We talk to Chris Fisher, CEO of Multrees, about the cost pressures, fight for talent and other demands on the wealth management sector – and how they might be best managed.
One feature of wealth management that appears to rarely change is the complaint that there is a lack of suitable talent in the sector. The pandemic and associated disruptions to working practices have given an added edge to this. There is talk – with a certain amount of hype – of the “great resignation” and of people quitting the sector, although this news service understands that this is simply the case of people changing jobs and roles after being cooped up at home for two years, rather than some more profound change. In any event, the squeeze on talent is real. Inflation is rising, and pressures on salaries are likely to be upwards. But in a world where private banks and wealth managers want to protect margins and cut costs, how can they achieve such goals?
One firm well placed to discuss the UK scene is Multrees, the provider of outsourced platform, investment administration and custody services. We talk to its chief executive, Chris Fisher, on what he thinks of the market and where it is likely to be heading. (We also include comments from Multrees’ head of people, Carole Lamond.)
How significant are the cost pressures that wealth
managers in the UK/Europe face?
Rising staff costs have been the most significant pressure affecting the wealth sector in recent times with the job market changing rapidly in a relatively short space of time. Dynamics are changing; where historically, staff might have been attracted and financially rewarded to come and work in the big cities, people are now electing more lifestyle focused approaches. There are numerous examples of businesses now paying big city salaries to people far and wide, adding further competition in an already shrinking labour market.
A lot of faith appears to have been put into using
technology tools to square the circle of compliance burdens,
client service and business growth. Have we reached the
limits of what’s possible? What problems do you see? Are
there interesting tech solutions you have come
Faith has always been put in technology tools as technology is an evolutionary process. There is nothing new under the sun, but innovation and change is a gradual and steady process. Whilst [over] a hundred years ago communication was via quill pens and paper, technology has since adapted. As change comes in, it is accepted as the norm, and as a result processes become more streamlined. The wealth business is a growth business, the market is growing as people are saving and earning more so there is more wealth out there to be managed. In a growing industry you are always going to lean on technological growth to drive change and efficiencies. I do not believe we have reached the limits of what is possible regarding tech innovation; technology will continuously evolve and adapt to meet our changing requirements.
Interesting tech solutions from a people perspective that we have come across, include performance management and engagement systems, which are crucial to supporting everyday conversations, goal setting and the performance of an organisation. In addition, digital benefit apps can play an important role; these help firms outline the benefits offered to their staff and aid retention. Benefits are difficult to quantify and are often overlooked by employees.
Are wealth managers’ clients mistakenly informed about
the costs of using services? Are firms doing enough to frame
their expectations about what they should expect to pay for
Post RDR [Retail Distribution Review reform programme of 2013], we have moved from a world where wealth managers' income could be subsidised by opaque charging structures and hidden fees, to a much more transparent marketplace. Wealth mangers are to be held to account and are required to justify their fees to their clients.
There is the old adage “you get what you pay for” and service in our industry is a key differentiator. If service is done well, it does cost money. As an example, at one extreme end of our market there is the DIY investor who does everything for themselves; it is this area of the market that offers enormous opportunity as these armies of “go it alone” investors could greatly benefit from tailored professional financial advice. It is these people who wealth mangers need to appeal to by clearly outlining their value proposition. To put it another way if I was running a restaurant, my greatest competition would not be from the other restaurants down the street, but would instead come from the supermarkets.
Although a “macro” issue outside direct industry control,
how big a problem is that we have had ultra-low/negative real
interest rates now for a decade, given the margin pressures this
It is important to differentiate here between banks and non-banks with banks traditionally being more reliant on interest rates for their earnings than wealth managers. A fee-based wealth management business, operating in a transparent world is unlikely to be affected by macro factors such as low interest rates. Income should rather be almost wholly based on the recurring client fee received, rather than ancillary revenues generated from outside.
From your experience, how big a challenge is finding
talent and holding on to it? What potential solutions are there?
Do you see any help coming from inside or outside the sector? Are
higher education institutions, training organisations/government
doing enough, given that financial services are important revenue
earners for the UK?
There are around 50,000 vacancies in financial services at the moment, with recruitment agencies reporting that candidates are fielding on average five job offers at a time! The job market is particularly buoyant and, as reported in the press recently, this is certainly the “era of the great resignation.” In our post-pandemic world, candidates are seeking the ability to work remotely. It is fair to say then that finding talent and holding on to it is a very real challenge and will continue to be so for the foreseeable future, as we all learn how to lead and collaborate in an agile and virtual environment.
We are focusing on three key areas to attract and retain talent: our culture, capability and future proofing. Key to this initiative was hiring an exceptionally experienced head of people. Carole Lamond joined us last year to undertake this role, bringing with her years of experience in building teams. Carole joining the team coincided with our celebrating 10 years in the City. As an important milestone and as we move forward as a mature startup, our people strategy became an increasingly key priority for our business strategy.
Carole Lamond said: “Wealth Management is a business about people, so taking care of our clients requires us to have strong teams. Partnering with CISI, we have built a robust development programme and have recently implemented a new performance management and engagement system to further equip our managers with the skills they need to develop their teams. We have dedicated wellbeing initiatives (both mental and physical) as well as qualified mental health first aiders and trained managers."
Where do you see the most promising sources of new
business client at Multrees?
Key opportunities for new business for us include the growing market of startups and entrepreneurs as we believe investment management is a business that suits this group. Also included are post pandemic firms, who recognise that running their own business and managing their own systems can be pretty demanding. With all the challenges that the pandemic bought about and now the tight labour market, businesses are increasingly looking for outsourced solutions.
When do you think we might return to a more “normal”
business climate post-COVID?
Our industry, like many 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 short notice video calls as opposed to appointments booked months in advance, are all changes I believe are here to stay and now represent the new normal.
What are the main problems and challenges those clients
bring to you and ask for help with?
Our clients are looking for a consistent, stable and high-quality operating environment on which they can base their business and provide opportunity for further growth. Facing challenges of scalability, customer service and margin protection, our key focus is to support our clients by providing first class customer service as well as choice and flexibility in the support services they might require.