Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12

Australian compliance & operational risk
Market update & salary survey 2011/2012

In association with Risk Management

taylorroot.com.au

Australian compliance & operational risk: Market update & salary survey 2011/2012

Introduction
We are delighted to present the Taylor Root Australian Our survey is reflective of the quality of information that we
compliance & operational risk: Market update & salary survey are able to collect and once again input from our clients and
for the financial year 2011-2012. from the broader compliance market was excellent from both
a quantitative and qualitative perspective. Data covers both
This is our sixth annual survey and we thank Risk Management Sydney and Melbourne and the non financial services sector,
magazine for their fifth year of continued support. Given our otherwise known as the “corporate compliance market”.
ambition to enhance and improve the survey each year, for Compliance and risk roles in this corporate sector are almost
the first time we also include data for compliance and risk exclusively in the most heavily regulated industries such as
roles outside of the banking and financial services sector. telecommunications, pharmaceuticals and energy. This is an
emerging market and data, unsurprisingly, can be irregular
Once again, this year’s data and market commentary is and random.
drawn from in-depth research and input from the Australian
compliance and risk community. In excess of 1,200 key We continue to receive very positive feedback from our
contacts of Taylor Root were invited to contribute via an clients and the broader compliance and risk community to our
online questionnaire and thanks goes to those clients and survey which, we understand, is used as a reference point
candidates who took the time to volunteer much valued for many salary reviews and initial salary offers during the
information. In addition, we have been able to draw from recruitment process. The survey is the only one of its kind
first hand experience and involvement in hiring decisions, which is specific to the Australian compliance & operational
recruitment trends and remuneration levels throughout the risk market.
last 12 months when working with clients and candidates
alike. As always, feedback is welcome and will hopefully result in
positive changes being made for future publications.
In comparison to our previous market report, the last 12
months has seen a relatively stable employment market for
compliance and risk professionals with the majority of client
organisations returning to profitable performance, some even
to near pre-GFC levels of return. This is in stark contrast to
the uncertainty hanging over the financial services sector as David Buckley Amanda Atherton
we headed out of the worldwide downturn during the latter Partner Director
half of 2009. Salary and recruitment data from the last 12 Taylor Root Taylor Root
months is discussed later in the report.

David Buckley
Partner

taylorroot.com.au


Market overview
Trends

The last 12 months, as was predicted in the previous review, their compliance and risk teams which seems a more realistic
has seen a steady flow of compliance and risk roles “come figure based on current hiring patterns. These organisations
to market”. Unlike the past 2 years, there has been little cite an equal mix of improved business activity and the
volatility in the numbers of open job vacancies due largely obligation to comply with specific regulatory requirements,
to a healthier Australian economy and few obvious shocks as the reasons for growth.
to the labour market. Many banking and financial services
companies took advantage of new headcount hiring approvals The balance of organisations predict “no change” in numbers.
at the beginning of 2010 and recruited significantly. This,
in turn, led to less frenzied hiring and more consistent and
steady recruitment throughout the remainder of 2010 and
into the first half of 2011. We do not see this changing over
the next 12 months.

Whilst we saw very few compliance and risk roles disappear
through redundancy during the financial year, there still
remains some not insignificant challenge to secure headcount
approval to recruit. This is particularly so at those organisations
with a parent company headquartered offshore and typified
by the investment banking community. A prolonged approval
process is often still required before job offers are forthcoming
and fixed term contracts or temporary appointments are still
being offered to circumvent this arduous process. As a related
point, our survey reveals that during the last 12 months, just
shy of 50% of clients experienced some form of headcount
freeze at some point in time.

“...just over 50% (of clients) ended the year with the same
sized team as they started.”

In comparison to previous years, approximately 40% of our
client organisations reported a net increase in the size of their
compliance and risk teams during financial year 2010-11.
Only 8% actually decreased in size compared to 60% last
year. The majority of organisations, at just over 50%, ended
the year with the same sized team as they started with. These
results are reflective of the strong activity in the recruitment
market in early 2010 when much recruitment took place,
together with a steadily improving economy resulting in
consistent levels of hiring over the last 12 months.

