Remuneration at asset management companies jumps by 18% – PwC
GLOBAL - Remuneration at asset managers is up by nearly one-fifth over last year, according to a report by PwC.
The consultancy found that Asian asset managers saw pay packages increase ahead of their European counterparts, with the growth of niche products including exchange-traded funds (ETFs) coupled with high inflation rates.
The consultancy also predicted that European-based managers would be faced with problems expanding into Asia, as European regulation on pay limited their ability to compete with local remuneration packages.
The Asset Management Reward Survey 2011 further found that investment staff had seen salaries recover ahead of colleagues in the distribution-side of the business, with wage bills for chief investment officers increasing above those of even chief executives.
The report noted: "This supports a view that firms were looking to preserve their investment track records and provide stability for investors at a time when asset flows were stagnant or negative."
However, it stressed that some of the interviews on which its findings were based took place before the August market downturn, with the impact of the sovereign debt crisis and its effect on the stock market "clearly" altering the views of survey respondents, according to PwC.
Nonetheless, the asset management industry was expected to see remuneration increase by 18% - with a company's salary bill rising by 4% in comparison.
Tim Wright, the consultancy's remuneration director, noted the increase was for the second consecutive year, but highlighted the difference between the salaries of sales and investment staff.
"This reflects pressure in the markets," Wright said. "Fund managers have performed to protect and grow the investments they have, exactly what they're measured against, but market uncertainty resulted in pockets of poor sales activity, which affected sales-related incentives.
"It's been tough to bring new assets through the door, and the focus was on retaining existing money, trying to stem the tide."
However, he said companies would be facing a conflict at the end of the year, with a number of managers performing well, while the market turmoil in recent months will have affected a company's overall balance sheet.
Companies also raised concerns about the European Union's Capital Requirements Directive (CRD III), with 85% saying the impact on salaries would make it harder for managers domiciled in Europe to compete for staff.
Wright noted the growing expansion into the Asian market.
"Regulation for local firms there is currently less onerous, but companies based in Europe are restricted in how they can reward their people in these markets," he said.
"They're concerned it will prevent them from competing and will challenge their expansion."