Financial sector girds for tougher competition for highly skilled staff, survey says

Mounting workloads to address greater regulatory demands are forcing financial services firms to compete for specialized talent and driving up costs, according to survey results released on October 1. Whether it’s Basel III in Europe or Dodd-Frank in the United States, stronger financial regulations in response to deficiencies that led to the global financial crisis have the financial industry struggling to comply with disclosure, privacy and other legal requirements.

The Robert Half Financial Services Global Report: Navigating Change in an Evolving Regulatory Landscape, is based on a survey of 1,100 chief financial and operations officers from banks, insurance companies and other financial services firms across the major financial markets in the United States, Canada, United Kingdom, France, Germany, Singapore and Hong Kong.  

The report underlines the hefty costs associated with compliance. Across those seven markets, 35 percent of respondents say they expect overall spending on initiatives related to financial regulations to climb by 14 percent on average this year from 2012. The largest budget increases are anticipated in Singapore and Hong Kong (49 and 46 percent, respectively). Nearly nine out of 10 respondents see regulatory changes forcing their firms to manage external auditors, more filing deadlines and rising costs among other demands.

Despite having had to deal with a more dynamic regulatory landscape for a few years, many companies are now struggling to keep pace with emerging changes, says Neil Owen, global practice director of Robert Half Financial Services.

Because the complexity of financial regulations has increased workloads and required additional spending, ‘compliance demands must be balanced in equal measure with profitability goals,’ he says.

The current regulatory climate increasingly calls for employees with specialized skills. Finding the right people to address new regulatory demands without hurting a company’s profitability is a key challenge, say 89 percent of respondents. The talent war has just begun, they believe.

‘We're seeing staffing institutions bring in additional interim and full-time staff to address compliance demands and alleviate employees' workloads, but hiring and keeping top performers is challenging,’ says Owen.

There’s a persistent shortage of candidates to fill high-demand specialty positions and worries about retaining highly qualified staff have been exacerbated by the growing need for regulatory expertise and operational changes in the financial sector, says Owen. Roughly 77 percent of US financial services executives polled expressed concern about losing top performers.

The dearth of talent is creating opportunities for mid-level professionals to take on roles of greater seniority, but that’s also putting pressure on financial firms’ labor costs and overall budgets.

The increasingly large proportion of the work that is project-based has led to growing reliance on interim employees hired on a temporary basis to manage initiatives such as regulatory compliance, the survey finds. One-third of those polled say they plan to increase their interim staff in order to handle current and future regulatory changes, and nearly one-quarter plan to hire additional full-time staff as well. The survey results show that many firms don't have the employees they need to successfully handle the extraordinary workloads that accompany broad and deep regulatory changes..

The survey also highlights a trend toward integrated governance, risk and compliance programs, which 68 percent of respondents, both globally and in the United States, say have led to a more efficient use of labor. US executives cite improved business performance, optimized risk/return outcomes and reduced compliance costs as benefits of integrated programs.

Among the takeaways for US firms is the need to ’identify skill gaps and areas where they will need additional staff, both on a project and full-time basis,’ says Owen. ‘Even if they don't have roles to fill immediately, managers should make recruiting an ongoing priority.’

Given the intensified competition for top performers institutions that are most proactive will be better able to hire and retain the highly trained professionals they need to handle growing regulatory demands, he adds.