Big asset managers have expanded their combined EU workforces by 38 per cent over the past five years in response to the growth of the market, Brexit uncertainty and increased regulation.
According to figures compiled by the Financial Times, 10 of the world’s biggest asset managers, including Amundi, Vanguard and Invesco, now employ almost 7,000 people in Europe, excluding the UK. The figures do not include BlackRock, Fidelity International or Capital, which declined to provide figures.
Eight asset managers provided data for both 2015 and 2020, showing that their combined headcount rose from 4,771 to 6,569 over the period — a 37.7 per cent increase.
The jump in staff numbers coincided with the rapid growth of the investment industry globally, in which assets under management increased from $84tn to $110tn between 2016 and the end of 2019, according to PwC.
Fund groups’ UK headcount increased 35 per cent over the same period, according to FT’s analysis, despite previous predictions that fund jobs would flee the country after Brexit.
Amin Rajan, chief executive of consultancy Create Research, said a combination of quantitative easing and low interest rates had driven the hiring spree. “By putting a rocket under asset prices, central banks have indirectly fuelled the headcount growth in large swaths of the industry since 2015.”
He said the rise of sustainable investing, the adoption of machine learning and the growing regulatory burden facing fund managers had also forced groups to expand by hiring specialist staff.
The UK’s vote to leave the EU has also turbocharged hiring. Most asset managers have either set up EU entities or bolstered existing offices to retain access to EU clients. Luxembourg and Dublin, Europe’s two largest fund domiciles, have emerged as the main beneficiaries.
Schroders, the UK’s largest listed asset manager, has added almost 250 staff to take its total EU headcount to almost 900. Amundi, Europe’s biggest fund house, now employs more than 3,600 in the region, an increase of more than 1,000, although this is partly attributable to its 2016 acquisition of Pioneer.
US-headquartered managers have also bulked up. Franklin Templeton has almost 1,240 employees in the EU, up by more than 200, while Vanguard employs 65, compared with nine five years ago.
Nicolas Mackel, chief executive of lobby group Luxembourg for Finance, said the looming end of the UK’s Brexit transition period had added urgency to asset managers’ EU hiring plans.
“It has dawned on them that, come January 1 2021, they will need an adequate level of staffing to sell their funds to EU clients and to avoid being reprimanded by regulators,” he said.
EU regulators have started demanding more boots on the ground after Brexit led to fears of letterbox entities being set up in the bloc. UK fund house M&G, which gained additional licences in Luxembourg after the Brexit vote, now employs 43 people in the country compared with just five in 2015. M&G declined to provide EU-wide figures.
Many believe that regulatory changes will drive more job creation in the EU, particularly any tightening of the EU rules on outsourcing in asset management — an idea being explored by the European Commission.
Mr Mackel said that while the UK would remain Europe’s dominant investment hub, asset managers’ EU headcount would gradually increase at the expense of London. “It will be a slow erosion. Asset managers’ UK and EU operations will become more and more separate over time.”