Quick Summary An insight into the impact of brexit on competition and salaries for the top talent in the financial services sector.5 min Read
How will Brexit affect financial services? With negotiations about the UK’s exit from the European Union far from complete no one knows for sure.
We'll make one prediction now, though. Competition and salaries for the top talent in the financial services (FS) sector will increase sharply before Brexit, and for a couple of years after, as firms adjust to it and shuffle their businesses and staff.
As we explained in our previous blog, UK-based banks and foreign banks with offices in the UK will want to continue serving Continental-based clients when, or if, the UK leaves the single market and customs union.
Faced with losing their “passporting” rights, FS companies will consider re-locating parts of their business (e.g. front-office functions such as traders, sales, and corporate finance) and back-office functions (e.g. risk management, compliance, finance) to somewhere in the European Union − maybe Dublin, Amsterdam, Luxembourg, Paris or Frankfurt.
Not all UK-based staff will want to re-locate to another city, in another country. Consider senior staff in FS: Heads or Directors of Risk, Credit Trading, Trading and Compliance. They’re probably between their mid-thirties and fifties, many married with children who have settled into good schools in the UK.
Re-location packages, particularly for the cost of housing, as well as salaries will have to become more generous to lure them to other European locations.
There’s a relatively small pool of FS workers with the necessary experience and skills to do some of the more scarce and senior jobs in FS. It takes years to train people for these roles and most of the aforementioned European locations do not have established pools of talent.
Furthermore, uncertainty about immigration rules after Brexit will make life hard for FS companies to plan recruitment, or plug gaps in departments as easily as they’ve become accustomed to.
The upshot is that there is going to be fierce competition for the brightest talent. Ultimately, FS companies will end up paying a high premium for the brightest talent. Recruitment in FS is set for its biggest change in the last two or three decades.
Armstrong Craven is working with a number of firms to help them understand the talent landscape and enabling them to put in place a more strategic approach to their talent acquisition.
Such a strategy will put them in the best place to win the talent race, particularly when looking to find the best candidates for scarce and senior roles.