Global executive search firm CTPartners has released a new report: "Asset & Wealth Management Talent and Compensation Trends 2011: Have We Arrived at the New Normal?"
The report is a qualitative review of talent and compensation trends within traditional asset and wealth management firms, hedge funds, real estate and private equity firms, in the Americas, Europe/Middle East and Asia/Pacific.
The report addresses the impact of recent reverberations in the market that have dampened the compensation prospects for a year that began on a strong note. Many asset managers began 2011 with balance sheets showing stronger revenue lines with lower costs and higher profit margins than the industry had seen in three years. Bonus pools looked very promising.
Heading toward year-end, the report notes that many firms have been rewarded for doing more with less or for picking their spots for growth and investment, while others, particularly franchise financial institutions, are bearing the weight of diminished profitability from heavy losses in other parts of their business. As a result, the industry is in for some challenging conversations regarding year-end bonuses. Investment professionals at pure-play asset managers will fare better than those employed at global franchise firms, and that difference will need to be managed.
According to Cornelia L Kiley, a partner in CTPartners’ Asset and Wealth Management Practice: "CEOs at these firms will find communicating the right performance and reward message to be challenging. In part, the message will need to address the possibility that as an industry, we are settling into the ‘New Normal,’ a prolonged period in which opportunities for growth are hard to identify, assessing risk is an elusive exercise and the business climate is increasingly difficult to navigate.
"Despite leadership seasoned at weathering turbulent markets and uncertain economic conditions, this year will present another challenging bonus season for CEOs who need to retain talent and make hard choices about investing in business development initiatives," says Kiley. "Even though most CEOs moved to protect bonus accruals earlier this summer, the markets have wreaked havoc with top line revenue during the latter part of the year resulting in bonuses being directionally positive but in the single-digit area."