Insights

Investment & Middle Office

INVESTMENT & MIDDLE OFFICE MARKET COMMENTARY Q1, 2018

• Article by BRUIN Financial

INVESTMENT & MIDDLE OFFICE MARKET COMMENTARY Q1, 2018

MARKET OVERVIEW
The Asset Management industry has seen a steady flow of recruitment in Q1 across front and middle office, with pockets of heavy recruitment in client services, client reporting, performance, technical fund manager assistants, research and product (including specialists and product development). The start of 2018 has also been a defining time for the industry. With the implementation of MiFID II and PRIIPs regulations, the continued discussion around Brexit, and several large mergers.

MiFID II implementation has resulted in a number of changes across asset management businesses, one of the most costly may be the new regulations regarding research. The changes mean that research and trading costs must be differentiated and it has driven a reduction in both the number of research providers which firms will use, and the budget teams are allocating to external research. Many larger companies have promised investors that this will not have an affect on their fees, but smaller firms will find it hard to absorb the added costs. The results of this looking into the future, means an increase in building out internal research teams.

The final quarter of 2017 through to the start to 2018 continued to be a busy time for hiring, and we have seen a largely candidate driven market. Top tier candidates have secured interviews fast, and we have also seen individuals receive multiple offers for similar roles. The firms which have run the most efficient interview processes have found that this enables them to secure new talent faster, as well as companies which have been focused on actively selling their firm to potential joiners from the outset.

Similarly in the contracting market, there has been a constant volume of hiring within middle office and front office functions. It is apparent that more opportunities became available throughout fund accounting, valuations, performance and product development. With new legislation coming into play, we have also seen roles within these areas with a particular focus on DC Pensions.

ROLE PROFILES

Middle office:
Businesses continued to focus on the improvement and expansion of their client servicing divisions, with some even building out completely new teams to focus on specific product streams, i.e. multi-asset offerings.  Candidates with an institutional focus have been the most in demand, but are few and far between, usually seeking to either progress into more relationship management roles at the more senior end, or become more product / investment aligned at the more junior end.  Clients have

therefore been more open to taking candidates from an institutional reporting background with strong communication skills and a desire to become more client facing. As the pool of candidates with institutional experience is limited, a large number of clients opted for the contracting route hoping that this would open up the avenue for candidates looking for more flexibility. Lucrative day rates did sway a segment of candidates, however on the whole candidates in this space want to venture out to new areas., mirroring the permanent space.

We have also seen firms investing in client onboarding and transition teams, often called client implementation areas. This increased specialism allows client service teams to continue to focus on BAU client management and allows implementation teams to create efficiencies and improve onboarding procedures for clients. It also means that candidates are developing specific skillsets within this space, such as pooled or segregated client implementation.

Client reporting has been one of the busiest areas for us in Q1, across all levels; from a few months experience to senior manager.  Due to the sheer volume of roles in this space, clients have been very open to looking at candidates from a diverse range of backgrounds, as long as some form of client reporting has been part of their role.  This is also an area where we have seen hiring managers being open to hiring candidates who have been out of the market for many years, with the right experience, and who are trying to return to the industry.

Performance and attribution roles have also been recruited across many of our clients, both on the fixed income side and equity side. Roles have predominantly been at the more senior end of the market and although there may not be so many active candidates in the market, these roles have been able to attract otherwise inactive candidates with more varied and exciting responsibilities, i.e. a heavy project focus, or an additional focus on portfolio construction.

With constant changes in regulation, we have seen clients implementing new platforms in order to allow for more bespoke reporting. This has seen an increase in the amount of temporary hires in the client reporting and performance space. As a result, candidates who have had some previous experience working on ad-hoc projects have been in high demand.

Front Office:
Within the research space we have seen an increase in external hiring, in an area which traditionally will often promote individuals from within. Firms have been bringing in fresh talent to mainly their emerging markets and SRI spaces. Within SRI we have seen roles at all levels, with new positions being created for junior candidates with some experience within research, and a passion for SRI. We have also seen a number of more senior hires, looking for experienced candidates who can bring new ideas. This has proved trickier as there are fewer individuals at a senior level with this specialism as it is a relatively new area of focus.

What has been very encouraging is the number of technical mid-level fund manager assistant roles, which historically have been recruited for from within, but now companies are trying to upskill and bring in new talent.  These FMA / junior portfolio manager roles have spanned most financial instruments and there have been a lot of particularly strong candidates in this space to fill these vacancies.

There have been some interesting restructures within product at various asset managers in this space, with some teams splitting out product management / product development and market research, and some amalgamating them.  Either way, with any restructure invariably comes recruitment requirements, which we have seen a lot of.  Again, these roles have predominantly been at the more senior level, particularly in equities and multi-asset.  These roles in London have often required European languages and due to our extensive networking in other countries in this space we have also been working on such roles in a few other countries across Europe where they are expanding their satellite offices. We have also seen an increase in the number of contracting product roles looking for DC product knowledge, with changes in regulation having a noticeable effect on the DC product space. These candidates were few and far between, most of them already in permanent positions and those not, getting snapped up quickly.

PREDICTIONS
Looking forward into 2018, we hear that investors are continuing their demand of long term returns, which has driven them to look at their ESG criteria when making portfolio construction decisions. Investors are attracted to funds which take into account these risks as they have the potential to offer sustainable investment opportunities which have longer term growth trajectories. As a result we predict that there will be a continued focus on companies hiring SRI specialists who will focus on research and portfolio construction.

Languages are also set to be a continued focus for the rest of the year, not only in client facing roles, but also within product and oversight as many firms are now spreading their core divisions across Europe to mitigate Brexit risks.

With a promising stream of recruitment across most of our clients, we look forward to a busy Q2 in 2018.