Please note that the figures used throughout this market commentary are based on a survey conducted by BRUIN Financial during the first week of April 2020. This survey was sent out to finance, audit and tax professionals working across Financial Services in London. Please note that the full results of the survey will be further analysed in a separate document to follow.
We expected the focus our Q1 2020 market commentary to be around increased job flow and the positive response of the market following more clarity around Brexit, as well as about the ongoing discussions around IR35 and how this will continue to shape the way Financial Services firms look to hire and retain their flexible workforce. Although our predictions have had to change as a result of the difficult situation that we are facing, we believe that there are reasons to be optimistic and thus will be exploring current and future trends below.
The first part of Q1 did indeed bring with it ongoing discussions around IR35 but also an increase in hiring by a lot of our clients. With more clarity on how firms approached the regulation, along with a higher degree of certainty around Brexit, we initially saw a good flow of both permanent and contract hires across a wide spectrum of clients from the financial services space. This hiring followed a trend set in 2019, in that firms continued to be more stringent in their recruitment processes. Most firms are only willing to bring in new talent if they are certain the candidate will add value to the business by bringing a niche skillset or standing out in their field. This effect was furthered by the outbreak of COVID-19, which brought significant changes to our daily routines towards the beginning of March and resulted in recruitment slowing down during the second half of the quarter.
Recruitment trends, working from home and the impact of COVID-19
In such unprecedented times it seems only natural for firms to further increase restrictions around bringing in new talent, and likewise for candidates to sit tight in their current roles, while we are all hoping for the world to return to normal as soon as possible. Despite this, it has become clear that a lot of candidates and clients are keen to keep momentum up. The candidate market is still very strong, if not stronger than usual, which may be a result of people finding themselves with more alone time to have a think about their career whilst working from home. Our recent survey showed that approximately 75% of candidates across financial services are still open to considering new opportunities, even in the current economic climate. It is also becoming clear that a lot of proactive clients, with the openness and capabilities to continue hiring through telephone and video interviews, have enjoyed the benefits of less competition and thus the upper hand in securing the best candidates.
Unfortunately, the harsh realities of the situation mean that this is not a possibility for everyone. A number of firms have had to put recruitment on hold whilst we wait to see how this situation pans out. However, even those clients who have temporarily stopped recruitment tend to have a critical hire policy in place to ensure they are not missing out on talent they deem necessary for the stability of the business. Over 85% of candidates surveyed said that they would accept the right job offer having only met their future employer via video interviews. In the contract space, we have already seen some clients conducting video interviews, offering candidates, on-boarding and allowing them to start working remotely, with the caveat of processes being reviewed on a case-by-case basis.
IR35 Delay and the Contract market
The contract market has of course been equally impacted due to a number of factors, including the Government’s last minute U-turn on IR35, delaying its implementation by one year, until April 2021. Although this measure was adopted to reduce the impact of the coronavirus crisis on the flexible workforce market and act as an economic stimulus, there has also been a degree of uncertainty for clients and candidates alike. Whereas a lot of financial services firms have decided, at short notice, to continue engaging with Limited Company contractors, some other institutions decided to proceed with the reform regardless of the new announcement. When it comes to attracting highly skilled contractors, we have seen that clients who have decided to postpone IR35 implementation plans have experienced lower levels of disruption and have also gained an instant competitive advantage over those that have not.
Considering how controversial the legislation was perceived among contractors, it goes without saying that the vast majority of them have enthusiastically welcomed this delay. Of the contractors who completed our recent survey, more than three quarters of them stated that given the choice, they would chose the nature of their current assignment to be via a limited company as opposed to PAYE or Umbrella.
Despite the obvious obstacles mentioned above, the Finance market has seen a variety of roles being released from a range of firms across the financial services space as summarised below.
When looking at recruitment on a permanent basis, the job market at the start of Q1 is usually fairly slow in the Finance world. With year-end processes taking priority, the main bulk of permanent hires at the start of the quarter tend to be ongoing processes which re-gain momentum after the Christmas break or critical hires deemed necessary. This was no different at the start of Q1 2020. The remainder of the quarter however, albeit somewhat interrupted, saw a continued increase in demand for 1-3 years post qualified candidates with very specific relevant skillsets and industry experience. The demand for this type of profile was seen across our Asset Management, Hedge Fund, Private Equity and Insurance clients who were looking to fill Financial Accounting/Control, Fund Accounting/Control and FP&A vacancies.
