European ETF industry salaries surge as managers fight for talent

Stay informed with free updates

Simply sign up to the Exchange traded funds myFT Digest — delivered directly to your inbox.

The race to hire talent within the increasingly competitive exchange traded fund market is causing salaries to “bloom” across the sector, experts have said.

Asset managers in Europe have piled into the market over the past couple of years in a bid to capitalise on client interest.

This has acted as a boon for salaries as demand for roles across the sector has risen, while heaping margin pressure on fund companies looking to enter the space.

Robeco, Janus Henderson and American Century are among the asset managers to hit the market last year, while Schroders, Dimensional Fund Advisors and Nordea are plotting their entry.

This article was previously published by Ignites Europe, a title owned by the FT Group.

In a recent survey of 18 asset management product heads by recruitment firm Logan Sinclair, all of the respondents said the substantial investment required to build out a separate function of ETF sales, capital markets and product specialists was a major concern when entering the market.

Ben Burling, managing director of Logan Sinclair, said the combination of rising demand for ETF roles and the lack of talent coming into the industry was causing salaries to rise.

“The market demand is causing a bloom around [ETF] salaries,” he said.

“Not every firm has ETF capabilities and there is an issue of not enough young people coming into the workforce.

“Unless you start to expand the workforce and bring new people in, [asset managers] are just hiring from competitors. This has raised the cost of ETF sales, product development and capital markets specialists within asset managers.”

Burling highlighted two of Europe’s largest ETF markets — Germany and Switzerland — that were seeing salaries increase “every year” as senior sales people in particular were rewarded for the popularity of ETFs.

Michael O’Riordan, founding partner of ETF consultancy Blackwater, agreed that salaries were on an upward trajectory.

He said this was particularly acute in specialist areas such as capital markets, a function that is central to ETFs’ liquidity and is non-existent for mutual funds, where a senior person could expect an annual income of upwards of £300,000, and a further 50 per cent more in the US.

The capital markets function works closely with liquidity providers and is central to ensuring ETFs can trade throughout the day as efficiently and cheaply as possible.

O’Riordan said capital markets staff would “make their money back” for the firm and clients by helping to keep trading costs low, which “a lot of asset managers don’t understand”.

He added that mutual fund houses that tried to set up a capital markets function using existing talent were “destined to fail” but that equally firms did not need to “bet the house” on an expensive capital markets hire.

O’Riordan said a “super expensive” capital markets executive was not essential early on because firms would have fewer clients, with less activity as a result, enabling an asset manager to hire a junior or middle-ranking person.

Andrea Murray, vice-president of investor services at Brown Brothers Harriman, said capital markets personnel held a “critical role” within the industry that could not be replicated from within the mutual fund world.

“You are tapping into a resource that has a depth of knowledge about capital markets, but who will also be able to educate investors on the nuances of ETFs,” she said.

“We saw that with Robeco hiring Nick King last year. It is a good approach, you are getting someone who knows the industry in a critical and long-standing role.”

The Dutch asset manager hired industry veteran and former BlackRock and Fidelity ETF head King to spearhead the business, later poaching capital markets head Dorcas Phillips from Fidelity.

Despite the upward pressure on salaries, O’Riordan said firms were not “opening the cheque book for a huge hiring splurge” and are much more likely to leverage their existing expertise in areas such as sales and product development.

“Firms are treating headcount as margin and obviously there is a big cost in there, so they are trying to squeeze as much juice out of their existing capabilities as they possibly can.”

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.