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A migration of experienced talent from investment banking into asset management could result from changes in the regulatory environment according to research carried out by Charles Cooper, financial services risk consultant at Twenty Recruitment.

The Alternative Investment Funds Directive (AIFMD) and Undertakings for Collective Investment in Transferable Securities (UCITS) regulations imposed by the Financial Conduct Authority (FCA) have meant that the historically largely unregulated asset management sector could face increased scrutiny in the future. Firms will now be required to have a standalone risk function, completely separate to operations and with access to senior management in order to meet these regulations. For the majority of organisations this will mean bolstering their risk and compliance departments, and Cooper believes the talent may come from the investment banking sector. “We’re anticipating a large movement of risk and compliance professionals from investment banking into the newly regulated world of asset management, and while we don’t expect there to be panic hiring as there was in the investment banking sector, we do foresee a number of experienced professionals crossing over. We’re seeing the beginnings of ‘the buy-side dream’ where employees are seeking out a healthier work-life balance and better bonus structure over higher base rate remuneration. This is a good deal for both sides; the talent get a healthier balance and the firms get risk and compliance professionals with depth of experience who should be able to get them on board with the new regulations.”

From the asset management perspective the new regulations could have more of an impact on smaller firms, believes Cooper. “For smaller asset management firms the changes may prove problematic. A larger organisation could employ extra compliance and regulatory staff relatively easily, but for smaller firms this may be a serious investment, and one that could prove to be more of a challenge. Asset managers are generally taking a measured approach to hiring but those working for smaller institutions will have to think long and hard about the effects that boosting their risk functions will have on the business as a whole.”

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