Market uncertainty and the upcoming UK referendum on EU membership have led to UK asset managers putting hiring plans on hold, according to experts.
Kirsty Pineger, a director at specialist recruitment firm BRUIN Financial, says she has noted a “pronounced difference in year-on-year hiring” in asset management. “Processes are on hold or have slowed down noticeably in light of the general uncertainty in the market,” she says. Ms Pineger acknowledges that the second quarter and “bonus period” are typically quiet. However, “many houses are conspicuously quiet” at a time when conversations about the hiring pipeline typically take place.
Earlier in the year stock market dips led some asset managers, such as Henderson Global Investors, to revisit growth plans. Amid a decline in revenues, firms are either reducing their staff numbers or “doing a headcount freeze”, says an asset management executive who spoke on condition of anonymity. The UK vote on EU membership, which will take place on June 23, has made recruitment “even more difficult”, says Ms Pineger. “Although no one is openly citing the [UK] referendum as the cause, it’s also clear that no one wants to appear worried,” she says.
Ms Pineger says there is still demand for front-office and investment roles, but the market has “definitely seen quite a lot of strategic cost cutting in the larger asset managers”. “[It] has either been down to company performance or companies seeing the potential warning signs ahead,” she adds. Asset managers are reducing headcount by merging teams and there are “clear examples” of cuts in product-aligned roles, with global market and UK teams being merged, she says.
Global asset manager BlackRock said last month that it would shed staff in Europe as part of 400 job cuts globally. Earlier in the year Aberdeen Asset Management said it would not replace turnover in its middle- and back-office units to help make savings of £50m (€61.9m) after experiencing large outflows from its emerging market funds.
The executive at an asset management firm, speaking to Ignites Europe on condition of anonymity, says he knows of three leading headhunters with candidates who have received verbal job offers but have been “waiting on the paperwork” since the beginning of the year. Human resources departments are “dodging their calls”, says the executive. He also agrees that the referendum could be compounding the problem. The potential Brexit is like a “stormcloud” over the city of London with some investors pulling capital or avoiding sterling exposure, he says.
Saker Nusseibeh, chief executive of Hermes Investment Management, says he has heard rumours that some asset managers are “holding back on investment”. He says: “I think in the run-up to [the] Brexit and thereafter, the uncertainty will mean that investment will be held back and for some time. “Anecdotally I think there is some waiting going on but it’s not a trend, it’s just people are cautious, which is normal.”
Tim Wright, asset management reward leader at consultancy firm PwC, says “the biggest issue is lack of clarity”. Mr Wright says: “The asset management industry tends to act more prudently in general during times of uncertainty around market outlook, something that a potential Brexit brings. “In terms of investing in new people and new business opportunities there is likely to be caution underpinning any major strategic decisions in the short term until the way forward is clearer.”
Last week Deloitte published a report based on a survey of chief financial officers at some of the UK’s largest companies. It revealed that many are focused on defensive balance sheet strategies in light of a Brexit. Plans for hiring and capital spending have dipped, it said.
Alex Birkin, advisory leader at Ernst & Young, however, says he has not seen any asset manager put investment on hold as a result of a potential Brexit. Job freezes and caution around recruitment are more to do with the market volatility in the first quarter, he says. “During February in particular a number of asset managers were just concerned about the overall impact and whether that trend was going to continue,” he says.
Mr Birkin says it is “normal cyclical behaviour”. The asset management industry is more “sanguine” than other industries when it comes to a Brexit, he adds. “We’ve not seen anyone put investment on hold as a result of a potential Brexit, probably because most people think it would take considerable time to unwind and therefore it would take some time before it impacted their business, if at all,” says Mr Birkin.