In relation to future hiring plans (2011-12) it is interesting
to review and compare last year’s results when only 28% of
clients predicted they would be increasing the headcount of
their team. At the time, we viewed this as a very conservative
figure given the wholesale redundancies of 2008-2009 and
indeed, as the figures above show, this figure was closer to
50%. For the next 12 months, approximately 25% of client
organisations predict they will increase the net headcount in

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Financial services Corporates
The continued interest in ensuring strong corporate Although small by comparison to the financial services sector,
governance at Board level, particularly within the banking we have recruited for a number of non-financial services
and financial services sector, and developments in a variety organisations i.e. corporate compliance roles. Typically these
of new financial and regulatory requirements for market roles have been newly created and either represent the
participants has maintained the high profile position for Chief company’s first dedicated risk position or is in addition to a
compliance and risk officers. Senior risk and compliance sole risk or compliance officer. Heavily regulated industries
“leaders” must now be professionally qualified, highly credible such as pharmaceuticals and telecommunications have
and commercial with the ability to contribute and “hold their recruited such in-house expertise. Further, we have seen
own” with the most senior of internal stakeholders. large publicly listed companies that offer financial services
or financial products as an adjunct to their core business also
The Australian regulatory bodies recruited steadily over the recruit in the space to comply with licensing obligations.
last 12 months but certainly not at the same volume as
previously seen during and just post-GFC. As the financial Corporate compliance roles, not surprisingly, are often
year progressed, the majority of hiring into the regulators was secured by candidates from the banking and financial services
replacement recruitment where a compliance professional left sector. This reflects the lack of specific industry compliance
the regulatory body typically to take a role with a commercial experience available and the expectation that sector specific
organisation. Regulatory experience gained with ASIC, APRA “up-skilling” can be achieved quickly and relatively easily. We
and AUSTRAC is still highly regarded, as is strong product and believe that this hiring trend will continue in the corporate
markets compliance experience gained with ASX. compliance market.

“...“Big 4” accounting firms are also increasingly active” Although there remain some organisations who still attract
“negative press” for their compliance culture, this figure is
Undoubtedly, we have seen growth in the numbers of falling each year. In general compliance professionals, no
compliance contract staff being employed partly for reasons longer tolerate an anti or non-compliant culture and those
mentioned above but also to perform specific project work. companies who suffer from this stigma do suffer in attempts
The advisory and consulting arms of the “Big 4” accounting to attract the best candidates. Regulatory breaches can now
firms are also increasingly active and are recruiting in be “big ticket” items and very newsworthy, with reputational
anticipation of greater levels of engagement from clients with risk increasingly being managed proactively.
less cost constraints than in previous years.

Amanda Atherton
Director

taylorroot.com.au


Supply & demand

It is remarkable to think that only two years ago virtually all compliance and risk recruitment
ground to a standstill. In reality the lull in demand for staff really only lasted for around nine
months and since September 2009, a sense of normality has returned to the recruitment
market.

As mentioned earlier, the last 12 months has seen a steady if unspectacular supply of roles
in the compliance and risk space. The most obvious difference between the boom markets
of 2005-2008 and the post-GFC period is the reduced number of job opportunities available
to a candidate at any one point in time. Although candidates with strong compliance and
risk experience are still in short supply, your “average” risk professional may only have one
or two roles to consider compared previously with up to five or six client organisations
all seeking the same skillset. Together with this more limited choice for candidates, this
changed market has largely had a calming effect on salaries given clients have not needed
to enter into a bidding war to secure their preferred candidate.

The shortage of high calibre candidates on the open market can largely still be attributed
to (i) the pre-existing chronic supply-demand imbalance created over the last 7-8 years
since financial services licensing commenced (ii) the relatively small number of candidates
returning from global financial markets such as London, New York and Hong Kong with
relevant compliance skills.

In comparison to previous years, there has been a definite lack of senior roles on the open
market. This is due in part to less lateral movement at the top end and hence the limited
“merry go round” effect which results, but also due to improved succession planning.
Internal promotions to Head of/or equivalent positions are more common than ever before.
These internal promotions simply would not have been possible seven or eight years ago
given the then relatively shallow talent pool of compliance professionals and the small size
of in-house teams to select from.

