Financial Services: A Market Reaching Boiling Point

As part of the series of insights around our 2023 Financial Services Salary Survey, our Associate Director for Financial Services Alex Russon shared his insights on the state of the market and the year to come. Read on for his thoughts.

The past 12 months for the Financial Services sector have been marked by instability and unpredictability, as the state of the market has been impacted by the rising cost of living, growing inflation, and global political turmoil. As a knock-on effect, hiring in this climate has been increasingly challenging.

The main challenge to contend with which looks set to continue into 2023 beyond is the rising cost of living, and the hugely inflated salaries that go along with this. A shortage of qualified, experienced, and skilled staff is leading to salary increases at a level we haven’t seen the like of before. In order to compete and entice talent to their business, companies are having to step up their salary offerings. Where previously businesses might have been inclined to simply allow an employee to leave their business without any qualms or counteroffering, attitudes have changed. In the candidate short market, business leaders know the true cost of replacing their staff is exponentially greater than retaining them. In fact, it might even be impossible. Whether or not they will be able to find a qualified individual to replace staff exiting the business is a gamble. Therefore, their only option is to accept the current state of the market and offer huge counteroffers to keep their staff onside.

Whilst everyone seems happy to opt for the short-term solution at present, the market has to reach a boiling point sooner or later. Everyone knows that the current state of affairs is unsustainable: there will reach a point where business leaders and shareholders can no longer justify the hit that these increases are making on their margins, and the firefighting will need to end. But, with the market as unpredictable as it is, it’s impossible to say for sure whether the end is really in sight, or when this overheating will end.


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