Insights

Market Overviews

WEALTH & ASSET MANAGEMENT MARKET COMMENTARY, Q4 2016

• Article by BRUIN Financial

WEALTH & ASSET MANAGEMENT MARKET COMMENTARY, Q4 2016

MARKET OVERVIEW

The final quarter of 2016 was a positive end to a year punctuated by big outflows, tighter cost control, closet-tracking probes, Brexit, the US elections and the regulator’s highly critical assessment of active fund performance.
Whilst it has been a challenging 12 months for financial services as a whole, the buy side has continued to be buoyant. Q4 of 2016 saw a 38% increase in roles released by comparison to Q3, and a 31% increase YoY as asset managers launched products and expanded teams to meet customer requirements against a new and changing landscape.

Role profiles

Pressures on fees and flows into passive investments is having a noticeable affect to the dynamic of asset management. This has had a particular impact on the smallest active asset managers, several of whom have opted out of the business, whilst larger asset managers look to capitalise on the opportunity for growth this presents. As the banks rationalise their partnerships, fund houses are focusing on differentiating themselves in the market through relationships and products.
Client-centric roles have been a area of demand throughout Q3, and a consistent trend over the last 6 months. With a challenging investment landscape and redemption warnings, strong client relationships are more important than ever and we have seen corresponding demand in Client Services, Client Implementation, transitions, Client On-boarding and Relationship Management.
Another pressure on asset managers is that increasingly banks are looking for a wide product range from their partners. Instead of one or two from each house, institutions are often looking for six or seven for the relationship to be sustainable and we have noted the corresponding demand for product specialists, and product development & marketing professionals as a result.

Predictions

Bonuses are consistently the main feature of Q1, however the 2017 will be of particular interest to those seeking to take the pulse of the bonus culture on the buy side. The asset management industry recently came under fire for levels of variable pay and Neil Woodford has eliminated bonuses for the 35 employees at the fund boutique he founded in 2014 after leaving Invesco Perpetual.

We also anticipate that Client focused roles will continue to be the focus for 2017 as clients look to retain assets and look for cross selling opportunities throughout the year

As the UK financial services sector approaches a  transitionary period, we also anticipate asset management firms to look for opportunities to offset relatively weak organic earnings with acquisitions and to further embrace technology. All of which will have an impact on transitionary role requirements over the next 6 months.