As cost-cutting programs across the wealth management industry drive a rise in redundancies, a recruitment consultant suggests highly regarded talent could soon see their loyalty tested in an uncertain market.
The latest AGM season has already seen a number of big firms unveil cost reduction programs to “cut the fat” and improve profitability.
In October, AMP announced it will undergo a restructuring in its technology, platforms, finance, and legal and governance teams. It followed AMP’s previous announcement in April of a restructure of its bank lending division in light of a move into digital banking which would impact 83 people.
Last month, Clime Investment Management also said it expects to see $1 million reduction in operating costs as a result of a cut in board and leadership costs, with costs in every part of the business coming under scrutiny, according to managing director Michael Baragwanath.
Most recently, Insignia Financial announced it will look to maximise the benefits of scale and drive efficiency to achieve around $200 million per annum net cost savings by FY30. After a period of company moves and divestments, the firm said it will now move away from M&A activity to focus on its customers across four brands of advice, wrap, master trust and asset management.
Speaking to Money Management, Adrian Karloci, founding director and senior consultant at B&K Consulting, remarked there is an “interesting conundrum” in the job market presently.
This consists of staff feeling uncertain about moving to a new place but simultaneously fearing redundancy in their current employment.
Talent that is highly regarded at their firms has demonstrated less willingness to look for new positions, Karloci said. However, as the number of redundancies rises across the board and employees get nervous, such individuals may eventually be tempted to explore new opportunities.
“We’re in this interesting conundrum because the number of redundancies across the board has created a level of uncertainty for people and, as the pendulum swings, loyalty will be tested. These same people will be open to moving because although [the redundancy] didn’t happen to them, to the people they have relationships with, it has an impact,” he observed.
“They’re probably highly regarded and looked after where they are, so there’s this uncertainty about jumping somewhere new where they don’t have that reputation and they don’t have that credibility.
“I think the narrative of ‘things are tough’ really wears people down. But by the same token, the uncertainty extends to making a move in this climate and thinking ‘I’m safer where I am.’”
Those who look to remain loyal to their employer say they are seeking growth and development opportunities and assessing how they can progress in their role.
For recruiters, this has meant they are proactively engaging talent who are hesitant to leave rather than receiving applications for roles. He attributed this to lingering uncertainty in the market and fewer “pull factors” that would lead such individuals to look outwards of their own accord.
Cutting to the bone
Ongoing margin pressures and regulatory challenges have contributed to the surge of expense management cycles across the industry, he remarked, and for some organisations this means they have had to “cut to the bone”, with senior talent not immune to these changes.
“Interestingly, in years gone by, I remember some organisations cutting middle management at this time of year and that’s meant to clear out the balance sheet for the new year. My observation this year is they’ve been cutting people at the senior end,” Karloci said.
“In part, the redundancies are for roles that aren’t required or were nice to have. Another part is you might need to only cut three to four [senior roles] as opposed to 10 to clear the number out in your balance sheet.
“In some cases, some organisations have cut to the bone. There’s nobody left to cut, you’re at the tipping point of ‘who is going to be doing the work?’”
However, Karloci said he isn’t entirely pessimistic about the market heading into 2025 as some green shoots are emerging as businesses look to scale up, particularly in retirement and life insurance.
For example, while Insignia has streamlined its operations to improve efficiency and reduce costs, it has also hired a number of “highly capable” individuals at the senior level. In July, the firm tapped Dave Woodall, former chief commercial officer at Australian Retirement Trust, as its new chief executive for superannuation.
Earlier this month, it also announced four new appointments for the MLC brand: former TAL chief operating officer Andrew Howard as executive director of strategy and innovation alongside experienced executives Ashton Jones, Scott Manson and Jeffrey Hopson in the newly formed strategy and innovation team.
More broadly, compared to a “desolate” start of the year, the jobs market has shown signs of improvement, Karloci added.
“If I cast my mind back to January this year where it was desolate, it was really quiet. It has started to improve,” he said.
