Salary Survey: Fund management pay up in London and Paris

The Centre for Economics and Business Research (CEBR), a research consultancy, estimates that 450 jobs were added at London fund managers in 2004, hedge funds included. According to the CEBR, fund management was one of the fastest growing sectors in the City: it accounted for over 10% of all new positions.

Meanwhile, Morgan McKinley, one of the recruiters operating in the industry, asked 250 recruiters and employees in the London fund management industry what happened to salaries in 2004. The response: they rose 10-20%.

'There has been a steady and solid improvement in terms of job volumes and salary levels', says Jeremy Canning, manager of the asset management division at Morgan McKinley. 'Firms are prepared to pay increases on base salaries as well as appealing incentive and guaranteed bonus payments in order to attract and retain the best.'

Morgan McKinley found that fund managers and research analysts with four to eight years' experience working in London can now earn salaries of 60,000 to 100,000. Marketing executives and relationship managers with similar experience can earn 40,000 to 75,000, and 48,000 to 90,000 respectively

Canning says UK fund management bonuses vary widely, but are likely to be up: 'If you got a 30% bonus last year, you will probably get 50% this year. Funds have performed slightly better and need to retain high quality staff.'

It's a similar story in the French fund management sector. Nicolas Manset, a fund management specialist at search firm Russell Reynolds, said the fund management industry has been extremely active: 'Intense competition has stimulated hiring. There has been strong demand for staff at a senior level.'

Fonds de Reserve boosts senior hiring in Paris

Hiring in France has been given particular impetus by this year's activation of the Fonds de Reserve Pour Les Retraites, a 16.7 billion euro fund set up by the government to fund the shortfall in the state pension system. The Fonds de Reserve has got fund management houses in France and abroad salivating. Manset said many have been hiring senior marketing people to improve their chances of winning part of the business. 'There's been particular demand for people who can sell a fund's track record,' he said.

It hasn't been an entirely easy ride. The merger between Credit Lyonnais and Credit Agricole led to fund management redundancies in France, as did the combination of S&C Asset Management and Isis Asset Management in the UK. Cazenove Fund Management also cut about a fifth of its staff in September after closing its Global Opportunities Fund and pulling out of treasury management.

However, Emmanuel Arthur-Michels, a consultant at Russell Reynolds in London, says fund managers are less prone to job cuts than bankers, even at a time of restructuring: 'This isn't the sellside - you don't just get rid of people, you retrain and regroup.' Many funds in the UK have restructured in 2004, says Arthur-Michels; instead of facing redundancy, managers have been redeployed to meet the demand for more specialized funds tailored to a particular region or benchmark.

CEBR says financial services hiring boom is running out of steam

As well as highlighting employment growth in the fund management industry, the CEBR report suggested a lacklustre end to the hiring year across financial services as a whole.

Faced with weaker than expected stockmarkets, a fall in bond prices and only moderate M&A activity, the CEBR revised its estimated annual rate of growth in City employment down to 1.5% for 2004. In July, it forecast jobs growth of 2.6% for the year.

Andrij Halushka, author of the report, warns of more revisions to come: 'These are our best guesses: we're waiting for the annual business enquiry to produce City employment figures in December. Rumour has it they will be quite different to those we based our report on.'

In the meantime, the CEBR continues to predict jobs growth: it says 20,000 jobs will be added in the City of London between now and 2008.