The past 12 months will go on record as one of the worst years in the financial services industry in terms of declining investment markets impacting on corporate revenues.
However, the resultant pain has not been shared equally; companies with core wealth management businesses are taking the brunt of the pain.
First line cutbacks went deep into corporate discretionary spending. Marketing, sponsorships and entertainment budgets were dramatically pruned. Next port of call was headcounts, with back-office administration and client service being rationalised.
Any area that didn’t contribute to revenue went under review and numbers were revised down and redundancies initiated.
In the front lines
Those that thought front line personnel would be spared were provided with a great insight into how deep companies were willing to go to reduce headcounts when a number of fund managers retrenched business development personnel.
However, in the dark clouds that have enveloped financial services industry employment there remain opportunities, with a number of companies continuing to grow staff numbers on the back of successful business strategies that have continued to produce results through 2008.
While these opportunities are fewer than 12 months ago, they demonstrate there is some optimism among companies that have achieved or exceeded performance benchmarks over the past year, believing that now is the time to build personal infrastructure to both maintain and build new business.
Undoubtedly, a proportion of current new hires are opportunistic, as there are a number of high quality personnel who have been dislodged from their previous employers.
But this gene pool, particularly in distribution, is far from an endless supply and will rapidly dry up unless there are further redundancies as we move into the second quarter of this year.
Countering this is the increased difficulty in extracting targeted candidates from their current employer. In this uncertain economic environment, most are averse to looking at new employment and would prefer to see out 2009 in their current position. It may take some time for companies that view the market as awash with relevant candidates to recognise that this is not the case.
To avoid spending an inordinate amount of time conducting ad hoc recruitment campaigns, it is essential in this market to be more focused than ever on not only identifying who you want to recruit, but ensuring candidates are carefully managed through the recruitment process.
Hiring managers who do not have strong recruitment skills and experience will increasingly find recruitment a frustrating and expensive experience and one they wished they had handed over to a professional recruiter.
Silver lining
The silver lining lies in part with sectors of the market that are less impacted by investment markets, with a standout being the risk insurance sector that shows little sign of slowing.
This year a number of companies will actually increase business written and grow their personnel headcount in line to meet service requirements.
Advisers that are predominantly risk-focused are quietly optimistic about the year ahead and product suppliers are working to enhance products and improve their services to advisers and their clients.
Advice businesses that are well managed and have established client bases along with diversified revenue streams are well placed, particularly where the client base is at most moderately geared into the investment markets.
While these businesses may not be looking at further recruitment activity at least until the new financial year, they are not in a position where they must instigate redundancies. They will be the first in line to recruit new staff as the economy starts to gain certainty.
The pressure is now on advice practices that have in the past given little focus to implementing robust strategies for the development of their businesses in different market conditions.
Those at particular risk have rapidly expanded leveraging their practices to take on additional resources and upgrade administration and IT systems at significant cost.
The situation for some is critical as we move through a prolonged period of flat to negative economic growth along with an investor lack of confidence.
While it is unclear how many advisers have had to redress their retirement plans, particularly when the sale value of their practices is not to their expectation, it is not improbable to think the number would not be inconsequential.
Super opportunities
Superannuation outsourcing has areas of personnel growth, particularly with companies that have built significant market share over the past two to three years.
There are a number of companies that have continued to recruit senior level candidates to bolster servicing and new business infrastructure and have further plans to increase headcount in the first quarter of this year.
While funds management overall has seen a decline in recruitment activity over the past year, there have been both Australian and overseas companies willing to make further investment in both investment specialists and distribution personnel.
This is evidenced both in the institutional and retail/wholesale sectors where a number of companies are gearing up to boost their distribution presence.
This part of the market is problematic in terms of recruitment as the pool of business development personnel with track records of success is lacking in depth, particularly when you consider the number of people who have moved into new roles in the recent past and will not consider new opportunities in the short to mid-term.
As we move through the first quarter of this year, we will continue to see companies focus on cost management and it is highly likely we will see more industry redundancies.
In good times, staff that have, at best, patchy records of performance will be under the microscope, with companies looking to exit non-performers in the first line of redundancies.
While we are now in historic territory in terms of overall flat employment growth, there will continue to be sectors of the industry that will grow and will be looking to recruit experienced and well-qualified personnel in a variety of occupations.
Peter Dawson is executive director of Financial Recruitment Group.
