Financial services institutions are finding they are fishing from a smaller pool of talent due to a drive to improve standards within the sector through increased regulation.

Regulation-compliant talent is thin on the ground, meaning recruitment processes are being elongated and employers are having to develop talent from within. But with fierce competition for talent, recruiters are stepping up to the plate to help employers meet skills shortages.

From 2013, changes brought about by the Retail Distribution Review (RDR) will apply to all financial advisers in the retail investment market. The RDR aims to provide consumers with a more transparent and fair system on how they receive financial advice.

The impact of the impending new rules is already being felt, says Zoe Priselac, associate director at BWD Search & Selection. “From 2013 all financial advisers need to have a minimum level of qualifications,” she says. “As we move closer to that deadline, employers are tending to specify they want people already at that level or very close to that level. Candidates who don’t have that qualification are finding it hard to move jobs. Employers are finding it difficult to make their employees study further for exams.”

Candidates will look for employers that offer opportunity, career paths and development opportunities, expecting training, development and education along the way

Neil Soffe, director at Hays Financial Services, told Recruiter that the legislative changes had meant that the pace and volume of recruitment has slowed, while Karen Bleakley, resourcing manager at AXA, describes the impact of RDR as “huge”. She says financial services firms are now looking to recruit talent to support the strategic development of their business for the next five to 10 years rather than the “traditional backfilling” of existing experience.

Matthew Strover, finance insurance team leader at Eximius, reports that specialists in regulation, audit and risk continue to be in short supply.

However, despite increased demand some employers are looking to recruit talent directly says Paul Smith, head of human resources at LV=. He says the insurance firm has reduced its reliance on recruitment agencies and is being more creative on how it develops talent.

“We have developed programmes to train entry level recruits for technical roles,” he says. “These include an actuarial academy and a broker academy for potential underwriters.”

And according to Miriam Koller, global HR director at Bibby Financial Services, graduates in the sector see training and development as an expectation rather than a bonus: “Candidates will look for employers that offer opportunity, career paths and development opportunities, expecting training, development and education along the way. They will also be looking for a total working experience in addition to appropriate pay.”

In future, recruiters may well have a role to play in developing the financial services talent of the future, says Priselac. “We have launched an e-learning tool called BWD development, which is an online study aid for new qualifications like RDR. It has been developed with the help of a CIA examiner and accredited trainer.

“At the end, we have five mock exams, which are timed in the same conditions that an exam would be. We carried out a survey to find what people like and didn’t like about training and what their issues are. We feel this product helps to make learning more user-friendly.”