Is Scotland's appeal as a centre for asset management diminishing?

It's becoming more difficult for UK fund managers to attract foreign candidates, and given Scottish firms' new-found predilection for looking internationally for new recruits, this is a reason for concern.

In terms of recruitment, Scotland's asset management sector has traditionally been relatively isolated from the machinations of the City, with most firms looking locally for new recruits. In recent years, this has changed, with the larger fund managers in particular spreading the net wider and talking up Scotland's international appeal.

But a new report by the Investment Management Association (IMA) suggests that the UK has become less attractive as a place to work. A combination of high income tax, a more stringent regulatory regime and difficulty securing a working visa have all dented its appeal.

"We have to work incredibly hard to get people from overseas to work in the UK. It's not the posting it was five years ago. It used to be top of everyone's list," one fund manager told the IMA survey.

"The UK is a less attractive place from the tax, regulatory and other perspectives. There is a definitive risk that over time, you'll see attrition here, but no replacement," added another senior fund manager.

Talking down the UK's appeal is no new thing - bankers have, after all, supposedly been hopping on a plane to Singapore, Hong Kong or Switzerland for couple of years now. The reality has been more of a trickle than a flood, however.

In fund management, there seems to be no wholesale move away from the UK as yet, says the report, despite the increased challenge of attracting people here.

Don't group us together with England...

Hiring managers in Scottish fund managers, talking on the condition of anonymity, remain convinced that it's actually become easier to attract international candidates north of the border recently.

"People move for the opportunity, rather than its location, but Edinburgh's lifestyle, away from the hustle of the City, is a major selling point," claims one HR manager. "Remuneration hasn't been shaken up in the fund management sector, so the UK remains competitive from that point of view too."

Another HR manager tells us that the "Scottish connection" has always been prevalent when trying to persuade people to move from London, but it's less of an issue for international candidates who realise the appeal of Edinburgh's status as a centre for asset management.

The IMA report also unveiled some employment statistics in the fund management sector. There are now 25,000 people employed in the industry across the UK, which is an increase of 4% on 2009.

However, just 27% of these are employed in 'core' functions - fund management, research or dealing - with the remainder in marketing, sales and business development or support functions.