Recruitment Radar Q3 2024 – BiermannNeff | Executive Search & Talent Selection

Q3 2024

RECRUITMENT RADAR

TOPICS WE DISCUSSED LAST QUARTER:

Passive is continuing to apply pressure on Active, even more so with the rising demand of Active ETFs.
Many Investment boutiques are struggling in selling their niche products when they are not “en vogue” – sales people join organisations with broader product capabilities.
Strongly increasing merger activity in the Financial Services industry after two quiet years.
After years of massive recruiting on the ESG side, the added value of these hires is discussed much more controversially from a cost/income point of view, and we have already seen asset managers letting people go again.
Bonus expectations are getting lower for 2024.
Private Markets firms are snatching the best talents and seniors from the traditional asset managers – our main topic – read below!

WAR FOR TALENTS - HOW PRIVATE MARKETS PUTS THE ASSET MANAGEMENT UNDER PRESSURE

Private Markets Attract the Best Talent

Private Markets are increasingly attracting the best talent in the financial industry, displacing traditional asset management as the preferred career path. Areas like Private Equity, Private Debt, Infrastructure and other alternative investment strategies not only offer higher earnings potential but also a more dynamic working environment. While traditional asset management focuses on publicly listed securities, Private Markets provide opportunities to invest in non-listed companies. This allows for the development of company-specific strategies and direct involvement in the success of these businesses—an enticing challenge for many top professionals.

Attractive Compensation as a Key Factor

One of the primary reasons for the talent migration is the attractive compensation model found in Private Markets. Companies in this sector tend to offer higher base salaries and bonuses but also participation in investment returns (“Carried Interest”). This form of compensation is particularly lucrative for many candidates, as they receive a direct share in the success of their investments. In contrast, many asset management firms face margin pressure due to increased regulations and the rise of passive investment strategies like ETFs. This has led to limited compensation structures, making traditional asset management less appealing to ambitious talent. Private Markets, on the other hand, provide opportunities for substantial personal financial success, acting as a powerful draw for the industry’s top performers.

Dynamic Working Environment and Strategic Involvement

Besides compensation, the nature of the work itself plays a crucial role in the decision to move into Private Markets. These markets offer a deeper involvement in operational and strategic processes, allowing professionals to directly influence the development of the companies they invest in. Employees can actively contribute to the growth and strategic development of these firms, resulting in a broader scope of responsibilities. It’s not just about allocating capital; it’s about shaping companies and driving their long-term success. Many finance professionals find this level of entrepreneurial engagement significantly more interesting and fulfilling.

Challenges for Asset Management

This talent migration poses a serious challenge for the asset management industry. The loss of the brightest minds could ultimately result in the sector losing its innovative edge and struggling to provide high-quality services. The increasing exodus of talent makes it difficult for traditional asset management firms to compete with the dynamic Private Markets. More and more top professionals are opting out of classic investment management in favor of alternative sectors, where they see greater opportunities for impact and responsibility. This situation could force asset management companies to fundamentally rethink their business models and working structures. To keep up with the attractiveness of Private Markets, new approaches are needed—whether through more flexible compensation models, the adoption of innovative investment strategies, or creating a more engaging work environment that goes beyond merely managing portfolios.

Conclusion: The Battle for the Best Talent

The draw that Private Markets exert on the best talent in the financial industry is undeniable. With higher salaries, more exciting areas of responsibility, and the prospect of greater entrepreneurial involvement, it is no surprise that more and more professionals are making the leap from traditional asset management. In the coming years, it will be crucial for the asset management industry to find ways to compete with this new rival—otherwise, the exodus of talent could become a long-term threat to the entire sector. Only through adaptation and innovative change will it be possible to win back the best talent and remain competitive in the long run.

GERMANY / AUSTRIA

Q1 ‘24

Q2 ‘24

Q3 ‘24

Trend

Increasing
hiring activity

Increasing hiring activity

Private Markets IR/
Fundraising

Wholesale Sales

Institutional Sales

Research & Portfolio Management

Marketing & Client Service

Legal / Compliance

Operations & Risk

SWITZERLAND