Asset manager pay hikes not enough to retain star performers

Asset managers are increasing bonuses for star performers this year, but not enough to keep them from seeking new jobs.

On a pay-per-head basis, most large publicly-listed asset managers have increased pay this year, according to our analysis of 2012 annual reports. However, this doesn’t mean that bonuses have been hiked across the board – firms are focused on paying for performance.

“Very few asset managers are willing to drastically increase bonuses this year, and most are focusing on key performers,” said Richard Parkhouse, an asset management remuneration specialist at PwC. “There’s a mismatch between expectations and the reality of the bonus pool this year.”

That means that people will move on once bonuses are paid, Parkhouse said. This year, there are more opportunities for them to do so. While Deutsche Bank cut almost 500 front office staff in its asset and wealth management division last year, most firms are hiring. J.P. Morgan Asset Management added 450 people in 2012, Schroders recruited 109 extra staff, T. Rowe Price hired 117, Frankin Templeton went from 8,453 employees to 8,600, while Jupiter Asset Management added over 20 people. UBS kept headcount flat in its asset management division.

Confidence is relatively high among fund managers, and many are willing to explore other options if this year’s bonus disappoints, said Patrick Morrissey, partner at executive search firm Sheffield Haworth.

“For the past four years, fund managers have been pessimistic about their job prospects,” said Morrissey, “ but the stability in equity markets over the past few months has given many unhappy people the confidence to move on.”

Below is a ranking of pay per head among publicly listed asset managers that break out their compensation costs. Notable exceptions are Goldman Sachs Asset Management, BNY Mellon Asset Management, Bank of America, Citigroup, State Street Global Investors, Allianz Global Investors, Morgan Stanley Investment Management, Credit Suisse and Amundi, none of whom give sufficient detail on compensation costs to be included.