TORONTO, March 28 /CNW/ - Toronto's financial services industry is not
yet facing a "talent crisis," but there are clear warning signs that a lack of
critical talent will continue to grow, according to a year-long study of the
industry. If not addressed, the talent shortage could undermine revenue growth
and productivity in Toronto's main industry.
In a landmark report entitled Talent Matters - A Study of the Toronto
Financial Service Industry Talent Market, released today by the Toronto
Financial Service Alliance (TFSA), the study's authors, Deloitte, report that
the industry expects there will be major gaps in "critical talent" - the
talent that drives a disproportionate share of a company's business
performance - for Toronto's banks, insurance companies, investment firms and
other companies in the sector.
"If there is no collective will to create a vibrant, compelling financial
services industry in Toronto that stands as a magnet for talent," TFSA
President Janet Ecker cautions, "other centres across the country and across
the globe will take the lead."
Demographic changes are a major contributing factor to the challenges
financial services companies face, but the report identified others, as well.
"The exodus of the Baby Boomers from the labour market will create
experience gaps," the report says. "Declining birth rates and increased labour
mobility will decrease the supply of local talent. The influx of new
immigrants to Canada, almost half of whom are destined for Toronto, will
provide a strong pool of talent, but will also pose unique challenges to
integrating these new entrants into the workforce."
A major contributor to the expected shortage is the "greying" of the
population as Baby Boomers move into retirement. "Organizations may be facing
the potential loss of one third of the existing workforce which will represent
a significant loss of experience, knowledge and organizational memory," the
"There is enough evidence to suggest that the future growth and
competitiveness of Toronto's financial services industry will depend on its
ability to address today's talent challenges - in order to avoid a talent
crisis in the next five to ten years," says Margot Thom, partner in Deloitte's
Human Capital practice.
Increasingly, financial sector employers will have to look outside our
borders for talent - either by attracting people to come here to work, or by
sourcing labour in other markets. The study reports, however, that there are
concerns among industry stakeholders that "the Toronto market's financial
rewards are not substantial enough to attract some international talent.
Compensation and taxation levels make it difficult to entice US talent across
the border. European talent frequently sees Canada as a stepping stone and
moves to the US at the first opportunity."
New immigrants will be an important source of talent in the future,
notwithstanding the barriers that exist to integrate immigrants effectively,
including cultural, language, context of experience and credential recognition
issues. The report predicts, however, that there will be fierce competition
for Toronto's diverse workforce. "For any business with a global footprint,
Toronto offices act as 'feeder pools' for national and global operations,
leaving gaps on the local front," the report notes.
The Talent Matters study drew on interviews and surveys with human
resources leaders in the financial services industry, as well as educators,
government officials and Deloitte's own international network of human
resources experts. The study recommends, and industry leaders agree, that
Toronto's financial services industry would benefit from increased
industry-wide collaboration on three fronts:
- Eliminating barriers to hiring and integrating new immigrants
- Strengthening financial services education and its alignment to
- Improving the Toronto financial services "brand" both as a business
location and as a career.
Collectively, the report says, the financial services industry can be
better positioned to influence the federal government to amend regulations to
streamline the entry process for skilled immigrants. They can also push for
additional funding to support apprenticeship programs and formal mentoring
programs aimed at new immigrants.
Local educators note that while the business schools have been doing a
good job of preparing students for roles in corporate finance or portfolio
management, they need to focus more on education that prepares students for
roles in regulatory compliance, risk management, and global financial
operations, and to be innovators.
Finally, Toronto's financial services industry needs to reinforce the
importance of the industry to the region's economy; leverage the concentration
and calibre of the industry players located in Toronto; revitalize the appeal
of the industry as a career choice for next generation workers and new
immigrants; and emphasize the attractiveness of the city as a place to live,
work and prosper.
For a full copy of the report, visit TFSA's Website at www.tfsa.ca.
