There is a dearth of talent to fill the booming number of vacancies in the new pensions market, preventing firms from pressing ahead with new sales strategies.
The government has turned the retirement market on its head in recent months by effectively scrapping the need to buy an annuity and bringing in auto-enrolment rules that force employees to save for the future.
The investment industry is scrambling to gain a share of the new market, but distributors such as wealth managers, brokers and platforms, are struggling to find sales and investment staff to fill the openings.
Wealth managers, who tend to specialise in such products, have said the talent pool they draw on had already been shrinking before the recent changes.
Jim Wood-Smith, head of research at discretionary management firm Hawksmoor Investment Management, said: “If a firm wanted to move into discretionary management for the first time, and was saying they wanted to open offices in 10 towns around the country, the chances of them getting someone good to work for them are about nil, unless they have something very different to offer.”
Another senior wealth management figure, who didn’t want to be identified, said within the world of sales, firms looking to add staff “will have to pick up sales people wherever they can find them” and hope they can coach the recruits to sell the firms’ products.
He said the demand for multi-asset vehicles meant many people who were used to working just with long-only products would have to make the leap to a “completely different” area.
“They are going to find it a complete struggle, because it is so different,” he said. “To move from one area to the other must be difficult.”
And several high-profile recruitment firms agreed.
Andrew Breach, head of banking and financial services at recruiter Michael Page, said: “We have seen more demand in this space and there isn’t a huge amount of people that are qualified for the roles.
“Some firms still have the idea that the market is awash with brilliant talent and that they can pay a minimal salary, but that is just not the case.”
Henry Hodges, a product and senior distribution investment management recruitment director at Mason Blake, said current demand for multi-asset roles in the City was “extremely high”, as many recognised it to be “one of the most exciting growth areas”.
“In short, yes, demand is outstripping supply,” he added.
He said he had also dealt with some of “the very top candidates” from fixed income and equity fields seeking to enter the burgeoning multi-asset space, but they often did not have the right skills.
Investment firms salivate over a potential £9bn market
The desperation of the financial services industry to take advantage of the ongoing changes within the pensions sector derives from the sheer scale of the opportunity.
According to the Association of British Insurers, £12bn worth of annuities were sold in 2013 but, after the effective removal of the requirement to buy one by chancellor George Osborne, various estimates suggest that figure will shrink by between 50 and 75 per cent.
This opens up a potential market of between £6bn and £9bn per year for investment firms, and that’s not even counting the potential for retirees already receiving annuities being given the opportunity to cash out.
The ongoing shift from defined-benefit (DB) schemes to defined-contribution (DC) schemes also paves the way for asset management firms in particular.
Professional services firm Towers Watson estimated in 2014 that there was £600bn in DB schemes, a significant proportion of which will likely migrate into DC schemes in the coming decades.
Analysis from broker Numis Securities suggested the UK retail asset management industry, which encompasses everything from asset managers to wealth managers, “could see total growth in [assets under management] of circa 12 per cent per annum over the next 30 years”.
With such growth potential available, it is little wonder financial services firms are scrambling to bring in talent and launch products and services, but it seems the talent pool is running dry.
