Million dollar sign-on bonuses offered to attract financial services professionals to UAE
Financial services professionals in the UAE and the Gulf are being increasingly offered perks like sign-on bonuses, a rarity in the region, as companies seek to attract and retain talent.
Asset management firms, private equity companies and hedge funds are hiring robustly, according to recruitment consultants.
'We're not really used to sign-on bonuses in the Middle East. But some of the sign-on bonuses currently being paid to portfolio managers within multi-strategy hedge funds are between $3 million and $5 million,' says Oscar Orellana-Hyder, co-founder of Dubai-based executive search firm Cordell Partners.
Adam Man-Cheung, senior director at recruitment consultancy Michael Page, agrees that there's been a 'noticeable increase' in companies offering sign-on bonuses. These depend on the candidate, their seniority, specialism and tenure in the business.
Such a perk wasn't prevalent a few years ago in the region, although it has been internationally. When candidates join, they need to forego their existing bonuses, so the sign-on bonus is in recognition of that, he explains.
Carried interest agreements
Another perk being offered to FS professionals is carried interest, according to Mr Man-Cheung. Carried interest refers to a share of profits earned by general partners of private equity, venture capital and hedge funds.
'We are also seeing more long-term incentives being used to incentivise, attract and retain candidates,' he says.
'This illustrates a maturing of the market and aligning with international financial services standards that we've seen for years in the more defined jurisdictions like London, New York and Hong Kong.'
The UAE, the Arab world's second-largest economy, aims to attract more investments in financial services, Minister of Investment Mohamed Alsuwaidi told the Investopia conference in Abu Dhabi in February.
'We are still far behind where we would like to be in financial services,' he says. 'For me, there's definitely significant room to grow there, whether it's in the asset management business, whether it's in the insurance business, whether it's even in the banking and whether it's technology or FinTech or so on.'
A growing list of asset managers, insurers, financial institutions and investment houses have chosen to set up base in the UAE in recent years. New York-based BlackRock, the world's top asset manager with nearly $11.5 trillion in assets under management, received a commercial licence to operate at Abu Dhabi's ADGM in November.
'There is appetite to do business here, deploy funds and set up offices. The government has a commercial mindset and incentivises plans to help businesses grow. In other European or US geographies, it's very difficult as there's a lot of red tape and politics,' Mr Orellana-Hyder says.
'Safety and security here is also better than London and New York. There is also a good family environment. All these soft factors complement the UAE's tax-free environment. The potential taxation of carried interest in London is also a massive factor why talent is moving out.'
Which roles are in demand?
A 'fairly large' influx of international asset managers is coming to the region, and a lot of them are setting up in Saudi Arabia and Abu Dhabi, Michael Page's Mr Man-Cheung says.
Compliance professionals and fundraising roles have seen strong demand over the past few years. Existing international asset management firms are now looking to set up some of their investment teams here, too, he adds.
Mr Orellana-Hyder says many US and European hedge funds, investment managers and asset managers are in the UAE this month to find an office, to identify who they could raise funds from, and to source talent. They go to New York University Abu Dhabi, Sorbonne University Abu Dhabi or Insead to hire graduates.
'The Dubai Financial Services Authority signed 154 new licences last year. To get a license in DIFC and ADGM, you need people in compliance, risk, finance and a senior executive officer. Over time, you also hire portfolio managers and analysts,' he says.
'We are hiring financial services professionals from developed markets in Europe, London, Singapore, Hong Kong and South Africa. More and more North Americans are also coming and setting up their office here.'
When larger companies want to hire wealth managers, relationship managers, fundraising and compliance professionals, they favour people with regional experience and understanding of local compliance regulations. When the role is less specialised, they often go for international experience, Mr Man-Cheung says.
Perks and bonuses
This new ecosystem of investment managers is used to being paid 'New York-level salaries and bonuses', according to Mr Orellana-Hyder.
'Flexibility is right up there on people's radars. The compensation packages are getting more imaginative. I recently organised a pet allowance to move a dog from West Hollywood to Abu Dhabi for $8,000,' he says.
Mr Man-Cheung says the typical bonus in PE firms and asset management investment teams is about six to 12 months' salary.
'The usual bonus in investment banking in a good year is about 13 to 14 months' salary, whereas in a bad year, it's worth about three months' salary. For back-office and mid-office teams, the bonus is usually about two to four months' salary because they're not fee-generative roles,' he says.
The salaries for digital assets jobs are higher because there's potentially higher risk, according to Mr Orellana-Hyder.
Compliance jobs in digital assets are very popular. Hiring in this space is mostly driven by crypto exchanges, crypto hedge funds and the underlying blockchain providers.
Meanwhile, while family offices 'can be very tight on salaries … if you are loyal and dedicate time to them, they can reward you very well', he says.
'On average, regulators offer probably 20 per cent or 30 per cent salaries less than industry players. But you get a lot of visibility working for a regulator. That's attractive to people who have already made their money and are at a later stage in their career.'
Banking jobs under pressure
With many banks, regionally and globally starting to struggle, they are losing talent to funds and new start-ups, Mr Orellana-Hyder says.
'Gone are the days when graduates were desperate to work for Deutsche Bank, Goldman Sachs or Morgan Stanley. The big brands are losing people to boutique brands,' he says.
'In the next year or couple of years, we're going to see a real uplift of boutique banks, boutique asset managers, the smaller, more agile and nimble ones will be able to compensate better.'
Similarly, Michael Page's Mr Man-Cheung says that with the digitalisation of banks, there will be a reduction in lenders' retail headcount. But it is business as usual in wholesale corporate banking, he adds.
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