, as teams continue to grow in size the market becomes increasingly candidate driven.

The shortage of technical expertise is indicative across the Financial Services, and therefore good candidates are not staying in the market for very long. Most firms on both the buy and sell-side are accelerating the recruitment process in order to secure the best talent. This is increasingly important as good candidates often have multiple processes ongoing simultaneously, and as a result the firm that moves quickest will often secure the best candidates.

In addition, the greater risk of missing out on good candidates, coupled with increasing regulatory pressures, has resulted in salaries becoming inflated as firms look to do their best financially to secure the right candidate. We are still witnessing salary increase of circa 23% when candidates move from one permanent role to another. On the same note, firms are doing their utmost to retain the best talent, and often when candidates resign from positions we are witnessing excessive salary rises and often the creation of new roles internally to ensure that they don’t have to struggle with replacing lost talent, particularly in niche areas such as advisory.

ROLE PROFILES

Whilst there has been steady levels of recruitment across compliance, there are some areas that have been particularly busy:

Banking

Financial Crime – This continues to be one of the more buoyant areas within Compliance as new regulation coming thick and fast forces firms on the buy and sell side to increase their Financial Crime teams in bulk.  Within the Investment Banks, 1st and 2nd line defence positions within AML and Sanctions have continued to be an area in which firms are looking to upskill. Whilst there has predominantly been a large appetite for candidates with business-facing advisory experience, there is still a continuing demand for the more processing aligned roles as Transaction Monitoring teams continue to grow.

Product Advisory – Advisory candidates across the spectrum of asset classes are very sought after. Even if not actively hiring, each ‘head of’ from the large banks are looking for talented individuals to join there respective teams. With the natural reactive growth of compliance over the past half decade, the small candidate pool of product advisory candidates are thinly spread. In addition, line managers and HR teams are doing everything they can to retain talent in this space. Therefore, despite job offers that include bonus buyouts and substantial increases in salary, candidates are still remaining with their current employers as they are countered with sky rocketing figures.

Asset Management

Regulatory Change – With an ever changing regulatory landscape the need for experienced hires in this area has boomed. This role more often than not encompasses the general horizon scanning with regulatory bodies but also understanding of the business to provide gap analysis on upcoming regulation. The Senior Managers Regime and MiFID II are a huge focus for 2016.

Monitoring & Testing – Desk based and thematic review work is ever present in any financial services compliance team. With openings as a result of natural growth in this space in Q3/Q4 2014, most of the hires in Q3 2015 seem to have been due to current incumbents moving on, which ties in nicely with the surge in movement we see following the bonus months in Q2.

Product Advisory – With new fund launches from some of the larger AUM holders centred out of London, the advisory space experienced a lot of growth. Headcount has increased in this space and with a small candidate pool already we would expect some of these hires to remain open for the rest of the year with potential to fill the void with contractors in the interim.

CONTRACT MARKET OVERVIEW

Towards the end of Q3 and beginning of Q4, we have seen a quite an increase in buy-side recruitment within the contract market. Sell-side recruitment has been steady but the Wealth and Asset Management arms of certain, traditionally sell-side, institutions has been very buoyant.

After the huge increase in contract rates during 2014, rates in 2015 have continued to grow with candidates now having an increasing number of offers on the table at any one time making it a very candidate driven market. Regulatory change roles are now paying in excess of £1000pd and product advisory positions continue to attract candidates at higher rates around the £800pd mark.

PREDICTIONS

We expect Q4 of 2015 to be extremely busy with recruitment volumes back to their best following the summer lull. Both buy and sell-side firms are looking to bolster their teams before bonus season becomes more of a factor and internal headcount is reassessed in the new year. We would advise that all hiring at the senior level of the market is conducted in the knowledge that firms will more than likely have to buyout bonuses, particularly for candidates who are on a 3 month notice period.

Areas for hiring will continue to be product advisory and regulatory change but we may also see additional hires in financial promotions and guideline monitoring due to some of the movement observed in Q3 of 2015.