Concern about the wider economic climate has managed the salary uplift expectations of both incumbent staff and job seekers going into 2021, with some important caveats. Sentiment among the latter in the first half of last year was cautious, with job movers often only acting under some compulsion resulting in pragmatically flat salary offers. When we marry this to the notable changes to the way we work – which has seen a fortunate bracket of workers save more over the last twelve months – we have seen significantly less appetite for the yearly package pugilism or for job seekers to test the market externally. It is remarkable that after such a volatile year, compensation has largely remained so stable.

Financial services demonstrated a resiliency and an ability to adapt in 2020 that allowed a number of sectors to come out of the year in healthier positions than they might have anticipated. The compliance department had to meet specific new issues like remote surveillance, and while firms might be thinking that it has all gone rather well, some opinions are divided; did nothing go wrong or are we simply not aware of it yet? With the forbearance of the Financial Conduct Authority already fading, the stagnant compensation landscape may change quickly, catching out some firms without flexible salary review intervals and policies.

The recruitment activity that contracted deeply in Q2 2020 stabilised towards the end of the year and has rebounded with cautious optimism. The normally resilient externally mandated market for Chief Compliance Officers and SMF16s almost halted in the first half of last year and there was a strong sense that firms were reluctant to make such business critical hires without a face-to-face interview. As the pandemic lingers and adaptions become routine, that willingness – or pressure? – to remotely onboard the top job has grown and new mandates from clients for SMF16 vacancies increased 63% in the second half of 2020, suggesting significant pent-up demand. This will have an inflationary effect on top end salaries.

The overall workload of the compliance officer has increased, and early signs indicate that many firms will be looking to bolster their compliance and financial crime departments in the face of increasing demands. Huge amounts of unanticipated risks were ingested last year so we anticipate at least modest recruitment with commensurate salary pressure returning this year. Pockets of outperformance in the second half of last year across hedge funds, private funds, fintechs, M&A, broker-dealers and payments have now been joined by the rising tide of the wider market, which will likely mean sustained recruitment activity through Q1 and at least into Q2. Demand for professionals at mid-senior levels with broad skills, generalists, advisory, monitoring and surveillance, marketing compliance and reporting will continue to build in the short-term. Compliance Officers with digital expertise or experience of implementing tech solutions are particularly sought after as organisations focus more on finding efficiencies. The continued uncertainty is likely to keep salary increases modest for now, with the effects of Brexit still being felt along with a slight increase in the talent pool as a result of IR35 contractors now looking for permanent positions.

Firms that are willing to embrace the opportunities offered by flexible working in 2021 and in the ‘post-new normal’ of the pandemic will find themselves less exposed to these price increases as candidates are focusing on the wider benefits and work-life-balance considerations more than ever before. Whilst reasonable uplifts for good candidates looking to move will always be achievable and this should be considered during compensation reviews, there are obviously certain risks associated with job changes in this climate, which need to be weighed against the potential flight risk.

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Investment Management (Large)

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Private Equity/Hedge Fund (Large)

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Wealth Management (Large)

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Investment Banking (T1)

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Broker/Exchange (Large)

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Fintech/Retail Banking

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