How has enhanced scrutiny changed wealth management?

In an increasingly competitive marketplace, wealth managers are shifting their priorities away from raw numbers, and towards client care. What does this mean for the wealth managers and advisors of the future?

Job interviews can be famously tricky. Earlier this month, Trent Innes, managing director of fintech firm Xero Australia and Asia, went viral when he revealed how he uses a ‘coffee cup test’ to weed out unsuitable job candidates.

Here’s how it works: Innes takes all interviewees through the staff kitchen, making sure they leave with a drink of some kind. After the job interview, he will note whether or not the candidate offers to wash up their cup – if they don’t, they are deemed to have the wrong attitude and won’t be getting a job offer. To Innes, this simple task shows him whether or not they will fit into his company culture.

The coffee cup test is indicative of a wider trend happening across financial services, where candidates are increasingly being judged on their attitude and people skills, rather than numbers-driven performance records.

My colleague Grant Torrens, regional director of Hays in Singapore, is also seeing this trend across Asia with organisations placing a greater emphasis on situational based questions to identify salespeople who are truly client-centric.

Corporate values are changing

Corporate values in the financial sector have undergone a huge shift in recent years. The 2007/8 financial crisis forced sweeping regulatory changes around the world, with an emphasis on accountability, transparency and customer care. And the cost of compliance can be high. Between January 2011 and March 2019, a total of £34.9bn was paid in compensation to UK consumers who had been approved for personal loans and credit cards without being made aware of the risks.

The huge cost of non-compliance has led multi-national banks and fintech start-ups to invest heavily in customer care, and many new job opportunities have opened up for candidates with the soft skills to communicate effectively, build trust and intuitively do the right thing.

According to our latest Hays Australia Jobs Report, there continues to be a high demand for financial advisors, but these roles have become less focused on sales and increasingly focused on delivering an exceptional service to existing clients.

What does this mean for jobseekers in the wealth management industry?

“Advice has become a heavily scrutinised industry,” we noted in our report. “Current wealth advisers going for a new job must have good compliance scores from current and previous employers and be able to demonstrate a strong client centricity.

“There is still an expectation of candidates being a high performer; at the end of the day wealth advisers remain a revenue generating employee for the business.”

Scrutiny is everything – financial services organisations across the board now expect their employees to be brand ambassadors, promoting the new values of the firm through their work and conduct. This reflects the changing demands of a cynical consumer base which has weathered the financial crisis and values transparency. A recent Accenture study found that 66% of global consumers value companies and brands that have a great culture. As the first point of contact for customers, it is down to the company’s employees to project these values.

Over the past few years, regulatory pressure has also increased. The EU-wide MIFID II regulations require all financial firms to include an ‘appropriateness test’ that has the dual role of identifying unsuitable investors and making those qualifying investors aware of the risks involved in their investments. This test will typically involve a short but detailed questionnaire which aims to gauge the investor’s understanding of the investment and capacity to accept risk. If the investor fails the test, they will be blocked from investing in that particular product.

Meanwhile, the upcoming Senior Managers and Certification Regime (SM&CR) “aims to reduce harm to consumers and strengthen market integrity” by holding managers to account. SM&CR will apply to all financial firms in the UK and Europe, and it is expected to usher in a culture change whereby all financial staff are required to act with “integrity and due care”, and prioritise customer care.

For finance employers, this means that it is more important than ever to choose employees who represent the future of banking, and not the past.

Compatibility and strong values are now just as important as a performance-driven background, and interviewers will be on the lookout for any red flags that may reflect poorly on the company in the public sphere. This could be anything from controversial social media posts, to a lack of punctuality, to a general lack of consideration of their surroundings.

As Trent Innes would say – you have to wash your coffee cup.

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