Wealth Managers’ Challenge of Talent Gaps and Rising Costs – Multrees CEO
We talk to Chris Fisher, CEO of Multrees, about cost pressures, the fight for talent and other demands in the wealth management industry – and how best to manage them.
A characteristic of wealth management that rarely seems to change is the complaint that there is a lack of suitable talent in the industry. The pandemic and associated disruptions to working practices have given this an added advantage. There is talk – with some hype – of the ‘big quit’ and exits from the sector, although this news service understands that these are simply people changing jobs and roles after being locked up at home. them for two years. , rather than a deeper change. In any case, the pressure on talent is real. Inflation is on the rise and wage pressures are expected to rise. But in a world where private banks and wealth managers want to protect their margins and reduce their costs, how can they achieve such goals?
A company well placed to discuss the UK scene is Multrees, the provider of outsourced platform, investment administration and custodial services. We talk to its managing director, Chris Fisher, about his thoughts on the market and its likely direction. (We also include comments from Multrees People Manager Carole Lamond.)
How significant are the cost pressures faced by wealth managers in the UK/Europe?
Rising payroll costs have been the most significant pressure to weigh on the wealth sector in recent times, with the labor market changing rapidly in a relatively short period of time. The dynamic changes; where historically staff might have been attracted and financially rewarded to come and work in big cities, people are now choosing more lifestyle-oriented approaches. There are many examples of companies now paying salaries in big cities to people from all over, adding to the competition in an already declining job market.
A great deal of faith seems to have been placed in using technology tools to balance the burden of compliance, customer service and business growth. Have we reached the limits of the possible? What problems do you see? Are there any interesting technological solutions that you have come across?
Trust has always been placed in technological tools because technology is an evolving process. There is nothing new under the sun, but innovation and change are a gradual and steady process. While
[over] a hundred years ago, communication was done by means of quill pens and paper, technology has since adapted. As change happens, it is accepted as the norm, and as a result, processes become more streamlined. The wealth management business is a growth business, the market grows as people save and earn more, so there is more wealth to manage. In a growing industry, you are always going to rely on technological growth to drive change and efficiency. I don’t believe we have reached the limits of what is possible in terms of technological innovation; technology will constantly evolve and adapt to meet our changing needs.
Technology solutions of interest from the perspective of people we interviewed include performance management and engagement systems, which are critical to supporting day-to-day conversations, goal setting, and organizational performance. Additionally, power play applications can play an important role; these help companies to describe the benefits offered to their staff and to retain their staff. The benefits are difficult to quantify and are often overlooked by employees.
Are wealth managers’ clients mistakenly informed of the costs of using the services? Are companies doing enough to set their expectations for what they should expect to pay for wealth management?
Post RDR [Retail Distribution Review reform programme of 2013], we have moved from a world where wealth managers’ revenues could be subsidized by opaque fee structures and hidden fees, to a much more transparent market. Wealth managers are held accountable and are required to justify their fees to their clients.
There’s the old adage “you get what you pay for” and service in our industry is a key differentiator. If the service is done well, it costs money. For example, at one end of our market, there is the do-it-yourself investor who does everything for himself; it is this sector of the market that offers huge opportunities, as these armies of “go it alone” investors could greatly benefit from tailored professional financial advice. It is to these people that wealth managers must address themselves by clearly defining their value proposition. In other words, if I ran a restaurant, my biggest competition would not come from other restaurants in the area, but rather from supermarkets.
While this is a “macro” problem beyond the industry’s direct control, how big of a problem have we had for a decade with ultra-low/negative real interest rates, considering given the pressure on margins that this entails?
It is important to differentiate between banks and non-banks here, as banks have traditionally been more dependent on interest rates for their income than wealth managers. A fee-based wealth management business, operating in a transparent world, is unlikely to be affected by macroeconomic factors such as low interest rates. Instead, revenue should be almost entirely based on recurring client fees received, rather than ancillary revenue generated from outside.
In your experience, how difficult is it to find talent and keep it? What are the potential solutions? Do you see help coming from inside or outside the sector? Are higher education institutions, training organisations/government doing enough, given that financial services are important sources of income for the UK?
There are currently around 50,000 vacancies in financial services, with recruitment agencies reporting that applicants submit an average of five job offers at a time! The job market is particularly buoyant and, as the press recently reported, it is certainly the “era of great resignations”. In our post-pandemic world, candidates are looking for the opportunity to work remotely. So it’s fair to say that finding and retaining talent is a very real challenge and will continue to be for the foreseeable future as we all learn to lead and collaborate in an agile, virtual environment.
We focus on three key areas to attract and retain talent: our culture, our capabilities and our sustainability. Key to this initiative was the hiring of an exceptionally experienced personnel manager. Carole Lamond joined us last year to take on this role, bringing with her years of experience building teams. Carole’s arrival in the team coincided with the celebration of our 10 years in the City. As an important milestone and as we progress as a mature startup, our human resources strategy has become an increasingly essential priority for our business strategy.
Carole Lamond said: “Wealth management is a people business, so taking care of our clients requires that we have strong teams. In partnership with CISI, we have a robust development program in place and have recently implemented a new performance management and engagement system to further equip our managers with the skills they need to grow their teams. We have dedicated wellness initiatives (both mental and physical) as well as trained mental health first aiders and managers.”
Where do you see the most promising sources of new business customers at Multrees?
Key new business opportunities for us include the growing market for startups and entrepreneurs, as we believe investment management is a suitable activity for this group. Also included are post-pandemic businesses, who recognize that running their own business and managing their own systems can be quite demanding. With all the challenges the pandemic has brought and now the tight job market, companies are increasingly looking for outsourced solutions.
When do you think we could return to a more “normal” post-COVID business climate?
Our industry, like many others, has changed irreversibly as a result of the pandemic. The ability to work from home, agile working, increased customer engagement, and the ability to have quick video calls on short notice as opposed to appointments booked months in advance, are all changes that, I think, are here to stay and are now the new normal.
What are the main issues and challenges that these customers bring to you and ask for help with?
Our clients seek a consistent, stable and high-quality operating environment on which to base their businesses and provide opportunities for future growth. In the face of the challenges of scalability, customer service and margin protection, our primary goal is to support our customers by providing first-class customer service and the choice and flexibility of support services from which they could need.