This color-coded chart shows which finance jobs will be in demand — and where Wall Street is heading
Morgan Stanley/Oliver Wyman
- Morgan Stanley and Oliver Wyman have just released their annual Blue Book on Wholesale Banks and Asset Managers, highlighting the growing pressures on the asset management industry.
- As part of the study, the two companies presented their forecasts for compensation spend by role in wholesale banking and asset management.
- Technologists are going to be in demand, with engineering, technology, quantification and analytics personnel making up a larger part of banking front office operations, and IT making up a large part of the back office. There is a similar story in asset management.
- The report estimates that up to 40% of the asset management workforce “will require fundamental retraining”.
The finance workforce of the future will look very different.
That’s the conclusion of Morgan Stanley/Oliver Wyman’s annual blue book on wholesale banks and asset managers, released Wednesday. The report highlights intensifying cost pressures for asset managers, which will in turn translate into additional cost pressures for the wholesale banks that serve them.
And this dynamic will have significant implications for those employed in finance. The report said:
“As banks embrace new technologies and build new businesses, the talent model will need to change profoundly. In the front office, the demand for quants will increase dramatically, while technology experts such as user experience specialists (UX) will need to be aligned with business teams to enable the development of agile propositions.We estimate these two roles will grow to account for 25% of compensation, from less than 5% today.
“In the back office, IT will account for around 60% of future compensation, driven by higher salaries for more specialized and in-demand technology skills, such as user interface (UI) developers.”
The same goes for those working in the asset management industry. The report suggests that asset managers could cut costs by 30% through investments and advances in automation and outsourcing. The report said:
“We expect a reduction in headcount due to automation and outsourcing of the entire skill set. We also estimate that up to 40% of the workforce will require foundational training. This will be particularly important in portfolio management and asset administration roles where the use of better data and analytics will transform roles.
Morgan Stanley/Oliver Wyman
“As a result, compensation structures will change. Investment management will continue to demand the lion’s share of compensation spending. The compensation share of technology and data management will increase fourfold, while spending related to automated back-office functions will decline The distribution share will remain largely stable, but we expect this role to change most fundamentally as data and technology will become increasingly important at the interface with customers. “
Of course, there are challenges. On the one hand, attracting these skilled technologists to finance can be difficult, with the report stating that “wholesale banks will need to evolve their talent models to be competitive.”
And for asset managers, the retraining of 40% of the workforce is not likely to be easy.
“Overseeing this transition should be a CEO role,” the report says. “The depth and speed of change required far exceeds the traditional change management process managed by HR departments.”