Amanda Foster, global head of financial services at Russell Reynolds Associates, discusses the impact of Brexit on the movement of talent
The UK financial sector is a key driver of the economy, employing over 2 million people.
A big question is how Brexit will impact both the wider market conditions and the workforce. Even though Article 50 has been triggered, there is still much unknown, making it difficult to effectively plan.
While many decisions will need to wait until Brexit negotiations are underway, putting processes and plans in place now will help mitigate some of the risks. Companies across the financial services are beginning to make strategic plans about the geographic alignment of both staff and capital.
There is no catch-all solution for the industry. Considerable effort is being put into determining the best location for workforces and reviewing this across all functions within the business.
Movement of talent in Asset Management
Every sector within financial services is different. Early indications show that asset management firms don’t feel there will be substantial staffing moves for front office investment professionals.
Risk-taking roles should be able to stay, for the most part, in London, as City based portfolio managers already manage funds domiciled in Dublin, Luxembourg and elsewhere. For example, Andrew Wilson at Goldman Sachs Asset Management was recently quoted as saying “We don’t expect, from an asset manager’s point of view, that (the number of staff moving to the EU) will be a big number at all, we think it will be relatively small”.
With that said, some firms may need to move some administration, legal and distribution roles to the EU and will need to consider domicile of their fund ranges.
Should businesses decide to move out of the City, there is unlikely to be a single winner among the European financial services hubs. Instead, it is likely that each institution will move pockets of their business to more closely reflect where they operate.
In this scenario, New York may well benefit in addition to European hubs, as New York is already a global financial centre with a large existing support ecosystem, strong global market access and a deep talent pool in place.
There are multiple Brexit scenarios in play regarding the ability of funds to raise and invest money across Europe. Until there is more clarity on the exact outcome, investment firms may be able to delay final decisions about the geographic deployment of their staff.
As part of the negotiation process, businesses in the UK will want to ensure that EU-domiciled funds can still be managed from the UK. Depending on the outcome of these negotiations, we may see firms increasing their EU domiciled presence, on a role-by-role basis.
Many financial businesses are concerned for European nationals and their families currently employed in the UK. The Government has said it would like to offer European nationals living in the UK before the referendum, the right to remain, however this has been put under ‘negotiable capital’ in Brexit talks, meaning nothing is certain.
The fund management industry relies on a combination of homegrown, EU and international talent, particularly for specialist roles. Organisations are seeking to reassure their workforces that this will not change and to assist them with visa applications where relevant.
Many other factors have already been challenging the sector for some time – from automation to financial market volatility and increased regulation.
In this environment, retaining and attracting the best talent, creating resilient firms and giving the UK its competitive edge, is critical.
Amanda Foster has over 10 years’ executive search experience and is global head of financial services at Russell Reynolds Associates, a global executive search firm with over 47 offices worldwide.