Respondents cited the two biggest recruitment challenges to be (i) the underlying lack
of quality experience at junior and mid-levels and (ii) the retention of top talent caused
by willingness of compliance staff to move for financial gain. It comes as no surprise that
clients see the lack of available talent as being a constraint given the general challenge of
sourcing quality candidates. Perhaps, however, the willingness to move roles for a modest
increase in remuneration is a reflection of the lower salary reviews seen over the past few
years.

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Remuneration & benefits
With the more favourable market conditions and improved financial health of most financial services and banking organisations
over the last year, salaries and bonuses improved in line accordingly. The majority of salary increases were modest, however,
and we are unlikely to see the huge annual salary increases and job offers of pre-GFC days for the foreseeable future.

Headline points to note from the last 12 months can be found below:
Base salary changes
Base salary changes
• 45% of respondents increased base salary levels by up to 4%
• 25% of respondents increased base salary levels between 5-9%
• Just over 15% of clients increased base salaries by more than 10%
• Circa 15% of respondents did not increase base salaries at all
I
• In comparison to last years review when in excess of 65% of clients noted a I
I
“zero” increase, almost all salary freezes have been lifted and the ability to N
reward has improved
• Specialist roles e.g. AML and sanctions officers have attracted a small premium
• Little evidence of sign-on bonuses or guaranteed bonuses
• No real obvious pattern of bonus payments to report other than almost all clients
Increase up to 4%
now offer bonus potential to their team
Increase between 5-9%

Increase more than 10%

No increase

As mentioned earlier, although there is still somewhat of a supply-demand issue for talent, it is unusual for a “bidding war”
to take place to secure the preferred candidate. Equally, given the fewer number of open vacancies, significant annual pay
increases are no longer used as a primary retention tool.

Investment banking compliance salaries and total remuneration packages continue to lead the market with asset and funds
management compliance roles also rewarding well.

Brian Rollo
Manager

taylorroot.com.au


Bonuses

Almost every client (just over 90%) now at least offer a discretionary bonus or capped value
bonus depending on specific performance criteria. The actual monetary value of bonuses
is very difficult to accurately report on as wide fluctuations do exist between subsectors
and even within each team. Clients did report, however, that any bonus payment is equally
dependent on company and individual performance.

Traditionally, senior compliance staff at the 10+ year level expect to receive at least 50%
of their base salary as bonus in investment banking, institutional funds management
and some consumer/retail finance organisations. In recent years, on average we believe
this figure has likely dropped to something around 30-40% level. Some organisations,
typically those larger multinational banking and finance groups, have moved away from
providing this as “all cash” and have introduced cash and equity payments which vest
across a number of years to encourage less perceived risk taking, greater accountability
and retention.

Due to significantly less demand and few senior roles on the open market, sign-on and
guaranteed bonuses have become extremely rare.

Our expectation is that future salary reviews will be similar to this years review.

Other points to note on additional benefits:

• More than 50% offer health or life insurance
• Circa 70% of clients offer either free or discounted gym membership
• Almost 50% of respondents offer part time or flexible working arrangements for
current team members

Additional points to note

• Although across the broader compliance market salaries continue to increase,
generally there continues to be significant discrepancies between sub-sectors and
even between companies within the same specialist market. For this reason, and due
to differing interpretation or definition of the same role between organisations, the
salary bands can appear very wide. For example, the most senior compliance role at
a large international fund manager with 10 reports, plus some regional responsibility,
will be remunerated higher than the same role title in a small, domestic, single asset
class manager
• We assume that financial services organisations will fall into one of three categories
based on size and range of operations in Australia. Large organisations will typically
remunerate at the top end of the range, medium sized at the mid-point and smaller at
the bottom end of the scale. However, with the growth in the “boutiques” this typical
pattern can be reversed
• Figures refer to salary packages inclusive of superannuation but exclude bonus and
other benefits
• AML roles are generally remunerated at the same levels as the equivalent compliance
and risk professionals by years of experience

For specific advice on salary levels and benefits or for a discussion around any of the
points and figures in the survey, please contact one of our compliance teams (details at
the end of this document).

