dusted / 13 December
Brexit and investment management recruitment
Despite the rocky implementation, Brexit is still very much due to take place (at time of writing). There has been a lot of speculation about what will happen to various industries, including the financial services industry. A report from Oliver Wyman claims up to 75,000 jobs could leave the EU, while the latest EY Financial Services Brexit Tracker has said a fifth of financial services companies have confirmed at least one relocation destination in Europe.
But these are all worst-case scenarios. Analysts for the asset management industry have been slightly more optimistic. Or least they were until July, when the EU securities regulator, Esma, suggested national regulators should take a tough stance on policing the asset management sector after Brexit. Asset management businesses with locations all over Europe could find they have more trouble delegating or outsourcing their asset management internationally.
The logic behind this is that it will prevent firms from setting up “empty shell” subsidiaries in EU countries, allowing them to serve EU clients while leaving most of their management and operations in the UK. But what about businesses that operate primarily in the UK? Specifically, what about recruitment in UK investment management?
With negotiations ongoing and becoming more tumultuous by the day, it still seems too early to say with any definitive confidence that Brexit will have a major impact on the UK. However, based on patterns and the state of the industry since the Brexit vote, it’s becoming clear that there isn’t going to be a drastic change in the industry until the UK concludes its exit negotiations with the EU.
The primary threat to UK-centric investment management businesses is finding and maintaining EU talent. Nearly three-fifths of European nationals working in British investment management believe their jobs will not be secure following Brexit. Many EU nationals have even decided to leave. This means a smaller market from which UK investment management businesses source their staff, and could lead to a dramatic increase in demand (and therefore increase in salaries) for UK talent. In addition, since mid-2016, many analysts have suggested that Brexit will halt the growth of UK economy.
The good news is that non-EU passport holders had the opposite response, with 69% saying that they intend to remain in the UK for the long term. The even better news is that, despite the reduced overall number of EU workers coming to the UK, it doesn’t seem to be having much of an impact on how many skilled workers come over. Firms committed to the UK are unlikely to see job losses in the fund management and client-facing roles.
While it might be true that many financial firms have become nervous enough to consider contingency plans post-Brexit, experts are still confident there isn’t a crisis afoot, with some estimating the number of jobs being lost due to Brexit to have dropped by 2,000 since estimates in 2016. Omar Ali, the UK Financial Services Leader at EY, is confident there won’t be any immediate significant impact on London’s financial industry, saying, “While the relocation of [these] roles will have a significant impact on smaller financial services centres on the continent, it is unlikely in the short term to threaten London’s role as Europe’s main financial hub.”
Overall, Mason Blake is of the opinion that Brexit will have minimal impact on the investment management sector compared to other industries. With regards to recruitment, there is no guarantee that the situation won’t change, but there doesn’t seem to be any definitive reason to panic or suggest that the changes will be for the worst. Based on data and our significant professional experience, we believe you can take hysterical ‘end is nigh’ news articles surrounding Brexit with a pinch of salt, and investment management firms operating within the UK should employ some optimism.