Funds & Assets Management Overview
The Irish Funds and Asset Management market has had a strong year with funds, in particular, continuing their upward trajectory from the past few years.
There is now almost 2 Trillion Euro in Assets Under Administration in Ireland. The accumulative increase has been almost linear since 2010, going from 964 Million in 2010 to just under 2 Trillion as of August 2016, with Ireland’s “funds friendly” environment often credited with this increase. What this means is that we have a built a track record in domiciling and servicing funds due to our legal, tax and regulatory framework and our access to the Eurozone, combined with the necessary talent to service the funds. It has become the proverbial beast, feeding many a family and publican in and around Dublin with sprouts in Wexford, Limerick, Cork and Galway. But has this beast become too big and bold to the detriment of other functions?
On a macro level, one would hope to see more “high value” front-end jobs replacing some of the more manual processing administration jobs that Dublin has become synonymous with since the inception of the IFSC in the late 80s. While these jobs form the bedrock of the financial services industry in Ireland, we have not been presented with such a gilt-edged opportunity such as “Brexit” before to leverage on our existing financial services structure in attracting a front-end presence from new and existing multinational banks, who are already here in an administration / leveraged finance capacity. In this piece, I will touch on the standout themes in 2016 and look to areas which we think might benefit from ‘Brexit’ in 2017 and the outstanding issues there are attracting this business. For breakdown of salaries in this sector please click here.
Investor Services Demand
Q1 was relatively quiet with activity really picking up in Q2. The constant theme in funds has been the demand for candidates in investor services, trustee/depository and compliance. Much of this was due to large multinationals winning mandates for new funds registered in Ireland in Q1, and this was accelerated when funds with an existing presence in Ireland redistributed Assets under Administration to Dublin post-Brexit. This puts immediate pressure on the onboarding process which heavily involves the above-mentioned areas of TA / IS and compliance. The inevitable result is an increase in basic salary with a junior to mid-level position, such as a Transfer Agent supervisor, now demanding up to 55K, up by 9 % from Q1 to Q4. The increased focus on this part of the funds market has led to greater costs with many companies now trying to implement lean processing techniques, hiring programme managers and business analysts to work in tandem with developers to streamline the fund onboarding process, which can leave many clients extremely frustrated. Many consultancy companies who focused on providing Project Managers and Business Analysts to other financial services areas are looking to gain a foothold in Funds and Asset Management. While there are numerous candidates who are highly experienced in other fields, the market within funds is still in its infancy and candidates with both service experience and funds experience are very much in demand. It is rare that a candidate who ticks all the boxes has to be interviewed twice.
Fund Accountancy Ticking Along as Usual
Once these accounts start to go live, then the demand for the account managers / fund accountants needed to administer the assets on a daily basis duly increases, and there was with a large push on Fund Accountants in Q3, still pushing into Q4. This has helped to swallow up any collateral damage done by multinational administrators, such as State Street and BNY Mellon amongst others, who are relocating some parts of their business to India and Poland. Although this is not a new phenomenon, we will probably see the trend continuing in the more “heavy lifting” functional roles where boots on the ground are the ultimate goal.
Risk & Compliance
With everyone from global investment banks to merchandise companies complaining about the increasing cost of risk and compliance, it is no surprise that we have seen demand severely outstrip supply in these markets in 2016. Many candidates within the global markets have opted to jump sideways from trading into risk and locally we have seen more and more people move from an operational role and upskilling into a compliance function to fill the gap that has been created by continuing new regulations and new entrants into the market. With respect to the Irish market, this increase should be seen as a positive demand for risk and compliance professionals, indicating new business and usually more complex high-end products where risk and compliance are now the pillars on which all market-related activity is required to be built on. To illustrate this, 73% of compliance professionals surveyed by Lincoln have received an increase in their salary over the past two years with the rest probably with their hand out as we speak. For the Dublin market, more demand for compliance is good.
Quality candidates with a quantitative background are at a premium with the Fintech sector also looking to plug into this source of talent. We see this a growth area with increases year on year in graduates from masters programmes in quantitative finance. The squeeze in demand for those candidates with high level quantitative ability has led to some companies begin hunting in other industries to source the natural quantitative talent. Data scientists and actuaries are now coveted by those in quantitative finance with new entrants to the market increasing the competition amongst the status quo. This continued squeeze should see no sign of abating during 2017.
Expat Talent Returning Home
While the pros of Dublin are often stated, and are somewhat obvious, so it seems are the growing number of cons. Corporate tax rate, a well-educated workforce, access to EU markets, a similar legal and regulatory structure to UK are all in the plus column. Concerns over on the ground talent, office and accommodation space, personal income tax and perhaps the most concerning of all at present – regulatory red tape – are all viewed as problems that potential firms see in Dublin.
The flow of CVs from abroad within Asset Management continued apace during Q3. There has been much comment about Brexit and we are constantly being asked by candidates, clients and other interested bodies on what the climate and appetite is for more front office activity in the Dublin market. Many multinational organisations are scouting Dublin and the recurring theme is whether we have the commercial and residential property capacity and the requisite talent pool. I will leave others better placed to argue the former, but the answer is a hesitant yes on the latter. As we don’t have a tradition as a front office hub, many international candidates would be initially reluctant to move to Dublin. However, this has dramatically changed with many high calibre job seekers now calling to learn if the rumours have any substance. It will take another 6 months to really see any buds because no large organisation will commit a political error by declaring a move before article 50 is invoked. On the credit side, there is also a large expat contingent hovering anxiously, hoping that their dream move back to Ireland can become a possibility without them forsaking their banking, sales or trading career. We also have a huge base of talented graduates here, but in reality, they would need to upskill before taking on the type of jobs that we hope might move here, with expat community and International professionals filling that gap.
Probably the most frustrating aspect to those who are hoping there will be a flow of front office jobs to Dublin is the perceived attitude of the Central Bank, and by extension those who regulate financial market activity in Ireland and new entrants to that market. While our regulatory environment has been viewed as very “funds friendly”, the unfortunate theory seems to be that the Irish regulatory bodies are understaffed and also lack knowledge of the proposed products that market-facing firms would bring to Ireland. This has apparently resulted in barriers being put up and potential firms wondering whether Ireland has the appetite to add this sort of activity to its financial services portfolio. If we do attract business in this area, then I would look to capital intensive low margin activities, such as prime brokerage, FX, fixed income & equity trading, trade finance and the further growth of management companies, or ‘ManCos’, looking to feast on the loss of ‘passporting’ rights from the UK. These are already flooding into the Dublin market, but it is unclear whether their capital raising arms will also have to relocate to Dublin or whether it will remain a fundamentally administrative function.
2017 promises to be an intriguing year but it may be ultimately disappointing if we do not see the foundations being built for a nascent front office environment within the Irish market. Ultimately, this would result in stopping many of our best and brightest from immigrating to London and further afield, and also lead to the return of expats who have previously not had the opportunity to return home without sacrificing their career. We may not see the benefits in 2017, but most assuredly the battle for business will be very much on the agenda for the entire year, so those who are already bored of said theme should stick their head in the sand for a good while longer.
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