taylorroot.com.au


The salaries - Sydney
Investment Banking
Title Oganisational type Experience (typical) Salary range (AU$)
Head of compliance/risk Tier 1 10+ years 315,000 - 490,000 +
Tier 2 10+ years 250,000 - 325,000
Deputy head of compliance/risk or equivalent Tier 1 10+ years 260,000 - 310,000
Tier 2 10+ years 190,000 - 280,000
Senior manager Tier 1 6+ years 175,000 - 230,000
Tier 2 6+ years 135,000 - 200,000
Manager Tier 1 4+ years 125,000 - 165,000
Tier 2 4+ years 115,000 - 155,000
Analyst 0 - 4 years 75,000 - 125,000

Retail Banking/Consumer Finance
Title Experience (typical) Salary range (AU$)
Head of compliance/risk 10+ years 290,000 - 445,000
Deputy head of compliance/risk or equivalent 10+ years 145,000 - 295,000
Senior manager 6+ years 140,000 - 195,000
Manager 4+ years 105,000 - 135,000
Analyst 0 - 4 years 65,000 - 110,000

Insurance
Manager 4+ years 90,000 - 130,000
Analyst 0 - 4 years 60,000 - 95,000

taylorroot.com.au


Funds Management
Head of compliance/risk Large, international 10+ years 275,000 - 390,000
Smaller, domestic 10+ years 195,000 - 255,000
Deputy head of compliance/risk Large, international 10+ years 175,000 - 230,000
or equivalent Smaller, domestic 10+ years 160,000 - 190,000
Senior manager Large, international 6+ years 145,000 - 185,000
Manager Large, international 4+ years 110,000 - 135,000
Analyst 0 - 4 years 65,000 - 115,000

Distribution/Financial Planning
Manager 4+ years 100,000 - 125,000
Analyst 0 - 4 years 60,000 - 90,000

Corporate Compliance
Senior 8+ years 125,000 - 200,000 +
Mid 4 - 8 years 130,000 - 165,000
Junior 0 - 4 years 70,000 - 125,000

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The salaries - Melbourne
Investment Banking
Head of compliance/risk Tier 1 10+ years 290,000 - 300,000 +
Tier 2 10+ years 200,000 - 250,000
Deputy head of compliance/risk or equivalent Tier 1 10+ years 205,000 - 245,000
Tier 2 10+ years 175,000 - 210,000
Senior manager Tier 1 6+ years 145,000 - 195,000
Tier 2 6+ years 120,000 - 155,000
Manager Tier 1 4+ years 115,000 - 140,000
Tier 2 4+ years 95,000 - 135,000
Analyst 0 - 4 years 70,000 - 110,000

Retail Banking/Consumer Finance
Head of compliance/risk 10+ years 220,000 - 305,000+
Manager 4+ years 105,000 - 125,000
Analyst 0 - 4 years 60,000 - 85,000

Insurance
Manager 4+ years 95,000 - 105,000
Analyst 0 - 4 years 55,000 - 90,000

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Funds Management
Head of compliance/risk Large, international 10+ years 195,000 - 240,000
Deputy head of compliance/risk Large, international 10+ years 155,000 - 190,000
or equivalent Smaller, domestic 10+ years 135,000 - 180,000
Senior manager Large, international 6+ years 130,000 - 150,000
Manager Large, international 4+ years 105,000 - 135,000
Analyst 0 - 4 years 55,000 - 85,000

Distribution/Financial Planning
Manager 4+ years 95,000 - 115,000
Analyst 0 - 4 years 50,000 - 85,000

Corporate Compliance
Senior 8+ years 130,000 - 215,000
Mid 4 - 8 years 100,000 - 180,000
Junior 0 - 4 years 55,000 - 90,000

taylorroot.com.au

For more information on the compliance & operational risk recruitment market please contact a
member of our team on:
+ 612 9236 9000 (Sydney) or + 613 8610 8400 (Melbourne):

David Buckley Amanda Atherton
Partner Director
davidbuckley@taylorroot.com.au amandaatherton@taylorroot.com.au

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Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12

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Taylor Root Australia - Compliance & Operational Risk Salary Survey 2011-12