Finance

Asset management compensation report 2018

Published

6 years ago

November 28, 2018

Meghan Morris

Larry Fink
BlackRock CEO Larry
Fink.
REUTERS/Jason
Reed

Asset management compensation will increase 5% this
year, a new study says.
But there are still major challenges within the asset
management industry and things could get worse in
2019.

Asset managers are likely to receive a small bump in their
overall compensation this year – around 5%, according to a new
report. But that uptick masks some of the larger challenges
within the industry, as market volatility, the reallocation of
bonus pool dollars to technology investments and declining
margins eat into industry profits.

Overall compensation for
equities-focused traditional asset managers is expected to
average around $710,000 this year, compared to $490,000 for fixed
income-focused managers, according to a survey of more than 1,000
professionals by consulting firms Greenwich Associates and
Johnson Associates.

But those figures could
fall,

as markets have moved lower in recent weeks.

“Volatility and slowed business momentum has added uncertainty
and introduced an element of downside risk that could push final
pay numbers lower if markets remain unsettled,” the report
cautioned.

Compensation will be strongest at firms that have the scale to
maintain strong profits or the technology platforms to keep
costs low, including managers that focus on passive products
and exchange-traded funds.

Despite industry pressures, overall headcount increased in 2018
for both public and private managers, specifically in
technology, product development and international markets. But
this trend likely won’t last.

Next year, things are looking
worse, with planned job cuts coming as soon as the first
quarter of 2019.

“Unfortunately, the hiring trend is likely to be reversed in
2019. Many firms are already planning for reductions during the
first quarter of 2019 through both attrition and terminations,”
warns Francine McKenzie, managing director at Johnson
Associates.

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