David Reed / 05 December
Product Market Update 2019
2019 has been extremely busy for product management recruitment. Encouragingly, it has grown, more than consolidated over the last 12 months as firms look to broaden their product ranges and branch out into the less traditional investment products or strengthen them further.
Across the industry, the demand for individuals with fund launch experience across alternative assets such as real assets, real estate and infrastructure has increased substantially. Structuring knowledge of UK OEIC & UCITS funds has also seen growth.
We have also seen a significant increase in asset managers hiring people from legal backgrounds to cover product governance, product documentation and complex regulatory legislation for the post launch phase of the product lifecycle.
Insights in market intelligence
Firms have continued to develop specialist market intelligence teams to work along side the existing product strategy and development functions teams. This enables companies to integrate intelligence from Investment, distribution and product teams to identify organisational strengths and identify gaps where they can offer investors new and innovative products. The function also tends to focus on competitor analysis to ensure that the business is keeping up with its direct competitors.
Winds of change in ESG
ESG investing has grown steadily over the last few years, but in the last year the volume of sustainable product and investment focused roles has spiked. As more asset managers build ESG capabilities to meet investor demand, they have continuously sought more ESG specialists to join growing product specialist research teams.
The majority of these roles focus on ESG integration across the full investment process. Many firms have also launched sustainable or impact funds and have hired experienced equity analysts who have an interest and desire to work on these dedicated funds.
Aggressive recruiting in product specialist roles
A number of larger asset managers have aggressively recruited multi-asset product specialists with a significant interest in candidates with strong fixed income backgrounds who are looking to gain more exposure to a wider range of asset classes.
We’ve also seen several hires across the City for ESG for product specialist teams. Largely due to investors becoming more cautious about the products they are investing the importance of pushing ESG and responsible investment products has become a priority for many houses.
Historically, the gender balance within investment management has heavily favored men. However, the last year has seen a significant push by many asset managers to attract female applicants into key roles. Firms are using a wide range of efforts to try to lure in female talent. Firms are requesting a diverse shortlist from recruitment agencies, that include more women.
The wider investment community has encouragingly taking positive steps towards recognising the importance of having a more diverse workforce that is inclusive and offers individuals the same opportunities regardless of gender, race, sexual orientation or social class.
Weakening activity in passive/ETF
Over the last few years the industry has seen a race to the fee bottom in fees as investment managers compete strenuously on price. This trend reached its logical conclusion in the past year as some firms announced zero-fee pricing for selected products. This has led to an enormous shift for the investment management industry.
A number of investment managers followed suit with the launch of zero-commission platforms. These firms’ revenue-generation has now switched towards securities lending, order-flow payments and shareholder-servicing fees. Larger asset managers are likely to use a range of these zero-fee products to help to sell other offerings within their funds platforms and keep them within the fund family.
Active funds are also undergoing pricing model innovation in the form of a ‘Fulcrum Model’. This is a performance- based fee that adjusts up or down based on outperforming or underperforming a benchmark.
However, recruitment across the ETF and passive investing has dropped off significantly following the surge of hiring in this space between 2017-2018. Those that haven’t developed an ETF range or have failed to hire in this area may feel they have missed the boat and are focused on other product ranges.
A reversal in contracting
2018 saw a significant increase in the volume of contract opportunities within product, largely due to Brexit, The Asset Management Market Study and the ever-changing regulatory land scape. This trend reversed in 2019.
The number of contracting opportunities in the market has fallen as firms opt for more long-term and permanent options to join their teams and reduce their spending on contractors. The imminent threat of the new IR35 regulations coming in April has motivated many career contractors to seek permanent roles.