Scotland’s financial sector facing “perfect storm”

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SCOTLAND’S top financial services recruiter is warning of an impending crisis threatening to hit critical sectors ahead of the launch of the industry’s most comprehensive salary guide.

Core-Asset Consulting is set to reveal that while wages remain stable, overall firms must urgently adapt to a number of potentially existential issues.

The 53-page white paper, now in its eighth year and scheduled to be revealed in full next week, is based on annual research of 4000 registering candidates, as well as hundreds of job offers and placements - and has been endorsed by a leading expert at the University of Edinburgh Business School.

Within it, the specialist recruiter is calling on firms to take a longer-term perspective on a range industry head-winds. At the forefront is succession planning, which it states is the “unintended casualty of headcount reduction”.

This is highlighted by the number of mid-level management vacancies generically dropping by more than 15% during the last 18-24 months, while general candidate availability has increased by 25-33%, incorporating passive job seekers. 

Core-Asset’s research and insights also highlight a sea-change in the importance of environmental and social governance (ESG), with good practice no longer a nice to have or a trend, and now a factor which will materially impact business success across all sectors.

Similarly, the £14.7 million turnover firm is suggesting that organisations in Scotland are placing too little focus on culture and work life balance, alienating individuals who are increasingly demanding flexible working, compassionate leave opportunities and a demonstrably supportive office environment.

Betsy Williamson, Founder and Managing Director with Core-Asset, said; “It’s been a turbulent time across a financial services and investments with the industry facing a huge amount of consolidation and change.

“A big impact of the buy-outs and cost-cutting is the reactionary decision to take a red line through layers of middle management. Clearly these decisions aren’t taken lightly, however the affected employees are tomorrow’s leaders, who to reach the top require nurturing.

 “Without a healthy middle management, we simply limit our ability to retain the best possible successors to Director and c-suite positions.  

“This was already a small pool, feeling the effects a decade on from the last recession’s swingeing cuts to graduate recruitment, so we’d urge extreme caution going forward.”  

John Millar, Doctoral Researcher with the University of Edinburgh Business School, assisted throughout the process of the creation of the guide, providing extensive academic insight.

He said: “Core-Asset’s salary guide pinpoints a number of topics that should be swiftly moving to the top of boards’ priority lists.

“While the economy is performing well – or at least is not in recession – it is particularly important that we implement bold and brave changes.  

“The worry is that this isn’t happening and that there is complacency across the sector throughout the three key topic areas of succession planning, ESG and culture, highlighted by Core-Asset.

“Within financial services there are also worrying trends within practice areas. For asset management in particular, the pie is shrinking as older generations take out more than younger generations are putting in. In addition, a big move towards passive and away from active fund management is placing real downward pressure on fees and profitability, resulting in cost-cutting programmes.

“We’re also seeing tangible pressure being put on firms to demonstrate how they are benefiting society, from campaigners, the media, candidates and clients. For operators who have chased high profits and targets, these habits can be almost impossible to break.

“It is truly a fascinating time to study the overall financial services sector – and I hope that the clear warnings in this salary guide stir many into action, for the long-term health of the economy.”

Betsy added: “There are worrying signs that standard operating models from days gone by and increasing global competition are putting the industry here in Scotland at odds with the modern workforce.

“In 2020, companies taking a narrow view around incentives, assuming salary is the only way to ensure strong employee retention, are likely to find themselves haemorrhaging top employees.

“All of these issues are interlinked – they speak of a lack of long-term thinking around talent management.

“Scotland has earned a strong reputation for its mature, competent financial sector. It is critical for our nation’s economic health that it continues to deliver, while rising to these clear challenges.” 

From the outset, Core-Asset carved its reputation within Scotland’s globally renowned asset management sector. However, the success of its model allowed it to expand across the wider financial services market. It now boasts dedicated accounting, investment operations and finance teams and also works in Scotland’s thriving legal sector.

Its teams pride themselves on fully understanding client briefs thanks to being intimately associated with their specialist sectors and - by combining that with the latest tools and systems - can source the exact talent to thrive in the role.

Formed in 2005, now 30-strong Core-Asset was born out of Betsy’s desire to take the best of her experience of large corporate recruiters, applying the focus on infrastructure and training to a more sector-specialised business.

It proved both an instant and enduring success, with the business securing market dominance north of the border.

Core-Asset Consulting is a leading independent recruitment company dedicated to financial and professional services in Scotland. A specialist recruiter based in Edinburgh, it offers its clients tailored solutions for permanent, temporary, contract and interim positions.

For more information on Core-Asset Consulting, please visit: http://www.core-asset.co.uk/