Good News for Asset Managers: Higher Paychecks

(May 14, 2010) — According to a report by compensation consulting boutique Johnson Associates, money management compensation should increase by up to 20% this year. The pace of economic recovery, industry activity, business mix, and evolving legislation are key bonus drivers for 2010, the report said.

The study predicted that hiring would improve through 2010 with a shift from cash incentives to higher base salary. According to report conducted by Johnson Associates, 2008/2009 retention trends were not an accurate predictor of 2010 as more opportunities arise.

“There’s been so much scrutiny with compensation and the big question is what execs are going to do at the end of 2010,” said Jeff Visithpanich, principal at Johnson Associates, to ai5000. “Last year, top management at financial firms took big cuts in incentive pay, but since then, companies including Goldman Sachs have implied ‘business as usual,’ likely meaning a return to massive bonuses and other incentives,” he said.

Employees of equity-focused firms could see average incentive compensation gains of about 20%, while fixed-income-focused firms could see 15% gains, the report projected.

The report additionally stated that a growing number of hedge funds have begun surpassing their previous high-water marks for total value of their funds.

Visithpanich added that the report assumes the Greece crisis and others are contained and that the market remains flat for the rest of the year. It’s still a few months until compensation season, which typically starts at the end of August, and with lingering uncertainty in the market, there could be a turnaround with a less positive outlook for asset managers, he said.