About the TFSA/Deloitte Talent Matters study
The Talent Matters study engaged representatives across Toronto's
financial services industry through: a survey of 80 human resources and
business leaders; interviews with an additional 35 industry, association,
education and government representatives; focus groups with associations and
education institutions; a discussion forum with over 75 industry stakeholders;
interviews with Deloitte global thought leaders in financial services and
talent management; and a review of Canadian and global published information
on changes in the financial services market, anticipated labour challenges,
and world class talent strategies.
About the TFSA:
The Toronto Financial Services Alliance is a public/private initiative
whose mandate is to enhance and promote the long-term competitiveness of
Toronto as a premier North American financial services centre. Its membership
encompasses core financial services companies - banks, brokerages, investment
fund managers, insurance companies - as well as partner sectors - accounting,
law and education. The TFSA was created in 2001 by the financial services
industry, in partnership with the City of Toronto and with the support of the
federal and provincial governments. For more information, please check our
Website at www.tfsa.ca.
Backgrounder on Talent Matters
Snapshot of the workforce
- Financial services account for approximately 17% of Toronto's gross
municipal product, making the industry the largest contributor to the
- As the second largest employer in Toronto, the industry employs more
than 220,000 people directly and drives more than 300,000 jobs in the
business services sector that are linked to financial services.
Almost 8% of the 2.8 million jobs in Toronto are in financial
services, which is more than twice the national average. Employment
growth has averaged 5.5% since 2000 and 3.3% in the previous decade,
and significantly outpaces the average growth of all Toronto-based
- Women continue to represent the majority of workers in financial
services, accounting for close to 55% of the total workforce. The
concentration of women in the financial industry is significantly
higher than the national average for all industries, where women now
comprise 46.6% of the national labour force, a result largely
unchanged for the past 15 years.
- According to the Institute for Competitiveness & Prosperity's recent
assessment, the industry boasts high incidences of employees with
recognized financial service designations. For example, over 2.5% of
the workforce holds a CFA designation, in comparison to New York's
1.5% and Chicago's 1.25%. Similarly, 1.4% of the insurance segment's
workforce has the Society of Actuaries designation, in comparison to
New York's 0.4% and Chicago's 0.2%.
"Greying" of workforce
- Over 25,000 Toronto financial services workers are now 55 years of
age or older and the average age of retirement in the sector is in
the early sixties. This demographic slice of the workforce has more
than doubled in the past ten years - an increase of 233%. The second
fastest growing segment has been those between the ages of 45-54
years, up 65%, and the slowest growth - just 3.2% - has been those
workers between the ages of 25-34 years of age.
- Current levels of growth in Toronto's financial industry will create
a demand for approximately 1,980 new workforce entrants each year.
The anticipated retirement of the Baby Boomers alone will create an
exodus of 2,500-4,500 employees per year.
- The insurance sector is most affected by the greying of the
workforce. The Talent Matters survey finds that insurance
organizations report having the greatest percentage of workers at 55
years of age or older compared to banking and investment
organizations which reported having the fewest.
- Many major banks and securities organizations, in particular, could
face critical deficiencies with approximately two-thirds of all
front-line employees being either less than 30 years old or within
five years of retirement. Moreover, with a majority of experienced
managers expected to leave the workforce through retirement, many
retail banks must work to curtail the loss of vital institutional
- The survey results also confirm that talent shortages are most
pronounced in specific areas, many of which require significant
quantitative and sales capabilities - e.g., account management,
accounting and actuarial, credit risk and compliance, financial
analysts/planners/advisors, and technical specialists.
- Although all three industry segments - banking, insurance and
investment - indicate shortages in account management and technology
specialist positions, the investment and insurance segments indicate
greater shortages in the accounting and credit risk positions than is
experienced by the banking segment.
