31/01/2011 Author: Kapila Gohel

Asset management firms face remuneration pressures

Asset management firms are being pressured into investing more in recruitment and retention as fund performance improves, yet bottom line financials continues to lag behind, according to a new report by PwC. 

Compensation costs as a percentage of net revenues have increased by 4% over the last financial year states PwC’s annual asset management report, and are also being driven by pressure to increase base salaries. 

“Despite many firms spending more than the previous year on bonuses, base salaries are still being negotiated up. Ultimately asset management and banking share much of the same talent pool and new hires expect base salaries to be aligned. This in turn is pushing existing employees to demand pay hikes as they notice market rates have increased,” comments Tim Wright, remuneration director at PwC.
 
When it comes to bonuses, the survey found that a typical firm’s bonus spend as a percentage of pre-bonus operating profit has increased by 9%. For some firms, it has risen by as much as 20%. While bonuses were scaled back in the banking sector, around 40% of asset management firms actually increased bonus pools last year and only a third reduced their bonus spend.