It is almost a year since millions of people woke up to a new reality on 24 June 2016; the UK had decided to leave the EU. I woke up at 4am and was shocked to see that with every count, the balance was always tipped one way. I remember the faces of the presenters, as everyone was sat wondering the same thing. This was a result that nobody was expecting, and no companies were prepared for.

Come what May, Theresa finally announced the trigger of Article 50 on 29 March 2017, and the UK’s departure will now come into effect within 2 years of that date. Since then, our firm, which has been recruiting in Luxembourg for over 8 years, has seen a steady increase in hiring that doesn’t show any sign of slowing down.

We have been contacted by businesses looking to relocate part of their teams or build more extensively in the Grand Duchy following the Brexit announcement. There are still lots of companies window-shopping between specific locations, deciding what to do, and I don’t think we will see the full extent of the result until well after 2018, only when we know the extent of the situation, and particularly the departure (or not) of the UK from the EU common market. This departure would almost certainly accelerate the loss of jobs in the UK in finance industry, as international firms would be forced to move their teams abroad to keep access to European business.

However, even now there are some significant changes that have already started to take place, albeit on a more subtle scale. The headlines of losses of thousands of UK-based jobs, is not something that will happen overnight, and there are still no asset managers, Banks or the like who see value in removing an entire highly skilled (UK) workforce and building a completely new one in Luxembourg. It’s no wonder really, can you try to imagine the cost and pain of such a large exercise?

I find it interesting that HR is top of the menu, because Brexit, and the strategy around it, is predominantly about a people issue.

What type of companies are deciding to relocate now?

It is mainly companies where there is a business, or operations-based reason for doing so. Where they have already had relations with Luxembourg, and their investors know and like the Luxembourg product range, this has been especially apparent in the alternative asset classes; private equity, real estate, but also where UK based asset managers have a large number of institutional investors who like access to the European passport to sell funds in other jurisdictions. Luxembourg’s legal framework, the transparency around it, and the smorgasbord of languages found here, make it the best location for cross border fund distribution in Europe.

Brexit, and it’s timing against the backdrop of AIFMD and the new management company regulations, mean that any alternative asset managers, or Ucits managers with international investors looking to maintain their entities here, will need to grow bigger teams. Most are choosing to start at the higher level, and will build teams of around 6-10 senior oversight functions to begin with, once the Brexit deal is finally announced, they will be able to build further on that. This allows them the common sense of building slowly, and the first mover advantage of doing something when not everything is clear.

Timing is important for a first mover advantage

I would not wait until you know exactly what is happening with Brexit to start taking some decisions, get your organisation into planning mode now. Luxembourg is a country with around 300,000 staff as the working population. There is an indigenous growth rate of just 1% in the last 25 years. Even the additional 170,000 staff, that commute over its borders every day to work do not make up for the shortfall of people to fill the plethora of highly skilled jobs in the financial sector here. If you leave it too late to recruit your team, it will cost you. With so many similar skills being required here, all the best candidates will have already moved, and you could pay for joining the party last.

What are companies looking for?

In two words, middle, and back office. The combination of the success of the Ucits product, which is now almost a brand in the funds business, coupled with the strength of the regulatory framework and local regulator itself, the CSSF, makes Luxembourg a very natural choice to build a middle office team here. The strength of the local workforce in this space is also very special, here you can find German, Austrian, and UK tax lawyers who have practiced in all three jurisdictions. It isn’t easy, but you can.

When we were running some searches for a firm that was contemplating both the UK and Lux. recently, the candidates we found in Luxembourg displayed a far higher scope of knowledge across the other jurisdictions than the ones we typically found based in the UK, because they work cross border all the time here. Here you will find transfer agency teams that speak up to 30 different languages and accountants who can consolidate multiple jurisdictions worth of accounting into one final consolidated balance sheet.

Why would you try launching an international fund anywhere else?

What is the scope of skills that you can find in Luxembourg?

The top skill-sets of the region are as follows: accounting, reporting, tax, legal, risk, compliance, corporate secretarial, fund administration, sales, distribution, marketing.

What are the challenges of building a team in Luxembourg?

The largest challenge will be a cross-cultural challenge to get your office working a) together, and b) as a part of your international organisation, with the same standards and expectations. With so many international influences, even experienced managers will need to learn quickly. We ran an event last year with several panels on the subject, there was not one MD who said it had not been difficult to build a team here.

It’s not just a cultural thing, it’s an employment law thing. Luxembourg is similar to France in its law status. For example, it is one of the few countries in the world, where people actually ask to be dismissed! In the UK you would never do this as it would seriously impact your ability to get another job, but you would also seriously impact your rights to claim any unemployment benefit. In Luxembourg, you get fully paid leave for 12 months even after you are sacked.

If you plan to grow an office in Luxembourg, get yourself a decent employment lawyer, and be very wary of hiring anyone you feel you cannot trust.

Who are your key hires?

Start with culture, at all levels, but at the higher level make sure you have someone on-side who will understand both the larger organisational needs, and the local people ones. If possible, you should hire senior people who are connected to the local industry where you can, via work history or at least their languages.

As always, but especially here, hire attitude and build skill, but only into the right people. It sounds obvious, but do not hire anyone you perceive to be difficult here, you will regret it later, even if they might know your product and be working at a great firm, it will not be worth it. The employment law here are is mainly in favour of the employee. 

It is more important to get the attitude right and build into people who will stay loyal. Here there is always another firm down the street (literally, probably the same street!) who will pay 10% more than you, but the right people will see through this, so make sure you hire well and build trust.

Do not be seduced by shiny CVs, trust your gut, and question anyone who moves every year or two, on why it would not be the same thing again with you.

Good luck in transitioning from Great Britain to the Grand Duchy.

Rana Hein-Hartmann is European director of Funds Partnership, a recruitment firm specialised in the investment fund sector. This article originally appeared on her company’s blog and is republished with permission.