Where is Scotland's financial heart?

Glasgow may be growing fast as a financial services centre, but Edinburgh still offers many of the best paid money management jobs.

"Edinburgh is still the natural home for Scotland's institutional business," says Richard Fletcher-Jones, a Glaswegian now working as a financial services headhunter in Edinburgh. "Glasgow will have to work very hard to compete."

The most recent survey on employment in Scotland underscores the significance of the financial services industry in both of Scotland's major cities. Of the total 108,000 financial services employees across the country in late 2004, 46,000 were based in Edinburgh and 23,000 were based in Glasgow.

John Moor, head of the financial services division of Scottish Enterprise, says the financial services sector in Scotland is growing at a rate of around 4% per annum, with Glasgow enjoying many of the benefits. With the help of the Glasgow Financial Services District, it has attracted the likes of JP Morgan and Morgan Stanley, which now employ several hundred people in the city. Both expect to add to their Scottish headcount in 2006.

But Joanna Black, of Edinburgh-based headhunter Black Appointments, says most of the jobs being added are relatively low paid operational roles, for which salaries rarely exceed 50,000. By comparison, money management jobs in Scotland can pay 200,000 plus.

Edinburgh: Follow the money

Glasgow is home to Britannic Asset Management, which employs some 55 fund managers in the city, but the bulk of money management roles continue to be located in the east. "The best paid jobs are in the Edinburgh," says Moor. "In terms of fund management, Edinburgh absolutely dominates." Edinburgh is home to the likes of Aegon Asset management as well as major independent investment boutiques such as Baillie Gifford and Martin Currie.

As a result, Edinburgh's cheerleaders say the city is the place to be if you want to scale the heights of the managerial ladder. Alongside its fund management business, it boasts the corporate headquarters of Royal Bank of Scotland and HBOS. "If you want to be in the centre of things, come to Edinburgh," says Graham Bell, press and publicity officer at the Edinburgh chamber of commerce. He adds: "We need skilled and upwardly mobile staff - we're not looking for the donkey troops."

Edinburgh's fund management businesses could gain tax advantages by relocating in Glasgow, where Regional Selective Assistance is on offer to some organisations located in the financial services district. But few are likely to do so. The head of recruitment at one major Edinburgh fund manager says most of the skilled front office staff are based in Edinburgh, and few are willing to commute: "The main challenge to Glasgow is the M8, which takes an hour to travel along outside peak hours and three hours at peak times."

Britannic to expand in Glasgow

Glaswegians deny commuting is an issue, pointing to the 50-minute train journey between the two cities. Julie Stewart, head of HR at Britannic Asset Management, says there are also recruitment advantages to being a fund management firm based in Glasgow instead of Edinburgh: "The lack of front office competitors means there is less competition and we are sheltered from the hiring merry-go-round, plus housing and living costs in Glasgow are considerably lower."

Following its acquisition of Resolution Life Group in September, Britannic plans to add another 25 or so fund managers next year. Glaswegians with front office aspirations could yet be in luck.