ReleaseWire Connect

UK asset management growth has faced a number of challenges in recent times, from weaker markets through to acute competition on fees. Perhaps one of the harshest moments for UK asset and wealth managers was savers and investors pulling back £2.5 billion from UK-domiciled retail funds earlier in 2022. That came after high outflows had already marked the first month of the year. While there has obviously been a negative impact from this there are also positives - and M&A and consolidation in the industry is potentially one of them, as this looks set to drive up asset and wealth manager growth this year. There are a number of mergers and acquisitions that are notable, including Abrdn's acquisition of content platform Finimize and RBC's bid for Brewin Dolphin. Given changes in share prices thanks to the aforementioned conditions there could be a lot more M&A activity yet to come this year where asset and wealth management is concerned.

Fintech is a market on the rise all over the UK, including in Edinburgh where the local fintech community was on the receiving end of a £300 million UK government investment last summer. However, while this might seem like the optimum time for startups to break new ground in the sector it is actually presenting some challenges, primarily when it comes to recruitment. Fintech is a red-hot recruitment market right now and this is making it very difficult indeed for many newer firms to attract the talent necessary to spur growth in 2022. Wage inflation and higher expectations from candidates are two reasons for the market becoming increasingly challenging for startups, as well as the general skills shortages that exist across technology. There is a limited talent pool in fintech and many of the same enterprises are currently fighting over these people, including those that have much more substantial resources than many startups have to offer.

Takeovers by North American buyers have become increasingly common for UK companies in recent years (see also Morrisons and infrastructure investor John Laing). Now, the wealth manager Brewin Dolphin is going to be taken over by the Royal Bank of Canada in a £1.6 billion deal that will create the third-largest wealth management firm in the UK and Ireland - and potentially an asset management boom. Royal Bank of Canada already has a well-established capital markets business in the City and a strong international wealth management business (it is the sixth-largest in the US market and the biggest in Canada). Currently, its wealth management operations in the UK are more modest but that looks set to change thanks to the Brewin Dolphin takeover. Consolidation in the wealth management sector is a current trend, as the Brewin Dolphin takeover isn't the first in recent times. Aviva recently bought Succession Wealth Management for £385 million, for example, and Charles Stanley was taken over by the US-based Raymond James last year.

After a flurry of regulatory initiatives in 2021 - and an increasingly complex regulatory environment for many financial institutions to navigate - UK banks are focused on finding key compliance talent to help get through these challenging times. A new report has revealed that record numbers of risk and compliance jobs are being posted by banks in the UK market - a 98.9% year-on-year increase on the same period in 2020 - with hiring across all levels. In January of this year, banks published 850 risk and compliance roles, which represents an 87% increase on the same month pre-pandemic in 2019. It's not only an increasingly challenging regulatory environment that has triggered this record-breaking rise in posted jobs. Banks that laid people off during the pandemic now need to re-recruit - and to cope with the impact of The Great Resignation. Plus, economic bounce back is creating a general boost in workload for organisations in the banking and financial services sector.

The situation in Ukraine has had a major impact on markets across the world. For example, indications from the US government of a willingness to ban Russian imports created a huge surge in prices and a tanking in global shares. Factors driving this included a fear of inflation and a considerable slowing in economic growth. Congress has now passed a bill that bans all imports of gas and oil from Russia, moving ahead with its sanctions with almost complete support for the move on a political level. Although Russia has termed its actions in the Ukraine "a special operation" there has been a mass wave of sanctions leveled at the country as a result of what has been perpetuated on neighboring soil. However, there are concerns around this - for example, while the US can survive without Russian imports, the situation for Europe is not so certain, hence the bear market for stocks.

Thanks to a rush of new regulatory initiatives, and a wave of changes anticipated in response to them, the UK is a very active market for risk and compliance jobs today. In January 2022, British banks released 850 risk and compliance vacancies, which represents a more than 87% increase on pre-pandemic levels in January 2019. Throughout 2021 as a whole, there was a rise of almost 99% on pre-pandemic levels, a huge spike in demand and one that currently shows no sign of slowing down. Many banks were forced to make cuts to risk and compliance teams during the pandemic and are now seeking to rebuild these as conditions start to stabilise once again. KYC compliance and credit analyst roles are proving to be some of the most in-demand and have experienced the fastest growth. The current market for risk and compliance jobs is candidate-led and there are many different options and offers for all those with the right skill set.

When the proposed merger between Glen Point Capital and Eisler Capital looked set to collapse, this immediately caught the attention of asset management recruiters in the UK and beyond. The failed merger has made Glen Point a new target for asset management recruiters in London, particularly as the firm has a history of recruiting from big banks like Citi and the calibre of talent within the business is known to be high. As a result, it's no longer Credit Suisse that is the target for headhunters in this industry but Glen Point Capital. The firm was originally established in 2015 and began life as a globally macro fund with strategies encompassing other areas such as emerging market fixed income. It was supposed to be completing the merger with Eisler Capital in March of this year and no reason has been given publicly as to why the deal didn't go through.

A spike in activity in the responsible investment sector has triggered a wave of demand for ESG experts, which outstrips the number of talented people available to fill roles. This area of expertise is where many organisations are currently looking to recruit talent, often building new sustainable investment teams from the ground up. The number of businesses currently looking to increase the size of teams to support this new direction for the company is rising significantly, with a proliferation of roles available for those with ESG expertise. Alongside this comes the inevitable increase in earning potential, with offered salaries significantly higher than standard salary inflation. Incentives, such as cash bonuses, are becoming increasingly common as businesses look to attract the best talent and ensure that they have the internal skills and expertise to establish a viable, and thriving, responsible investment team in-house. Among asset management recruiters, there is currently high demand for ESG experts looking to take a career-defining next step.

The Russian invasion of Ukraine has created many challenging situations and in the legal community this is centered around the sanctions being imposed - and those being considered. Economic sanctions create a compliance minefield, one that it is vital for the legal community to get out ahead of, according to the experts. As the potential for sanctions increases, with the goal of making Russia's invasion an economic failure, there is a rising demand for lawyers with the right skill set to help navigate the compliance challenges that economic sanctions tend to create. Many firms in the UK are likely to be caught up in the compliance issues that arise from sanctions against Russia, especially if these continue to be expanded. City firms are being urged to review relationships and to ensure that they have the expertise to deal with the possible ramifications of the situation, including teams with the requisite compliance experience to safely navigate the crisis.

The start of this year saw good news for Impax Asset Management Group, which announced in January that managed assets had surpassed £40 billion for the first time. This figure represents an 11% increase from September 2021 and was growth that was mainly fostered by listed equities. Impax is based in London and is an investor with a very on-trend focus on environmental sustainability.