Brexit to spur compliance, risk hires

• Article by BRUIN Financial

Brexit to spur compliance, risk hires


ignites europe
By David Ricketts 13 July 2016

The UK’s decision to pull out of the European Union is likely to spur an increase in demand for fund professionals that have compliance and risk expertise, with some fund houses expected to hire dedicated “Brexit consultants” to assess the fallout, according to recruitment experts.

Asset managers are currently debating whether the historic referendum vote will require significant changes to their existing operations.

Firms including M&G Investments, T Rowe Price and Columbia Threadneedle have already announced that they may look to increase their presence in other EU countries such as Luxembourg and Ireland.

Others are expected to draw on extensive contingency plans formulated in the run-up to the referendum, in which 51.9 per cent of the UK electorate voted in favour of the country giving up its EU membership.

Recruiters say such significant operational changes in the wake of the Brexit will require fund firms to bolster headcount in particular business areas to help complete an orderly transition.

James Thornton-Dewhirst, director at buy-side recruitment specialist Investment Management Partners, says the Brexit will increase demand for asset management professionals “with a regulatory focus”, such as compliance, legal and risk specialists.

He adds: “The other area that is likely to see a dramatic increase in hiring is change management contracts, such as programme [or] project managers and business analysts in order to facilitate the transition between EU and UK business operations.”

Aaron Crowley, manager of the credit and risk management team at BRUIN Financial, a specialist financial services recruiter, says there has already been “increased demand” for change, and operational and business risk professionals as a result of the Brexit.

Demand is being driven by the need to keep on top of existing regulatory change, while also adapting for what the future landscape might look like.

Despite the UK voting to leave the EU, official negotiations on the country’s exit route cannot begin until Article 50 of the Lisbon Treaty is invoked.

Theresa May, the UK’s new prime minister, has said Article 50 will not be invoked “before the end of the year” in order to establish the country’s position ahead of negotiations.

In the meantime the UK regulator has advised asset managers that they must continue preparing for upcoming EU regulatory changes, which include Mifid II and packaged retail and insurance-based investment products regulations.

Kirsty Pineger, director of the wealth and asset management division at BRUIN Financial, says there is an “additional remit” for firms to hire specialists following the Brexit result.

She expects larger asset managers to employ dedicated “Brexit change” consultants.

“This is likely to follow the start of negotiations between the new UK government and the EU,” says Ms Pineger.

However, others suspect that asset managers have given little thought to the hires they will need to help them deal with the Brexit fallout.

Amin Rajan, chief executive officer of Create Research, says: “The Brexit vote has stunned asset managers [and] few were expecting it.

“Serious contingency planning has yet to begin due to extreme uncertainty on the terms Britain negotiates with the EU partners.”

He adds: “Little thought is being given to the types of skills that would be needed three to five years from now when the Brexit happens.

“The immediate focus is to develop skill sets that enable asset managers to cope with wild market swings that will be the norm in the interim period.”

Ross Kelly, head of fund management recruitment at Selby Jennings, adds: “One concern for many asset managers is a talent drain in London if major financial institutions relocate, taking top talent with them.

“That said, many asset managers found themselves unaffected by the referendum as they descaled their risk, or hedged appropriately, leading up to the result so that performance would not be too negatively affected. This means hiring activity is likely to remain relatively flat as recruitment besides replacement hires within asset managers is traditionally driven by performance.”