Equity research bonuses down (again)

Guess who fared worst in the latest bonus round? If eagerness to find a new job is anything to go by, equity researchers were near the bottom of the pile.

"We have had calls from entire teams that want to move," says Emma Halls, a manager at recruitment firm Finance Professionals. "Over the last few weeks a few mid-tier houses have announced bonuses and equity researchers there have been very unhappy. There will be a big kick out once bonuses are paid," she adds.

A search consultant operating in the research sector confirms the poor prognosis. "Equity research has been disappointing," she says. "Bonuses are down between 20% and 40%."

News of poor bonuses for equity researchers follows the unbundling of research costs. From January this year, asset managers have been obliged to disclose to clients how much of the fee they pay brokers covers research.

The move is likely to make it harder for asset managers to justify research spending. It comes on the back of the earlier controversy over the use of equity research to help win corporate finance mandates, as a result of which equity researchers are excluded from sharing in the profits of lucrative corporate finance deals.

"Suddenly, equity research is precisely that - a research function," says Halls. "It's no longer a business winning function. Although big name equity researchers are still being paid, there's no longer any incentive to pay a little known vice president a good bonus."

She says the discrepancy between equity research and other areas of the bank has been highlighted by the healthy bonuses paid out this year in areas like corporate finance and structured products.