2013 was a tough year for many. There are still a lot of changes taking place at the macro-level, and with companies still re-organising, and much new regulation taking effect this year, people are being asked to do ever greater things with less. Given the up and down results posted throughout the year, companies keep reviewing their strategy, and I get the feeling that the holiday season was eagerly awaited by a great many people.

Change and challenge

Change brings opportunity, and with it, challenge. It has been a fertile ground to really start discussing what is happening in our industry and I believe this past year has been one of the most transformative. People’s attitudes and habits are really changing, and with it, as well as because of it, so is the industry itself. In writing this blog I have had the chance to connect with many of you, and I thank you for you continued support.

Modest offering

One of the most notable changes I have seen over the last twelve months is regarding salary trends and offers currently being made in the community. I wrote in a former blog posting (see Pay versus Reward, September) how for the first time since I started my career, candidates are moving for different reasons. People are looking for job satisfaction first, and potential future of the firm. They seem to understand their growth, while interesting, will be of the slow and steady kind, and expectation of large salary increases is abating in favour of this. In fact, it couldn’t really be any other way as I believe people have started to realise that even with the successful high-growth firms, salary offers being made in the sector have been much more modest than they used to be, in almost every area.

Funds Talent - salaries

Moving for less

Having looked back on the last 12 months of placements at Funds Partnership Europe, the trend is very clear. More than 40% of the people we have moved in the past year have moved for less than a 10% increase in their salary. Within that, approximately a quarter are accepting jobs earning even less than they earned before. Gone are the days of moving for an expectant a 15% increase on your salary. If you are currently paid market rate in today’s world, you are lucky to see a 10% uplift when you make a career change.

This is mainly down to the sluggish economy but it is also partly because of the increasing cost of regulation. At Funds Partnership we have been busy in 2013, placing many new Risk, Compliance and Legal roles this year. Salaries for these roles have increased slightly, as have salaries across depositary and fiduciary functions. Budgets for regulatory change have had to include new systems and processes, as well as new head-counts in the area as companies get ready for AIFMD and other directives.

All this regulation is expensive. My guess is that these trends and associated costs will only increase in the future, and as such I would anticipate that during 2014, the number of people being offered jobs with salaries that are the same or less than their current salary will increase. The cash flow has to come from somewhere and nobody is making significant returns from regulation (yet). It will take a few years to feel the benefit of increasing investor confidence from the changes we are making today. As a result, I expect that in almost all areas outside regulation salaries will decline slightly, probably by around 3-5% across the board.

This is not to say that any managers reading this posting should immediately return to their desks and draw up wage cost cutting lists, which would be a false economy. It is just to say that in the field of new hires, when companies are struggling to create profits, new hires will be made with offers of a bit less than in previous years, and this is something to bear in mind for anyone thinking of making a move in 2014. The chances are that if a company can afford to hire, an offer is worth some careful consideration.

Exceptions to the rule

There are always some exceptions, and if you are looking for a Trilingual Lawyer, a Head of Fiduciary in London, or a COO of a Management Company in Luxembourg, these guys are not going to come cheap. There are always positions where demand outstrips supply, partly because of regulation or just because of business requirements, and in those cases, going below the market rate will only hurt your cause. Be clever about your hiring, spend the right money on the right people . If you are planning to hire to deal with an aspect of regulation, be aware that these salaries will increase slightly due to demand.

Golden Handcuffs

Given that we are a head-hunting business, it might come as a surprise to some people that we advise candidates if we think their salary expectations are out of line with market rate. I believe most people have realised that the best opportunities are not those attached to high salaries, golden handcuffs, but actually the ones that are paying market-rate or sometimes just above, with firms who are still experiencing growth and productivity. These companies are well-managed businesses who don’t need to throw cash at the situation to achieve the desired outcome, and this makes them more secure places to work. I have gotten into the habit of extolling the virtues of these companies, over and above those who over-pay, but offer little in the way of decision-making ability and real job satisfaction.

Wishing you all an excellent year ahead and for those who celebrate, all the best for the Chinese Year of the Horse, about to begin in a few days time. May 2014 mark a clear forward path for many.

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