New Financial Services Training Survey finds senior managers are trained less than their staff

The survey ñ which was jointly commissioned by the fast Group and The School of Management at Royal Holloway, University of London ñ sought the views of those senior personnel with responsibility for HR and training budgets for a number of leading financial services institutions. A total of sixty-six responses were received which, given the relatively small size of the market being researched, provides robust data.

The survey found that:
senior managers spend fewer days per annum receiving training than their staff;

financial services companies view business school graduates as being poorly equipped for leadership positions;

training volumes and budgets appear to be on an upwards trend;

keeping up with changing ëregulationí continues to be the most important training issue for the industry;

risk management, anti-money laundering and people management are currently viewed as important specialist training topics;

external training suppliers (currently used for 42% of general and management training and 36% of technical and regulatory training) are predominantly selected on the basis of their financial services or product expertise.

Commenting on the results of the survey, David White, Director of UK-based fast training said:

ìThe picture that emerges from the industry is one where the lionís share of training programmes are driven by ñ and solely focused on ñ the need to keep abreast of a constantly-changing regulatory framework. Whilst it is obviously essential to keep on top of the regulations, companies need to take care to adopt a more holistic approach to training ñ particularly when it comes to nurturing the interpersonal skills of their senior managers.

The news that training budgets are on an upward trend is good and it is to be hoped that companies will reserve more budget to focus on developing the people-management skills of their team leaders. The scenario where senior managers receive less training than their own staff simply adds to the pressure they are under and cannot be right.î

The Financial Services Training Survey 2004 revealed that:

Senior Managers spend fewer days receiving training than their Staff
Survey respondents indicated that members of staff each spend more days per year receiving training and development than do the members of the senior management team. This discrepancy may, however, be narrowed in future, given that 55% of respondents believed that the number of days senior management staff spent receiving training was on the increase.

Managers of the future ill-prepared for leadership
The survey asked how well- (or ill-) prepared university business school graduates were for effectiveness in a number of key business areas ñ namely: communication skills, finance, IT, leadership and project management. Only for IT did more than half of the respondents (66%) believe that graduates were well or very well prepared. Most disturbingly, only 19% of respondents felt that graduates were well-prepared for leadership, with over 40% actually describing them as ëill-preparedí for leadership.

Of the other subjects, 31% believed that graduates were well or very well prepared in communication skills, 43% believed that graduates were well or very well prepared for financial roles and 33% believed that graduates were well or very well prepared for project management. Asked about their perception of business school graduates, respondents made some very diverse comments, including:

ìThey have high level theoretical knowledge but lack personal and leadership skills to apply it. They are all taught to think the same way so lack creativity around problem-solvingî

ìVery high opinion of their capabilities gained in a theoretical environment ñ unrealistic salary demands.î

ìGood but a huge learning curve when they start a full time position.î

ìPoor when they come from the ëtopí schoolsî

ìIntelligent ñ but the degree is only the door to the job. It does not mean automatic progression up the line. Only application and ability count for progression.î

ìWould tend to prefer non-graduates and train on the job.î
ìDepends on the individual and their attitude. General perception is that they are well-prepared.î

ìCould do better!î

Training volumes in general are on the increase
Overall, the survey revealed that expenditure on training appears to be on the increase. The majority (72%) of responding companies had registered an increase in the volume of technical and regulatory training conducted in 2003 over the previous year and a similar percentage expected this upwards trend to continue in 2004. As regards general and management training, over 65% of companies had increased their expenditure in 2003 and 60% predicted a further increase in 2004.

The trend for training budgets is upwards
Predictions for training budgets were given in a number of verbatim comments as follows:
ìDue to regulatory controls, training budgets can only go up.î

ìUpwards [trend] ñ particularly in financial services industry ñ as regulators impose more obligations onto firmsî

ìIncreasing up to 2005 then stabilising thereafterî

ì[Expenditure will] Reduce for cost-cutting purposes. The board will put training budgets under strain. Trend likely to be downwardsî

ì[Budgets] increasing but emphasis on ëvalueí or effect on bottom lineî

ìNo large increases but training effectiveness improved through technology, eg e-learningî

Regulation is the most important training issue
Unsurprisingly, when asked: ëWhat is the most important training issue facing the financial services industry?í, ëregulationí featured prominently in respondentsí thinking ñ as indicated in the following typical comments:

ìKeeping up with the constant regulatory changes in the most cost-effective manner.î

ìIncreased regulation and anti-money laundering.î

ìTo deal with incessant regulationî

ìTraining required to support effectively the changes in polarisation rules/regulationsî

ìRegulation and the speed of change, along with the fact that regulation only gives guidance ñ not answers.î

ìGreater consumer awareness ñ regulatory environment ñ litigious culture appearing in HRî

Other issues mentioned were:
ìManagement development to encourage equality in teams and common goals in companies to instill a good culture.î

ìSenior managers being role models for those lower, through their development and communication.î

ìObtaining relevant and cost-effective training for the financial services industry.î

The most important training topics
Given a ëmenuí of training topics and asked which of them were becoming more or less important, 81% of respondents felt that risk management was becoming more important as a technical/regulatory issue with 75% feeling the same way about anti-money laundering. On the general/management training agenda, 81% of respondents felt that people management was an increasingly important area for training.

External suppliers are used for more than one third of all training programmes
The training needs of financial services staff are predominantly met through in-house resources but external specialists are brought in to supply more than a third the total training requirements. (36% of technical/regulatory training is delivered by external resources and 42% of general/management training)
When asked to comment on the current attitude within their organisations towards the use of internal and external resources, the following were some of the responses:

ìBoth are received well, the view that subject specialists bring credibility to their training leads to much use of external ëspecialistí suppliers. We do always add a little of our own culture to any course we run in-houseî

ìThe importance of on-the-job training (and its cost) is not recognised enough.î

ìDue to the cost of external training companies, there is a reluctance to use them.î

ìExternal suppliers manage training more professionally, but can be far too expensive.î

ìManagement are becoming increasingly aware of the need to bring in external expertise to train our managers of the future.î

ìInternal resources are favoured for training our customer-facing staff, as previous experience demonstrates that knowledge of internal processes is the key to success. External resources tend to be reserved for training at a higher level of the company as the requisite specialised knowledge tends not to be held within the companyî

Respondents were also asked to give the main reasons why they would choose a particular external supplier. The two criteria that headed the list were that they should be ëfinancial services specialistsí and ëproduct specialistsí.

David White of fast training commented:

ìThere are a number of lessons to be learned from this research. The demands of regulation and the business environment are pushing up the need for training. Both internal and external suppliers will have to gear up to match this volume change. Either internal resources will have to increase or the external providers will have to work harder to ensure they are providing the specific expertise needed ñ and at the right price.î