Investment management has been widely described as ‘an industry in disruption’. Revenues are under strain, returns are low, and regulations are being tightened. As such, there has been increased movement within Buy Side Sales and Marketing. There are several keys trends which are currently impacting Investor relations and Business development recruitment, all of which are having a significant effect on compensation in the space.
Exchange-Traded Funds and Beta Funds
Investors are no longer able to rely on the traditional bond-trading model, so they are now turning to Exchange-Traded Funds (ETFs) to diversify and gain market exposure. Inflows into ETFs during the first quarter of 2017 totaled $29.6 billion. This figure vastly exceeded expectations, and was largely triggered in the US by President Trump’s sweeping tax cuts, deregulation and infrastructure investment.
With greater demand for product management and product specialist positions, organizations are now looking for candidates with comprehensive knowledge and experience in ETFs. As more investment managers build or expand their platforms, there has been an increase in distribution hires (internal and external wholesalers) on both the institutional and retail sides. Most firms are operating a distribution strategy across numerous channels, which results in an increased reliance on hybrid systems triggering a wave of new recruitment opportunities emerging.
Smart beta ETFs continue to erode the need for active management. These programs can automatically select stocks based on factors such as asset value or dividend yield resulting in further disruption caused by sliding average fees across the industry. Of course, fee cuts are not a new concept to the world of ETFs; according to the Investment Company Institute, the average expense ratio on index equity ETFs fell from 0.34% in 2009, to 0.23% in 2016.
Big asset managers want to be able to provide multi-asset solutions to their investors. One way of doing this is through consolidation; the high-profile merger of Janus Capital and Henderson was spurred by the trend in ETFs. Janus Henderson, as the corporation is now known, boasts around $331 billion in assets under management.
The industry has also seen mergers of Standard Life and Aberdeen Asset Management, as well as Amundi and Pioneer Investment. Many predict that these recent big mergers in the asset management space are just the tip of the iceberg. An increase in mergers will mean fewer, but larger asset managers, with many business development professionals from those firms seeking new opportunities further afield.
Where are candidates looking?
Not every buy side professional wants to work for a large global asset manager. Even though many choose to start their careers in one of the larger, more established managers, many seek opportunities within smaller shops as they progress into more senior roles. This decision is not driven by compensation, but rather the desire to feel they are making a direct impact on the success of a business.
A larger asset manager may be seen as the more secure, stable option, but hedge funds are currently offering greater compensation, tremendous job satisfaction, and a more exciting working environment. Deloitte’s recent Investment Industry Outlook 2017 highlighted private equity investments showing continued asset appreciation despite high valuations, making them a highly attractive target for candidates. 6 Those currently working in the private equity and private debt funds sectors will be keen to continue, at least in the short term, and will likely dismiss any move to another product.
As firms continue to scale back, candidates are finding it harder to enter larger companies. Where previously investor relations and business development responsibilities would have been spread across two roles, companies are now recruiting just one role to cover both. This is leading more candidates to look across a wider playing field for potential vacancies.
What do businesses want?
The trend for consolidation goes beyond mergers; companies are also consolidating different employment opportunities in-house. Some firms are shrinking executive-level roles and hiring junior and mid-level professionals instead. Although less experienced, these younger candidates are also less expensive and sometimes more passionate.
Given that a senior investor relations employee has a similar base salary to a senior business development employee, firms are getting more creative with how they allocate salary spend. Rather than hiring one senior role, companies are using that money to hire an associate who can raise capital, alongside a more junior-level support person.
Alternatively, they are opting for a hybrid role – someone who deals with both investor relations and business development. Hybrid roles demand multiple skill sets, and professionals who have technical knowledge, good sales skills, and are able to act as product specialists, are in increasing demand.
Here at Selby Jennings we are constantly monitoring compensation trends across investor relations and business development positions.
Taken from our data, here is a breakdown of the packages candidates can expect to receive within specific roles.
Investment management may be in disruption, but there is plenty more potential for growth. Whether you are looking for, or recruiting for, an investment management role, our team at Selby Jennings can help you achieve a competitive edge.
Selby Jennings is a leading specialist recruitment agency for banking and financial services. For more than 15 years, we have given clients and candidates peace of mind that the recruitment process is in expert hands. Our continual investment in best-in-class technologies and consultant training enables us to recruit with speed, precision and accuracy. Today, Selby Jennings provides contingency and retained search recruitment across 11 offices in 6 countries. Contact us to find out how Selby Jennings can help you.