- The Talent Matters survey findings reveal that organizations are
facing significant shortages in middle and senior management
positions. The gaps in leadership are more prevalent in the insurance
industry, with over 53% of insurance organizations experiencing
shortages at this level. This leadership talent gap is further
magnified by the fact that many of the critical skills that the
industry requires - people leadership, client relationship focus, and
international reach - are skills that are found in this leadership
- Looking forward to the next five years, the Talent Matters survey
finds 68% of insurance organizations forecasting an increase in
shortages for director level positions. Among bank executives, the
greatest shortages - 67% - are anticipated for senior managers.
Looking beyond Toronto's borders
- Four in 10 respondents in Deloitte's global survey cited moves into
new markets as a top driver of profits over the next three to five
years. Organizations are choosing to enter new markets using a
variety of approaches, including joint ventures, mergers and
acquisitions or pure build options.
- Close to 63% of Talent Matters respondents indicate that the
contracting of services and functions outside the organization is one
mechanism used to access additional talent.
- In the Talent Matters survey, 30% of the organizations surveyed
indicate that visible minorities account for between 30%-50% of their
workforce. Leading the way, 70% of banking organizations surveyed
indicate that 30%-50% of their workforce represents visible
minorities. Seventy-five per cent of companies surveyed indicate that
between 1%-5% of their new hires have been new immigrants. Sixty-four
per cent of the organizations surveyed suggest that the number of new
immigrant hires will increase over the next five years.
- Toronto recruiters and local industry leaders in the Talent Matters
study suggest that attracting global talent to Toronto is not easy.
While Toronto ranks as one of the top five liveable cities in the
world, according to a 2005 Economist Intelligence Unit report, some
negative perceptions exist. The appeal of the city is quite different
from the standpoint of U.S. and international recruits versus
Canadian recruits. Concerns about living costs, traffic and lifestyle
are prevalent among Canadians, while compensation differentials,
access to health care, and the limits to career growth minimize the
attractiveness of Toronto for U.S. recruits.
- From an international perspective, Toronto is recognized as a
destination of choice for immigrants from China, India, Pakistan,
Korea, Philippines and Taiwan. However, cumbersome immigration
regulations, lack of recognition of education and credentials, and
other systemic barriers to workforce entry limit the ability of the
city and the industry to realize the full economic potential of the
global talent pool.
Summary of issues facing the industry
- Local and global competition for talent: Many local financial
organizations, given the maturity of Toronto's financial services
market, simply cannot achieve their business objectives by relying on
organic growth. As Toronto-based companies expand into new global
markets, competition for qualified talent in those markets increases.
The demand/supply gap will make it more difficult for financial
services organizations to execute their business strategies
successfully. Moreover, as the imbalance grows, the cost of talent
- Gaps in leadership talent: The retirement of the Baby Boomers and
organizational restructuring that has taken place over the past
decade leaving many organizations without a pool of employees ready
to move into senior leadership roles is creating critical gaps.
Combined with global competition for talent, the leadership gap will
- Significant loss in critical knowledge and skill with retirees: Over
25,000 financial services workers (more than 10% of the total
industry workforce) are now 55 years of age or older. Replacing those
experienced workers who head into retirement and transferring the
knowledge that they hold will present an enormous challenge for the
- Attracting younger workers and managing multi-generational
workforces: Four different generations make up Toronto's financial
services workforce and each generation requires a different talent
management and workforce planning approach.
- Integrating immigrant workers and managing increasingly diverse
workforces: New immigrants are a critical source of talent to help
mitigate potential talent shortages. Barriers do exist, however, to
integrate immigrants effectively, including cultural, language,
context of experience and credential recognition issues.
- Retaining critical retiree skills and knowledge: Retaining and
recruiting retired or retiring workers in the financial services
industry will require changes to current human resources practices
including those related to benefits, pension and work/life balance.
Enhanced flexibility - from a total compensation perspective - as
well as flexibility in when and where work is performed can meet the
needs of older workers, while allowing for trade-offs in cash
compensation and access to benefits.
For a full copy of the Talent Matters report, visit TFSA's Website at
For further information:
For further information: Brian Smith (TFSA), (416) 822-3130,