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10 big insights into finance pay, from the industry’s leading pay consultant

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Alan Johnson, chief executive of Johnson Associates, the Wall Street pay consultancy firm, has just made his annual presentation on the state of investment banking pay, along with pay in the asset management industry. Some of his findings have been trailed already (traders’ bonuses won’t be up to much this year), but he also has plenty to say that hasn’t been aired elsewhere.

If you want to keep abreast of what Wall Street’s veteran pay expert thinks is happening to compensation in the finance industry, this is what you need to know:

1. You want to be working for an asset management company, not an investment bank 

Asset management pay

2. Within asset management, you want to be working in private equity specifically 

Private equity pay

3. Hedge fund pay has not been so hot of late

Hedge fund pay

4. If you work for an investment bank, the best place for getting a pay increase this year will be IBD

Pay in IBD

5. Overall, equity fund managers earn more than fixed income fund managers 

Fixed income and equity pay

6. But hedge fund managers still earn the most… 

Hedge fund pay 2

7. Bonuses still comprise a large percentage of pay in asset management firms

Structure of compensation

8. It’s getting harder to work out what salespeople should earn

From the report: “Meeting new client demands often requires the combined effort of sales professionals, client service, the growing ranks of  product specialists, consultant relations specialists, and investment teams. Since it is usually the sales professional spearheading the effort, teamwork is slowly replacing ‘eat what you kill’ as the asset management sales mantra.”

9. You can still earn a lot more working on Wall Street than in most other industries

Wall Street premium

10. Banks are undervaluing their top performers

From the report: “Rule of thumb: excellent performers produce 2x or more average contributions.”

Comments (1)

Comments
  1. I’d be interested to know why there is such disparity in pay between equity and fixed income on the buyside – especially as the vast majority of equity funds underperform the market, not to mention that (at least I thought) the perception was that equities are less ‘technical’ than fixed income.

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