Flat Comp. High Expectations. Confident Candidates. Skill Shortages. Retention Challenges Facing the Buy-Side in 2015

Buy-Side recruitment improved in 2014 as obstacles for replacement hiring were removed and the competition for business-facing candidates increased. These trends increased salaries for new hires by up to 25%. In 2014, increasing candidate confidence in the job market prompted many to move jobs following several years of insecurity.

In 2015, overall sentiment amongst hiring managers within the Hedge Fund & Investment Management industry is positive. In this market update we will look into some of the trends driving this outlook. We will also highlight the main challenges facing hiring managers when it comes to staff retention, compensation and succession planning

2014 was a Good Year for Buy-Side Recruitment

Regulatory pressures, ever-increasing Business demands and a feeling of greater job security meant that 2014 was a good year for Technology & Operations recruiters.  
The three most common reasons for hiring were:

  1. Better serve the Front Office; 
  2. Improve data accuracy for reporting purposes; 
  3. Strengthen delivery by working closer with offshore development teams.

Retention and Succession Planning are Priorities for 2015

At the beginning 2014, recruiters experienced an immediate uptick in candidate enquiries. Frustrated candidates wanted to change jobs in the benign job market of 2011 – 2013 however they were hamstrung with a lack of vacancies and concerns around job security.

  • At the beginning of 2015, experienced candidates with Enterprise Data Management, BA skills, Risk, Performance or Front Office experience are confident to explore external opportunities.
  • Increased competition for Markit EDM and Charles River experience resulted in permanent staff leaving their jobs for contract roles. This trend is another sign that candidates share positive sentiment about future job security.
  • Demand is heightened within Technology & Operations because the same skills, systems, regulations and projects are ubiquitous throughout the Buy-Side. 
  • Technology & Operations face a lack of supply due to an aging workforce and restrictions on highly skilled migrants. The continued outsourcing/offshoring and use of specialist consultancies mean that few entry-level positions were created during the recession but fortunately graduate hiring is predicted to increase in 2015.

In Terms of Compensation is “Flat is the new Up”?

Bonus rounds began in January 2015 and early payers suggest that Comp figures are flat on the previous year. 

Increased cost and regulatory pressures have fettered better revenue generation amongst Long-Only Fund Managers. These cost pressures have an immediate impact on the remuneration of those working within Technology and Operations. 

  • Feedback from Asset Managers that have announced their comp in January suggest static budgets however candidate expectations are high due to better top line results. 
  • This disparity will result in staff turnover because employees feel more assured to pursue external opportunities and basic salaries for new hires are outpacing internal salary reviews.
  • In 2014, it was not uncommon to see candidates receiving 25% uplifts on their basic salary although the median is closer to 10%.

The Firms that Recruited High Volumes in 2014, Have New Direction in 2015

During last year, several Buy-Side firms, whom hitherto had been sedate for several years returned to the recruitment market. These firms joined a collection of Fund Managers and Asset Management arms of Investment Banks whom hired consistently high volumes to bolster large scale Transformation, Investment and Data projects.

  • Many firms that increased their levels of hiring in 2014 made changes to their senior IT management. The impact of these changes will be seen throughout 2015. 
  • It is likely these firms will turn their initial attention will be on delivery and optimising current headcount but expect these players be hiring in Q2/Q3 of 2015.

Skill Based Interviewing & Salary Benchmarking

The majority Of Buy-Side Tech & Ops hiring managers are planning for considered growth in 2015 as teams move into a pattern of “normalised” recruitment volumes.
Candidates hold a positive outlook due to increased competition amongst Buy-Side firms looking for experienced Business Analysts, Data Specialists, Risk and Performance Analysts. 

  • To overcome skill shortages we recommend you partner with agencies that conduct thorough Skill Based Interviews. We have success in recruiting for our Buy-Side clients by supplementing our specialist Buy-Side population with candidates from software vendors, insurance, consultancies and broker dealer environments.
  • The retention of staff is going to be harder than last year so if you need an external view on Salary Benchmarking for your team or indeed your own position then this is a non-billable service that we perform for clients.

I am always interested in your thoughts on what is happening market and welcome your feedback.

Matt