The war for talent in the stock industry leads to “great negotiations”

A fierce and widespread talent war in the asset management industry is leading to “great negotiations” as employers struggle to retain and recruit staff, according to JPMorgan Asset Management’s chief executive.

“We need to work harder to keep people on board, because ‘people have more opportunities,'” George Gatch said in an interview. “I do not call it the great resignation. I call it the great negotiations, “he added, referring to the increased rate of workers leaving their jobs during the pandemic.

The scope of talent competition has expanded beyond the mass asset management industry. In addition to their traditional rivals, groups such as JPMorgan Asset Management, an active management house that sells primarily to retail investors, are now competing with alternative companies that are expanding their footprint in the retail market and also facing technology companies in the lure battle. of engineers.

Gach, who joined JPMorgan in 1986, said the company “works really hard” to appeal to “younger people and especially people who understand technology.” JPMorgan Asset Management employs 1,500 technologists worldwide and spends $ 500 million on technology each year. In total, he has $ 2.5 trillion under asset management.

“It’s about competitive remuneration, but other things are just as important,” he added, pointing to factors such as the company’s culture, environment, people and opportunities.

In the War of Talents, Gach said the asset management industry needs to do a better job of “conveying the purpose and accomplishment that could come from building products and services that are quite fundamental to people’s lives.” Helping people save for college, pay for their child’s wedding, your parents’ retirement, your own retirement.

Last year, JPMorgan Asset Management bought Campbell Global, an investment manager focused on solid wood, to expand its position in alternatives. Last year, he acquired 55ip, a fintech company that allows financial advisers to deliver smart tax strategies on a large scale.

Now the focus is on organic growth, not deals. “I really don’t see a gap in our proposal or any urgent strategic priorities,” Gach said. “The obstacle is too big to do anything. It is very difficult to be successful by integrating strong cultures and integrating two asset management companies. So where we have made acquisitions, we have focused on additional opportunities. “

Gach said that while the broader asset management industry is still highly fragmented and scale is becoming more important, he said large, transformational deals are “less likely” in the current environment of more difficult markets. He sees areas such as environmental, social and management strategies, alternatives and exchange traded funds as the most likely target areas for industrial transactions, as firms seek to take advantage of strong investor demand for these areas.

Market volatility, Gach said, means “active [management] returns. He said: “The basics have been reset. And I think that’s key to the role that the active can play in the next cycle.

As early as 2014, JPMorgan Asset Management launched its first actively managed ETF business, a type of investment that combines the collection of stocks, usually related to mutual funds, with the convenience and tax relief of ETFs. It has since grown to almost $ 90 billion in assets.

Gatch predicts that “ETFs will overtake mutual funds in the long run”. He believes that more and more investors see the structure of the ETF as better than the mutual fund due to its tax efficiency, lower transaction costs and ease of use. “I think the active ETF industry is at a turning point in the United States and will grow rapidly.

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