The past two years have been hard hitting for the financial services career market. Ashleigh McIntyre takes a look at what is driving its recovery.
It is difficult to reflect on the past 12 months without acknowledging the challenges faced by the financial services industry throughout the global financial crisis (GFC).
This time last year, the finance job market was plagued by salary reductions, salary freezes, job cuts and drawn-out recruitment processes as a result of the market downturn.
Much scrutiny was placed on big business salaries, particularly executive remuneration, and it was common practice for the discretionary parts of pay packets to be pared back to nothing as employers tried to cut costs. But with the end of the downturn in sight, a much brighter picture is being painted for the remainder of 2010.
Recruitment drive
Employers in the financial services industry have begun their recruitment drives again, realising that as the market recovers additional headcount is needed to outperform competition.
But this return to normality in terms of recruiting has not stretched as far as salaries, which are remaining stagnant.
Recruiters are optimistic that a return to larger pay packets and increased competition in the job market lie ahead, as employers look to recruit the best talent to help them take advantage of improving market conditions.
Remuneration
It comes as no surprise that salaries across the financial services industry have seen little movement over the past 12 months.
Unfortunately, base salaries have not benefitted from the same rapid increase witnessed by recruitment rates since the start of the year.
“While recruitment activity has increased with a vengeance, salaries remain fairly static. We do however anticipate that salaries will start to increase over the next 12 months as the war for talent heats up once more,” says the senior regional director of Hays Banking, Jane McNeill.
According to Hays, almost half of financial services employers (48 per cent) expect to see a 3 to 6 per cent increase in their salaries in their next review, while a further 8 per cent expect to see their salaries increase by over 6 per cent.
Compared to last year, these numbers have more than doubled.
The outlook for bonuses is not quite as strong. Flexible salary packaging in the sector has improved slightly and the number of bonuses handed out increased marginally over the last year.
Advance Professional’s director of global marketing intelligence, Bob Olivier, says that although the discretionary parts of pay packets have taken a hit in some firms, commission trails in the majority of larger financial services institutions have not been affected by the downturn.
In addition, variances in salaries and bonuses across similar positions are being experienced throughout the industry as employers struggle to afford the best quality candidates.
Olivier believes this variance in salary level can be attributed to the particular skills or benefits an employee can bring to a business.
“For example, financial planners who bring a client book or employees with particular expertise are likely to receive higher salary than those without,” he said.
Even during the GFC, remuneration in the form of incentive programs still remained a key way for employers to retain their top talent.
However, Olivier says this may not be the case in the future. “The move towards a fee-for-service remuneration model will most likely have an effect on the structure of incentive programs,” he said.
“If revenue is therefore brought forward rather than spread, incentive payments will also gravitate towards short rather than long term. This may lead to greater movement of financial planning professionals once annual bonuses are paid, which is great if you’re searching for staff but frustrating if you’re trying to retain the best,” he adds.
Recruitment
The renewed enthusiasm to recruit occurred late last year, breaking the conservative approach to hiring that was common throughout the industry at the time, McNeill says.
“The main motivation was the realisation by many organisations that they had downsized to a point where they no longer had sufficient headcount to take advantage of recovering market conditions, which prompted them to recruit immediately,” she says.
Almost half of the employers surveyed by Hays are expecting to increase their permanent headcount, while 22 per cent are looking to increase their use of temporary and contract staff — up from 14 per cent last year.
The number of job advertisements in the market have also risen in line with the market’s renewed optimism.
The Advantage Job Index shows that banking and financial services job advertisements are up 25 per cent on last year; and while recruitment is increasing throughout the industry, it appears that those in revenue generating roles such as experienced financial planners are in the highest demand, according to eFinancial Careers Asia-Pacific editor Simon Mortlock.
This is backed by the index, which shows that financial planner job advertisements are up 28 per cent over the 12 months — 3 per cent higher than the industry average.
The drive for more financial planners is also starting to have a knock-on effect for support staff such as paraplanners and client service officers, but at a slower rate. In the stockbroking realm, demand has increased for investment advisers, dealers’ assistants and portfolio administrators.
Equity analysts are also in demand, particularly those with energy, resources or financial services experience.
Despite this, there is still a lot of volatility and uncertainty in the financial services job market, which is creating some interesting trends in recruiting, according to eJobs Recruitment Specialists managing director Trevor Punnett.
One trend Punnett has noticed is the significant reduction of movement in the financial planning market, with the majority of financial planners “staying put” as compared to this time last year.
Olivier agrees that the GFC has “produced a new found conservatism among those in Generation Y who saw or experienced much pain during the GFC.
Rather than flock back to the market in droves, they are now showing more loyalty to their employer and being less open to a career move,” he says.
This has resulted in the need for employers to rely more heavily on recruitment consultancies to source the best talent. Recruiters in turn have to work harder and more innovatively to attract the passive job seeker and earn their fee.
Hays Banking’s Jane McNeill also says that there is a large percentage of passive job seekers in the market who are not necessarily looking to leave, but are aware of the opportunities available.
“These candidates are not actively looking for their next role. They are unlikely to respond to job advertisements, but they are happy to put feelers out very selectively with recruiters.
These candidates are generally of a very high quality and so are valued by employers,” she says.
Light at the end of the tunnel
The past year has been a particularly tough one for the financial services industry in terms of both recruitment and remuneration — many people lost their jobs, more still took salary reductions and freezes.
Meanwhile, recruitment processes were drawn-out as employers became increasingly cautious about hiring additional staff.
It seemed at the time that the end of the global downturn would be a long way off, and that recruitment and salaries would take longer still to return to their previous levels.
Fortunately, recruitment is on the rise as employers realise they are understaffed to take advantage of the opportunities presented by the upturn in market conditions.
Although salary levels have remained fairly stagnant throughout the year, recruiters remain optimistic that as hiring continues to gain momentum, salaries will follow.
