The Review — 05/12/2017 at 12:00

Asset managers driving down bonus costs by hiking up pay for cheap juniors

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Asset managers are prioritising pay hikes for tech-savvy junior employees in a bid to push down overall compensation costs as they prepare for a new era of Big Data and quantitative finance amid pressure on fees and a need to aggressively cut costs.

Hedge funds and asset management firms are expected to increase bonuses for their employees by an average of 7% this year, according to a new research by Greenwich Associates and compensation consultants Johnson Associates, based on 1,000 interviews with buy-side professionals. But this could be the last hurrah for asset managers.

“We’re in a bull market, returns are much higher this year, and most asset managers still have conventional compensation models. While their funds are performing, they need to reward their people,” says William Llamas, associate director at Greenwich Associates and author of the report.

“But they also have to invest more in technology, hire more compliance professionals as well as continuing to deal with fee pressure and regulatory demands,” he adds. “All of this investment will hit employee compensation from next year.”

Equity hedge fund professionals are expected to earn an average of $600k this year, says the research, up from $580k in 2016. Meanwhile, fixed income focused employees will haul in an average of $970k in hedge funds and $500k within traditional asset managers, according to the figures.

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Read more on efinancialcareers.com


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