The demand for newly qualified candidates was ever present, with firms aware that a lot of 2019 ACA candidates will still be looking since having qualified. It will be interesting to see the type of changes that will occur as a result of this year’s ACA exams being cancelled due to these unusual circumstances and how recruitment will be impacted, from the perspective of both clients and candidates. There was also an increase in demand for more niche and technical skillsets. These tended to be across ICAAP, Regulatory reporting and Tax in particular and were mostly at the VP level, with not a huge amount of AVP vacancies seen in these areas.
Another familiar pattern that has been increasingly observed over the last couple of years across the permanent market continued into Q1, in that our traditional Investment Banking clients are not releasing the volume of roles that they have historically done.
In the Contract space we saw similar trends as per the permanent market – namely a high demand for newly qualified accountants, mainly for reporting roles. As the pool of immediately available ACA candidates was scarce as always, top tier institutions had to adjust their expectations, thus considering a wider array of backgrounds, including candidates with little or no financial services experience. Investment Banks released a number of vacancies for their regulatory reporting functions, particularly on the capital side, as well as for their statutory reporting and financial accounting/control teams. Our Asset Management clients looked to strengthen their fund accounting teams with junior candidates with a visible focus on their Private Equity and Real Estate portfolios.
There was also a significant demand for Finance Change and Regulatory Change professionals at the more senior level. Whilst sell side clients focused more on improving their Regulatory Reporting frameworks and systems, buy-side firms aimed to improve their finance functions by bringing in experienced contractors to help them streamline processes, remove manual work and improve MI capabilities. Demand was concentrated equally between the large players and boutique clients with niche areas of expertise, such as small-sized asset managers, wealth management firms, hedge funds and a number of private equity companies.
The last quarter of 2019 and the first quarter of 2020 have shown us that the Tax market definitely continues to be one that is candidate-driven with firms competing harshly to attract the best available talent. We have seen a spike in demand for Tax professionals with strong experience in specific investments, especially within the alternatives space. Successful candidates did not only possess strong core UK Tax knowledge, but also had an understanding of tax regimes of various European jurisdictions as well as exposure to ancillary areas such as Tax structuring and Transaction Tax.
Q2 – Reasons to be optimistic
Even with the uncertainty around the current crisis, we expect markets to pick up slightly in Q2 as clients become more comfortable using technology and working from home becomes the norm. We expect that firms will continue to adapt by conducting video interviews and making sure they have the relevant technological means in place so that if we are still working for the foreseeable future, they are able to on-board new employees and allow them to start working remotely.
Cautious hiring will continue in the permanent space, will contractors fill the gap?
Across the majority of the areas mentioned above, including newly qualified vacancies, it is clear that most clients are prioritising finding as close to the perfect candidate as possible over speed of process. When taking into account the current climate and the time it might take to get the economy back on track, this is a pattern we see continuing as firms will look to be careful where they increase their costs.
Thinking longer term, we do expect to see a sharp increase in the number of roles released once we are back to normality, as companies will look to fill vacancies which may have been on hold, or to strengthen teams who may need to play catch up since having all been working from home. With firms being more cautious about their long term commitments and the postponement of IR35, we believe that in the short run, there will be a significant increase in the number of contract vacancies released by our clients.
Changes in attitude towards WFH
Another point worth highlighting is that with the vast majority of firms now advising that their employees work from home, Financial Services firms have been presented with the opportunity to re-evaluate their working from home policies moving forward. There is an ever increasing demand from employees to have the option to work from home at some point during the working week.
The current situation we find ourselves in may result in some firms, whether by choice or not, having the chance to confidently implement more flexible and well thought-out working from home policies. This may in turn result in these firms being able to attract more top talent due to better work-life balance, with more than 70% of finance professionals who completed our survey stating that a good working from home policy would positively influence their decision to accept an offer with a new employer.
For more information about the market or current opportunities please contact one of our Consultants.