Insights

Compliance

COMPLIANCE MARKET COMMENTARY, Q4 2018

• Article by BRUIN Financial

COMPLIANCE MARKET COMMENTARY, Q4 2018

MARKET OVERVIEW

Having had an exceptionally busy Q3 with a great deal of post summer hiring needs successfully concluded we expected to see a lull in job flow going into the festive season. The final quarter of the year is typically a challenging time to recruit with bonus season on the horizon. However, the start of the quarter was as busy as ever with a plethora of vacancies in both London and Central Europe.

Hiring trends have been very consistent throughout the year continuing into Q4 with Investment Management clients providing 70% of  requirements over the quarter and circa 60% of permanent hires in the asset management space, across both alternative and traditional houses.

The permanent market also remains candidate driven, and as such many of the challenges in Compliance persist. There is a high demand for quality people, generally less ‘active’ candidates on the market and those that are open to new opportunities typically have more than one process on the go.

The contract market continues to grow as uncertainty over Brexit contributes to both candidates and clients considering contracts as a viable option to see them through the next 6 months. As organisations prepare to move or complete certain functions to Germany, France, Luxembourg, Poland, etc. candidates are finding their BAU and Projects expertise in particular is required.

In a competitive market, clients with a smooth and expedite process will inevitably secure the candidate. As ever, remuneration remains one of the main contributing factors and in the final quarter of the year this was amplified with an average of 21% increases in salaries for permanent hires.

Another notable trend is the increasing importance of non-financial incentives, especially as the margins between salaries becoming increasingly blurred, and as such additional benefits and flexible working are now more and more significant in candidates’ decision making.

 

Role profiles

Investment Banking:

The sell-side has been quieter in Q4,  however some areas have been more in demand than others, most notably in Advisory.

The past year has seen a significant number of candidates seeking Advisory roles. The primary reason for this is to gain exposure to front office departments and challenge their existing compliance knowledge in more technical areas. But an issue clients have faced is finding candidates who have the right personality to face off to traders and senior stakeholders. This has resulted in processes taking up to 50% longer to complete due to the limited pool of candidates on the market at this time of year.

On the contract side a number of remediation projects came to an end in Q4 which has left a number of experienced candidates on the market. A few Investment banks have recently taken advantage of this to bolster teams at the junior level. 

Asset Management

Guideline Monitoring

This has been the busiest area of recruitment throughout 2018, with the vast majority of the larger asset managers implementing new systems and growing their guideline monitoring teams to fulfil these. With this rapid growth and the very technical nature of guideline monitoring, firms were demanding that candidates have pre-existing trade compliance experience whilst also possessing specific product knowledge. This meant that clients were often open to considering a variety of backgrounds, such as front office analysts who have good product knowledge, or operations candidate who were open to a new challenge. This is an area which will be ever present in recruitment next year.

We have also seen a sharp increase in demand for experienced Portfolio monitoring and coding contractors due to a number of projects within Asset Management clients. Specialist Charles River experience is in demand as large scale projects aim to meet deadlines in 2019.

Monitoring

Mirroring the Advisory space on the sell-side, monitoring has become ever present in our quarterly round ups as an area which many firms are looking to expand. Throughout the year buy-side firms have been diversifying their monitoring teams to incorporate candidates with relatable monitoring experience to compensate for the high demand. This has given candidates with the likes of Audit backgrounds the opportunity to move into compliance on secondments and permanent position, as a similar methodology is required within both monitoring and audit.

 

EUROPE

With BREXIT continuing to keep Financial Services in limbo, a number of firms have started to transition into BREXIT projects which has resulted in a spike in hiring across mainland Europe. In particular, demand has been for EU nationals seeking to return to their native countries with locations such as Luxembourg, Poland, Belfast, Spain and Switzerland particularly dominant in hiring over the last quarter.

The advances in technology also allows a lot of compliance functions to work now remotely which has resulted in more firms making the move to offshore functions and cut costs within the UK.

 

PREDICTIONS

In the coming few months, it is expected that crucial inbound regulations and changes, namely SMCR and BREXIT alongside a number of new systems implementations and upgrades, will continue to drive demand both on the contract and permanent side.

Additionally, whilst mandates in Asset Management are typically steady through the year, Investment Banking undergoes a minor quiet patch prior to review period. As such, there is very likely to be a noticeable increase in movement within Investment Banking in reaction to the near-exhaustive receipt of bonuses across the Industry.

Following the trend of hiring growth across Europe we’re seeing a greater willingness from candidates to relocate back to mainland Europe. In recent times London’s talent pool was relatively inaccessible for European based firms but this is now changing and set to continue throughout the year due to Brexit.

And finally, the team hosted a very successful breakfast seminar in late November focused on the practical implementation and implications of SMCR on buy-side businesses. The session was chaired by David Berman, a Partner at Latham and Watkins and the event was attended by Heads of Compliance at Investment Management houses in London. If you would like to be sent the information from that event or here about future events, please do get in contact.