Boutique financial services start-ups are launching at a faster rate than at any point since the global financial crisis hit. While large financial services organisations pare back divisions and reduce job numbers, smaller players are starting to take up the slack.
In the past year, start-up boutique financial organisations increased in number by 12.2%, our analysis shows. There are now 25,210 boutique financial services organisations in the UK, or around 2,800 more than at this point in 2014. Over the same period, the number of larger financial services organisations has fallen by nearly 16%.
Hedge funds, private equity funds, brokerage firms and financial technology firms are growing at a rapid rate, fuelled by talented teams of financial services professionals fleeing larger firms due to a combination of redundancies, slow pay growth and restricted promotion opportunities.
Large financial services organisations have been shedding non-core business areas because of regulation and a need to shore up their balance sheets. Many banks have scaled back their private equity arms and in-house buy-out teams are leaving to set up their own funds. Meanwhile, the squeeze on equity analysts because of the looming impact of MiFID II has prompted an increasing number of analysts to set up their own research consultancies.
For financial services professionals this offers another hope in a difficult job market – large organisations continue to cut headcount, but these boutique organisations are increasing in number and needing to hire.
The lower cost of IT infrastructure has made it much easier for teams with a proven track record to spin out of large banks and start their own family office or fund. We’re even seeing banks re-engaging their former employees as contractors.
Then there’s the fintech sector. Large financial services organisations are open to the opportunity of transforming by embracing digital technology, but it’s like turning around a super-tanker. This means it’s the smaller start-ups leading the charge and the banks playing catch-up.
All of this offers a crumb of hope to financial services professionals laid off by large financial services organisations during the crisis and into the present day. Boutique firms are starting in greater numbers and are offering job opportunities.
Simon Curry is CEO of SJD Accountancy