Exams boosted by healthy markets

A healthy increase in the number of City professionals taking the Securities & Investment Institute's exams in the past year reflects the buoyancy of capital markets recruitment, and the trend looks set to continue.

SII examination figures are fed by fed by the influx of new entrants and graduates into the securities and investment sector. The institute reports that the number of examinations taken this year increased by 5%, with exams taken by front office and advisory staff increasing by 12%.

"Numbers are also increasing owing to increased M&A, investor confidence in the fund markets and the FTSE index rising to a three year high," says Simon Culhane, chief executive of SII. "Recruitment is up about 8%."

The SII says 29,000 people took exams in the dark days of 2003, compared to 34,458 this year - an increase of 19%.

However, the percentage of exams for those working in administrative roles fell by 3% this year compared to last, an affect the SII attributes to the continuing trend of jobs being moved to offshore locations.

Will the Financial Services Authority's new regulations making exams non-compulsory affect exam registrations? Culhane says, "We expect a small decline in entries but nothing substantial."

He attributes the small decline to MiFID, which he says could encourage candidates to take regulatory exams in their own countries and "passport" into the UK from the EU.

However, Culhane says exams will retain their importance. "Firms use the exams as a quick and comparatively cost effective means to determine the competence of new staff and we don't see that situation changing."

Tactical asset allocators take over

Disaffection with balanced mandate funds makes ominous reading for asset allocation specialists. One headhunter says jobs in the area are evolving, as tactical asset allocation becomes the new watchword.

Financial News today reports that F&C Asset Management saw funds under management fall 5% in the second quarter of 2006 as the company's clients withdrew money from its balanced mandate products.

The move is part of an ongoing trend, which has seen institutional clients favour high return funds focused on a single asset class, instead of balanced mandate funds that mitigate risk by spanning a mix of products and regions.

It doesn't bode well for asset allocation specialists, who decide how balanced mandate funds are split between products and regions. But headhunters say job losses in the area have already taken place. "There was huge cut back in asset allocation roles about four or five years ago, with a whole layer of people stripped out," says the head of the asset management practice at one City firm.

She says asset allocation skills are still required today, but the nature of the role is changing. "Asset managers are looking for a different skill set: rather than more traditional asset allocation roles, institutions are now looking to bring in tactical asset allocation talent."

Companies like Schroders, Merrill Lynch Investment Managers and Insight Investment already have tactical asset allocation products. Standard bearers of the new breed include Schroders' Curt Custard and Insight's Johanna Kyrklund.

Unlike traditional asset allocation specialists, tactical asset allocators need a focus on absolute rather than relative returns, says the headhunter. The roles are more demanding and candidates need a strong understanding of derivative products as well as contemporary macroeconomic events. In return, rewards can be generous with six figure pay packages easily obtainable.

Union website exposes banking pay

Investment banks aren't known as hives of trade union activity. But a new pay-focused website from the Trades Union Congress makes interesting reading.

Not all banks are listed, but the site (which is to be found at www.worksmart.org - click on 'Get the lowdown'), confirms that Goldman bankers are top of the pay tree.It also suggests that Merrill's European staff haven't been doing too well and reveals that some board members are keeping an increasing share of profits for themselves.

According to the TUC, staff at Goldman Sachs International earned an average of 336,732 last year, compared to just 186,410 at Merrill Lynch Europe and a mere 114,194 at Bear Stearns International.

Moreover, while Goldman staff have received a pay increase averaging 166% in the past three years, it seems their colleagues at Merrill and Bear Stearns have seen their pay cut. The average salary was reputedly down 8.69% last year at Merrill Lynch International and 0.36% in the past two years at Bear Stearns.

The Financial Times says the TUC intends people to use the website to compare remuneration at similar companies and to contrast board-level pay inflation with pay rises for lowly staffers.

Accordingly, board members appear to have been doing rather well for themselves at Bear Stearns and Goldman Sachs. The site says directors at Bear Stearns International received a 70% increase in average pay over the past five years, while the highest paid director at Goldman Sachs International benefited from a not immodest 676% increase in pay over the same period.

However, fat cat bashers are liable to be disappointed by the goings on at Merrill Lynch. The highest paid director at Merrill Lynch Europe has apparently seen his/her salary fall 85% in the past five years. There is no mention of bonuses though.