So far this quarter we have seen assets managed in ETFs hit a record $5.12tn in July, more than doubling over the past five years. There are, however, some signs of slowing growth with assets under management in ETFs in Europe rising by just 3.2% this year, compared with 40% in 2017. We have also seen large investment inflows into speciality property sectors, such as logistics, industrials, healthcare and hospitality, are expected to lead to a substantial increase in the market value of Europe’s listed real estate sector over the next five years.
Investment managers have refocused efforts on preparing for a hard Brexit, but many large groups have long had extra precautions in place to ensure that they are not cut off from European clients when the UK leaves the EU. Luxembourg has been in fierce competition with Dublin to scoop up fund groups’ business after Brexit. More than 40 financial companies have drawn up concrete plans to transfer part of their activities to Luxembourg, the country’s statistics bureau has revealed. Nine banks, 13 fund managers, 10 insurers, five investment firms and four other financial actors have firmly put plans in place, according to Statec. It seems Paris, Frankfurt and Amsterdam are lagging.
We have also noticed a continued trend of asset managers moving away from many of the traditional models that have shaped the industry for decades. And one of the most notable is the role of marketing, and marketeers. There has been a notable shift in the profile of the buy side marketing function, in itself a microcosm of the pace and scale of change in the wider asset management industry. Demand for traditional marketeers has been replaced with a need for strategic thinkers, innovative practitioners, and technical specialists. A number of houses that have successfully adapted to meet the current challenges, have made the successful move from ‘product pushers’ to solutions providers, utilising the merits of hiring marketeers with Wholesale and Retail experience.
Increasingly asset management has looked to replicate the success of other sectors who have harnessed technology effectively – and none more so than ecommerce. Investors have growing expectations of similar levels of personalisation, relevance and timeliness and asset managers that can incorporate these are setting themselves apart from their competitors. We have spotted similar demands from consumers within the banking industry. Digital newcomers like Monzo have entered the market, who are nimble, tech-savvy and offering effective technology platforms, integrating customer data for better suggestions and serving customers with machine-learning intelligence embedded in their processes.
Well publicised research from McKinsey & Company recently stated that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. We are seeing some positive progress, as women are now in 35.4% of FTSE 100 non-executive director positions. The Investment Association (IA) has also appointed four directors to its board, including Brooks Macdonald CEO Caroline Connellan and Columbia Threadneedle Investments CEO, EMEA, Michelle Scrimgeour. Peter Harrison, chairman of the IA, commented on the new appointments: “Their perspectives and experience will enable the IA to remain an authoritative voice for the asset management industry.”
There is still a significant need for change, as the overall number of women holding the most senior positions and Executive positions in the boardrooms of Britain’s biggest companies has fallen, and the average pay for male FTSE 100 CEOs is 110% more than their female counterparts, according to a report by the CIPD.
Diversity, Sales & Profitability
BRUIN Financial will be challenging the status quo at a breakfast panel on Thursday 29th November alongside senior Sales professionals. We will be exploring whether the introduction of women truly increases sales revenue, or whether men are simply better at sales than women? To what extent is the culture of a sales team conducive to females? Is there a structural problem attracting females to sales? How can we look to make Sales jobs more attractive to women?
Please join us for a discussion around strategies to attract, retain, develop, and progress women within the asset management sales environment: RSVP to Georgina Sell please note that due to popular interest, places are limited.
We have seen certain marketing roles flourishing in the job market; with specific skills becoming increasingly in demand, such as senior European marketing roles that require European language skills. As investment management firms expand their presence in Europe; there has been a need for marketing strategies and messaging to be tailored to local and broader European audiences; this is for both client channels (whether that be more institutionally or wholesale aligned) and language requirements.
Writers have continued to be in strong demand across asset management with consistent requirements for RFP and investment writers for. With financial services firms increasing their product diversity and extending the remit of their reach to broader Europe; there has been greater demand to document, adapt, monitor and advertise their offerings through investment writing pieces and formal RFP documentation.
We have also noted growing demand for marketing executives for the general production of collateral and fund fact sheet generation, driven by increasing opportunities for internal progression as Marketing Executives step up into more senior roles. By comparison, senior marketing roles have predominantly focused on client segmentation strategies and channels (retail, wholesale and institutional), as well as UK and European focussed remits.
As we approach the end of the year we can expect more aggressive moves into European markets to continue. As previously mentioned, we have seen significant hiring required in the UK to support local distribution teams locally in Europe, however an influx of continental-based roles are predicted to rise. In particular we expect to see increased activity in Luxembourg, with more than 40 financial companies committing to moving certain teams to the region. This is expected to create a minimum of 400 jobs across multiple disciplines.
We also anticipate continued demand for junior roles across all aspects of Sales & Marketing continue, with the need for replacement hires taking precedent over new headcounts – this is likely to reverse in Q1 of 2019 and then revert back in Q2, after bonus season. Candidates at Assistant, Executive and Analyst levels are generally more accessible than bulking teams with significant experience.
Similarly, we expect more focus on marketing than sales roles, with many distribution staff waiting for their bonuses to be paid at the typical bonus season of March/April. Sales hiring has been somewhat slower on the whole in 2018 with capital raising being affected across numerous companies as investors avoid mutual funds over the worry of costly markets. Whether the fund management industry try and make amends by significant hiring in the early part of next year is still to be seen.
MOVERS AND SHAKERS
UK hiring has seen a focus on the Wholesale channel, demonstrated by Corporate credit specialist Muzinich & Co. hiring Hugo Wheeler as Head of UK Wholesale from BNY Mellon followed by Selina Tyler joining Hermes Investment Management from Mirabaud Asset Management as Head of Wholesale for UK and Ireland.
Most noticeable in Europe have been changes in both Institutional as well as Wholesale channels. DWS (the asset management business majority-owned by Deutsche Bank) has brought in new members to their European institutional client team. Gareth Davies joins as Head of UK Institutional clients after moving from Hermes Investment Management while Alexia Giugni takes the role of Head of Institutional clients for southern Europe after leaving UBS last year. Candriam has recruited Thomas Kalin, previously a client director at GAM, as senior client relationship manager for the wholesale distribution and institutional market in Switzerland. In Spain, Bárbara Echazarra has joined Columbia Threadneedle as sales manager in the Madrid office of the US-UK fund group. This demonstrates a focus on firms strengthening their teams within Europe and the UK in particular, possibly looking to gain security in the face of uncertainty caused by Brexit.
Moving on to the Global remit, firms have been looking to solidify their structure from the top downwards after a number of hires with a Global focus. Standard Life Aberdeen has attained Alex Hoctor-Duncan in the role of Global Sales Director and Head of Distribution for EMEA from BlackRock. RBC Global Asset Management similarly has recruited Jeff Masom as Global Head of Institutional Distribution while QMA, the quantitative equity division of PGIM, has a new Global Chief Marketing Officer, bringing in Lee Shapcott from Alliance Bernstein.