Large asset managers have committed to hiring hundreds of new staff over the course of 2015, but a gloomy end to the year – combined with increased competition and ongoing asset outflows – means that they’re paying them less.
The bonus pool for asset managers in 2015 is likely to have declined by 10% over the previous year, according to Richard Parkhouse, director of asset management remuneration at PwC, with most firms paring back variable pay except for “top performers they want to keep”.
PwC’s figures suggest that a portfolio manager in the UK earned £130k on average in 2014, with a 100% bonus. Assuming salaries are static and bonuses fall by 10%, the average bonus will be £117k in 2015.
“Asset managers haven’t increased base salaries drastically like some of their sell-side peers. Cutting bonus payments allow them to cut costs without making drastic changes to staffing levels,” says James Dewhirst, director of buy-side headhunters Investment Management Partners.
Large publicly-listed asset managers have been hiring a lot over course of 2015. J.P. Morgan added 1,240 people last year, Aberdeen Asset Management – which was hit with £13bn worth of outflows in the final three months of the year – still ended 2015 with 176 more people than 2014 and Blackrock now has 13,000 employees – an increase of 800 people on the previous year.
Predictably, overall compensation costs at these firms have increased as a result. However, on a per-head basis people are being paid less. At Blackrock, average compensation went from $313.8k in 2014, to $308k last year. Aberdeen paid £148k ($211k) compared to £156k ($222k) in 2014 and J.P. Morgan’s average payment went from $257.5k to $243.7k.
The exception was Ashmore, which hired just three additional staff last year but increased average payouts to £229.3k ($327.2k) from £227.9k in 2014. Ashmore’s reporting period ended in July 2015, however, before most asset mangers hit more difficult times.
Reduced bonus payments have yet to result in an exodus of staff, says Dewhirst. “It’s rare for people to look for new opportunities on the basis of pay alone,” he says. “The most common reason is someone stagnating in terms of progression or learning.”
Aberdeen says that it hired 41 graduates from a pool of 109 interns in 2015 and that average salary rises for its employees were 3.4%.