Legal Market Update: The Impact of Management Consulting Firms on the Compliance Recruitment Market

Angel Wing Chung

Although it is toward the end of the year, the compliance job market in Hong Kong is still very active as financial institutions look for experienced compliance personnel to manage their regulatory burden. Further limiting the supply of capable compliance professionals is the expansion of global consulting firms in Asia and a move into compliance consulting by the Big Four accounting firms in the region.

Facing a shortage of experienced compliance talent, a number of financial institutions have decided to outsource their compliance projects to consulting firms in order to keep up with regulatory demands, and to make their compliance programs and processes more efficient.

Impact of Management Consulting Firms

Compliance officers at international financial institutions often complain of a poor work-life balance, citing the pressures of continuous compliance regulation changes and the release of new regulations. It is not uncommon for those working for global banks to take conference calls after leaving the office in the evening, and even while on vacation. The relentless onslaught of new regulations and long working hours have caused more and more experienced compliance officers to move to local firms or consultancies in search of a better work-life balance.

While consulting work can be demanding and involve occasional late work sessions, the general work-life balance seems better because the consultants' only responsibility is to provide solutions for their clients – thus doing away with the many other responsibilities of an in-house compliance officer. As long as consultants prepare well and agree a manageable time frame with their clients before projects start, they can avoid too long working hours.

Some international financial institutions also have budgeting issues or a lack of headcount for permanent roles, especially for less experienced compliance officers. As a result, the use of contracted compliance officers has become more common, with some not even employed on a contract with the financial institution but with the recruitment agency. Several large global banks in Asia have in recent years resorted to using contract compliance officers due to this headhunt budgeting issue. One consequence of this has been that some less experienced compliance officers have tended to move to consulting firms for job safety.

Some compliance officers also find a move into consulting an attractive option due to the different and more complex challenges they get to work on. While an in-house compliance officer at a financial institution will usually only deal with internal departments such as audit and legal, and occasionally directly with the regulator, working for a consultancy allows them to deal with more diverse kinds of projects and a larger variety of departments and clients.

Compliance officers at consulting firms typically have a different career path. Instead of being promoted from junior compliance officer to senior compliance officer, they may instead be promoted to partner. As a partner at a consulting firm, they will typically have to be more involved in marketing activities, in order to maintain and to increase the revenue of their firms. In other words, it involves some “sales elements”.

Market Trends

International consulting firms are often more keen than banks to hire compliance officers with Chinese skills, especially in the junior to mid-level segment.

Since consulting firms are service providers to financial institutions, it is easier for compliance officers with Chinese skills to build rapport with different departments at institutions, not just the compliance departments and regulatory authorities.

Banks, on the other hand, seem to employ more expatriate compliance personnel, often because they are transferred from overseas offices and already know the internal operations and compliance systems well.

Compensations and Benefits

One of the most attractive reasons for compliance officers in the consulting arms of Big Four accounting firms (excluding partners) is the better compensation and bonus on offer, with many of the Big Four offering one or two months' salary as bonus. Others, however, are keen to move into an in-house compliance role in a financial institution for a different exposure.

Overall speaking, benefits and compensation at both financial institutions and consulting firms are quite similar. However, bonuses are generally better at management consulting firms (except for the Big Four), compared to financial institutions, especially for junior to mid-level positions. Even at junior level, some compliance officers can receive up to 10 months’ salary as annual bonus at a consulting firm.

While all potential job seekers should consider their own career goals and firm culture at potential new employers, in-house compliance roles typically tend to favour a more introverted character who wants to become a specialist in certain areas. Similarly, an extrovert would be more likely to enjoy the project management and the client facing aspect of a compliance consulting role.

Angel Wing Chung is Senior Consultant at Gemini Executive Search in Hong Kong. She focuses on recruitment of risk and compliance professionals for the financial industry in Hong Kong, Singapore and China.