European fund managers close in on US salary levels
Hot demand for talent in key areas this year has pushed remuneration for star fund managers and marketers in Europe closer to levels seen in the US.
According to a survey from headhunting firm TMP Worldwide: "We expect compensation levels to continue to increase in Europe over the next year and, in the UK at least, for total compensation levels to move closer to the US."
In 2000 European investment managers have been taking home 20% to 40% less than in the US.
According to TMP, European chief investment officers pick up base salaries of between $300,000-$350,000 (€323,000-€377,000), and total compensation worth $1m-$2m. This compares to a base of $350,000-$500,000 in the US, producing total compensation of $1.5m-$3m.
Top payers in Europe tend to be fund management firms owned by US investment banks, such as Goldman Sachs. Independent US investment firms, led by Capital International and Fidelity, pay the next highest salaries.
European and UK-owned investment firms such as ABN Amro and ING's Baring Asset Management fall within the third tier.
Firms tied to insurers tend to be the meanest payers, although a few are capable of paying premiums. Norwich Union's willingness to pay 10% to 15% ahead of market made its investment division a strong force before its merger with CGU. Many executives within the Norwich Union team, led by Gerald Holtham, have now picked up the most senior positions within the merged division.
In certain specific sectors, such as technology, equity specialists attracted packages as high as $1.5m in 2000, which approaches the levels paid in the US.
High yield bond specialists are also being paid decent packages. TMP quote an example of one head of European high yield within a US investment bank being paid a package worth $725,000.
Remuneration has been particularly boosted by the determination of traditional fund managers to stop the exit of expertise to rival hedge funds.
Apart from individual stars, there is a strong premium attached to buy-side heads of equity research capable of managing analysts on a pan-European basis. One such individual, at a US bank, has secured a total package of $2m, said TMP.
Remuneration for pan-European marketers, particularly defined contribution pension and product development specialists, is rising fast. European marketer total compensation ranges between $500,000 and $1m.
The team head at one UK investment banking owned house has secured a base payment of $390,000 with a 200% bonus opportunity attached.
Packages in the US tend to be significantly higher. Total compensation for head marketers in the US range between $1m and $3m in 2000. Others have achieved guaranteed packages of $650,000 over many years. Allianz and Axa are said to be among the firms who have locked in US sales executives with retention packages.
TMP also points out that packages within the wealth management arena have been rising dramatically, with fat premiums payable for sales forces prepared to move to new homes.
"Typical terms have been up-front payments of 75% to 100% of the prior year's revenues plus premium payout terms for years going forward. If the normal payout is 30% to 40% of revenues, firms might offer 40% to 50% for the first two years."
Individuals react strongly against attempts to put a cap on remuneration. TMP pointed to a move by Goldman Sachs this year, when it introduced a new compensation scheme for private banking. This added a subjective component that was seen internally to limit upside and the firm, said TMP, experienced a loss of talent.
