The Delicate Balance of Paying Asset Managers

In a meeting last fall, the CEO, CIO and head of human resources at a large investment firm argued over whether to raise compensation and bonus pools based on the firm’s ability to pay, or to steward those assets more conservatively. The CIO recounted the pressure he was getting from investment professionals about an across-the-board pay raise, while the head of HR countered that the firm was still at record low turnover, particularly at the more senior levels in portfolio management and sales, and had been successful recruiting over the past two years. The CEO was unwilling to settle the dispute as the meeting drew to a close. This debate struck me as the backbone of a compensation and recruiting challenge that many firms simply gloss over.

There is always a delicate balance in corporate governance between employee motivation and the conservative stewardship of assets, and the investment management business is no exception. Historically, spendthrift compensation payouts are frowned upon, as are penny-pinching companies that let employee dissatisfaction lead to excess turnover. In many ways 2014 was a watershed year for asset managers around the world as a majority experienced climbing profitability on the back of several years of rising, if perhaps appropriately skittish, markets. Results point to significantly higher compensation payouts across the industry, without a strong motivating factor, such as increased turnover or challenging new recruiting goals.

Asset management firms are anxious to reward hard-working and loyal employees, and there is no question that in many cases nonexempt and lower-level managers have seen total compensation relative to inflation rise only marginally since the 2008–’09 recession. Even more-senior professionals with equity stakes in traditional (not alternative) asset management have in many cases experienced a lost decade, as cash and equity compensation packages are only now returning to the cumulative values seen in the mid-2000s. Since 2012 this tendency has persisted in the face of rising firm profitability and record markets. Not surprisingly, employee expectations are running high.

Certain key roles, such as top-performing portfolio managers and leading sales executives, that often have compensation programs heavily weighted to equity or revenue-sharing arrangements, experienced significantly better total remuneration for 2014 based on strong firm profitability. This trend repeats the pattern observed at year-end 2013 and remains a dominant feature of compensation for the most senior professionals in the investment business.

However, at more than half the firms in theII300 ranking of the U.S.’s 300 largest asset managers，盈利能力的提高主要基于市场估值升至历史高位，而不是客户业务的有机增长。这种缺乏有机增长的情况导致了C-suite高管的谨慎，我的轶事经验表明，这在全球范围内是正确的。在招聘方面，资产管理公司表现出克制，避免长期的担保和慷慨的合同，并格外关注长期忠诚员工所代表的企业文化的连续性和价值观。亚慱体育app怎么下载

Total turnover at most firms I visited in late 2014 was running at 10 to 12 percent — and around 5 percent among exempt employees and senior managers. This level of turnover represents a continuing low point for the asset management industry since the 1980s.

It is surprising that asset managers continue to boost pay across the board in the face of such low turnover. One would expect a more aggressive stewardship of corporate assets through compensation inflation restraint.

我认为，更合适的做法是，根据员工的表现，采用更陡的差异曲线来提高薪酬。这将包括奖励表现优异的员工，其薪酬增幅明显大于表现中等或较差的员工。通过这种方式，更有价值的员工将体验到分享一些C-suite高管已经享受到的利润的回报。这种“感觉良好”的奖励将有助于在未来竞争更加激烈的市场之前建立这些关键执行者的信任和忠诚度。

The savings of holding back compensation increases for median performers could be significant, both in stewarding resources more cautiously in the likely event of future difficulties as well as allowing future increases to have a bigger impact. The downside of this strategy is negligible, as median and poor performers usually have far fewer career alternatives and unforced turnover among them is generally much lower than with top performers. • •

George Wilbanks built the asset and wealth management practice at executive recruiting firm Russell Reynolds Associates before founding Stamford, Connecticut–basedWilbanks Partners2011年。