What is happening in the economy?
The latest Office for National Statistics (ONS) report on the labour market in the United Kingdom (UK) stated that the unemployment rate rose to 4.2% between June and August, which is a 0.2% increase from the March to May quarter in 2023. At the same time, the number of jobs on offer fell to under a million. The estimated number of vacancies fell by 43,000, with only 988,000 vacancies available from July to September onwards.
In the US, the unemployment rate rose to 3.8% in August 2023 from 3.5% in July, the highest since February 2022 and above market expectations of 3.5%.
Financial service firms’ layoffs
The financial services industry has taken a great hit amid economic volatility. With continual slow growth, high interest rates and fears of a possible recession next year, banks and financial services firms across the world are seen to be laying off their staff in an attempt to cut costs. This is particularly prominent in the United States (US). Reportedly, the top banks of Wall Street have been quietly cutting 20,000 employees throughout 2023. JP Morgan has cut about 500 jobs this spring across its departments. Another well-known American commercial bank Signature Bank laid off 400 workers.
There are plenty of other examples – Goldman Sachs, has cut 3,200 jobs across the bank which made up 6.5% of the workforce. Bank of America has cut over 4,300 jobs since the end of the first quarter. Following its merger with Swiss rival Credit Suisse, UBS also announced plans for a massive layoff of up to 30% of the workforce worldwide. Understandably, this sparks concern within the UK. Earlier this year, Financial News reported that Citi Bank had cut 30 jobs in its UK investment bank, with a further 20 coming from its corporate banking unit. It is anticipated that the financial services industry in the UK will face a similar challenge.
Recruitment agency Morgan McKinley noted that the number of job openings in the finance industry this year had fallen by 86% compared to Q2 of 2022. It is suggested that London may now be oversaturated with financial talent.
What does this mean for Family Offices?
While the above seems negative, we believe that this could be an opportunity for Family Offices to take advantage of. While the overall economy is undoubtedly in decline, the Family Office space is growing exponentially.
We have always talked about the challenges and difficulties in hiring for Family Offices. Family Offices are often in direct competition with large, well-known financial service firms and banks when it comes to hiring finance and investment-related talent. The rising unemployment rate and increasing layoffs in the financial sector may indicate that there will be many high-calibre professionals that are in the financial services industry entering the job market soon.
With an abundance of incredible candidates entering the job market, it is anticipated that Family Offices may be able to hire at a competitive cost point than it was before. We believe this is a great opportunity for Family Offices that are looking to internalise their investment functions.
Agreus is an established full-service resources and recruitment consultancy dedicated to working exclusively with Family Offices. Agreus has successfully placed entry-level through to executive-level professionals within investments, legal, accountancy and finance and operational roles in Family Offices across the world. We understand the dynamics of a Family Office and can offer the perfect candidates as well as consultative advice on compensating your employees. For a more tailored conversation about hiring for your Family Office, please do not hesitate to get in touch.
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