There his been a major spike in staff turnover since the turn of the year.
Some key decision makers in the wealth industry have their own theories as to what is driving this phenomenon.
‘We went through a lull over the last three to six months; experienced investment managers were all thinking about Mifid II and the firms probably were as well, to be honest,’ said Redmayne-Bentley’s joint chief executive David Loudon.
‘We are coming out of that now. We are seeing more interest in people looking for change, in some cases with a feeling that some firms are restricting their ability to do their job or the way they want to do the job. I think that’s picking up now.’
In December, Redmayne-Bentley reported its pre-tax profit had jumped by 22%, buoyed by a string of hires from rival firms.
The number of staff moving between big wealth management firms is not surprising to Chris Payne, managing director for the UK at GWM Investment Management, whose firm has recently come off a hiring spree.
‘It is an interesting dynamic. It is very different depending on the type of the firm and size of the firm. With the large institutions obviously the turnover will be slightly higher and the pressure to bring in assets and do it quickly is much higher.
‘So the turnover in that job market is always going to be high. I just don’t think that’s going to change – it is actually a really effective business model.’
Bringing over business
He highlighted that there is a problem of attrition when managers switch firms, as they will inevitably leave a percentage of their clients behind.
However, Loudon sees this as largely self-regulating. Given that the package Redmayne-Bentley offers to new recruits is denominated on their assets t, he needs to know what they will bring across.
‘It is pretty rare for managers to take a totally unrealistic view of how much business they are going to bring – they tend to have thought about it pretty hard,’ said Loudon.
Another factor both Loudon and Payne take into account with new hires is how long they have been at their previous firm.
‘A manager who has been there two years is very unlikely to move – unless the firm is caving in – precisely because they know that their clients are not going to be secure,’ explained Loudon.
For Payne, this issue is even more pronounced for the bigger businesses.
‘The problem with recruiting from some of the bigger places is that a lot of the clients also have some loyalty to the brand itself not necessarily the individual.
‘Say a manager has only been in one place for two years – they probably don’t have much of a network. So then what actually is their business line? Because the clients are really close to the firm and not the individual.’
He also pointed out that they could be clients of a wealth management desk and not a specific individual, something especially true of regional offices.
Gordon Scott, executive director and regional team head at Julius Baer, a firm that has been on a fairly prominent hiring spree, said: ‘We do not bring people in with an expectation of them bringing names, clients or a percentage of an existing book across. We very much invest in people.
In his opinion, the regional advice market is underserved for those with over £1 million, which presents an opportunity to target those clients once the right people are in place. This means he does not need his new recruits to bring in assets.
How important is culture?
Recently, a number of companies have actually gone back to the same firms to bring in teams across the country rather than just hiring a single investment manager. A good example of this is Julius Baer hiring from Barclays, Deutsche Bank raiding Coutts and GWM taking on board several ex-Lloyds staff.
Does this mean that it is easier to hire
from companies with a similar culture already in place?
Despite hiring a number of people from Lloyds, Payne does not put too much weight on people’s attachment to the institutions they come from. ‘Unless somebody has been there for multiple decades, generally people are not that institutionalised,’ he explains.
Loudon has a slightly different view: ‘It is reducing but there are still a significant number of competitor firms who we
feel are generally like us with similar cultures.
‘Although everybody’s culture is changing all the time, they come from a similar place and these kind of people, generally speaking, are very easy to absorb because they are very similar to our people and indeed they are self-directed to some extent.’
This clearly has been the case for Redmayne-Bentley as a lot its hires were from other national firms, such as Charles Stanley, Walker Crips, Rowan Dartington and Brewin Dolphin.
Payne stated that for larger firms such as Redmayne-Bentley there is a safety net, as they are able to easily take on the balance sheet risk for new hires.
‘For smaller players it is more difficult, you have to do much more due diligence. But you still do not know until day one.’