With so much gloom around, some financial services workers may dread 2012.

Headlines abound about domestic banks speeding up job cuts, global investment banks trimming workforces and broking firms shedding staff because of sluggish equity markets and weak corporate activity.

Even if only half of this happens, many thousands of jobs will be lost in what could be a watershed year for Australian financial services employment.

The global financial crisis (GFC) aftermath, volatile share markets and a slowing property sector are terrible cyclical headwinds for financial services employment.

Structural trends such as investment industry consolidation in Australia, rising fee pressure and growth in index funds are other job threats for stock-pickers and administrative staff.

The most powerful long-term trend, technology adoption, will also drive further cuts and result in more jobs sent to cheaper overseas markets.

Casual observers might think heavy lay-offs in part of the Australian financial services industry are a new development.

More perspective is needed.

Investor Weekly analysis shows employment in the financial services and insurance industry has been shrinking for two decades, from a high of about 4.5 per cent of the workforce before 2000 to about 3.6 per cent now.

The industry has averaged about 3.7 per cent of the workforce for the past 20 years.

Financial services industry productivity growth from 2006 to 2011 was 3.1 per cent, second only to telecommunications and media and almost double the national average, according to business forecaster IBISWorld.

Technology, more part-time employment and continuing outsourcing are driving higher productivity growth, although gains were slower from 2000 to 2010 compared to 1990 to 2000, Australian Bureau of Statistics data shows.

IBISWorld chairman Phil Ruthven says financial services employment in Australia "has seen its best days", but he is bullish on the sector's medium-term outlook.

Ruthven, one of Australia's most respected business forecasters, says: "2012 is going to be a poor year for financial services employment.

"There will be much more job shedding in the banks, insurance companies and parts of the investment industry to cope with the backwash of the GFC and severe problems in Europe and America."

He believes 2013 will be stronger for financial services.

"I've been saying for some time that the Australian share market will snap back 40 to 50 per cent in 2012 or 2013, probably later rather than sooner. That will spark a howl of activity in parts of the financial services industry. For it to happen, the markets need more confidence that problems in the US and Europe have stabilised. I expect both economies to get their act together in 2012, with the US leading the way and Europe improving, although it will need most of this decade to sort its problems out," he says.

He says higher regulated contributions by superannuation fund members would be another huge boost for the industry and "hopes it happens".

But even with robust asset expansion, the number of major investment funds will fall 40 per cent over five years, IBISWorld predicts.

"This will reflect the large number of industry, retail and corporate super fund mergers that have been a response to members' desire for lower fees and greater investment choice. Critically, greater scale can yield significant cost savings for funds and enable them to reduce fees and offer greater investment choice. Conversely, the number of self-managed super funds has been surging, as many people have decided to bypass the major funds," it says.

In its Superannuation Funds in Australia report, IBISWorld adds: "(Superannuation) employment is expected to decline due to the scale economies coming from fund mergers and greater outsourcing of certain administrative and investment functions."

Ruthven warns that not all parts of the financial services industry will bounce back quickly. "Higher interest rates in 2013 will keep a lid on mortgage financing and property prices. Industries that rely on the property market might face low growth for some time," he says.

The long-term outlook for financial services employment is continuing job losses, he predicts.

"When the full impact of the digital age arrives, and more technology is adopted, job shedding in Australia's financial services industry will accelerate. Global competition could be another factor, as more Australian investors choose offshore banking and investment providers," he says.

He forecasts financial services employment, as a proportion of the total workforce, will ease from 3.6 per cent to 3.2 per cent in the next few years, and drop as low as 2.5 per cent over 20 years.