Salary survey: Asset managers use innovative pay schemes

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Fund managers have been looking for alternative ways, such as bonuses or stock options, to reward employees and keep star players as the economic downturn has made cash a less attractive option, according to a European survey by Armstrong International, the financial headhunting firm.

Bonuses for traditional fund managers are expected to be down by 20% to 40% from last year because of poorer performance, as a result of market conditions. Star players are the exception, as some have been offered multiple-year guarantees to prevent them defecting to alternative fund boutiques, the report said.

It expected basic salaries to remain stable for 2002 compared to last year. Salaries then ranged between $200,000 and $260,000 for a head of equity, $175,000 and $230,000 for a senior equity investment manager and $110,000 and $145,000 for a senior analyst with more than three years experience.

For institutional sales, bonuses will be down between 20% and 50%, the survey said. In many cases with new hires, no guaranteed bonuses are being offered and maximum contract periods have been reduced. For client servicing roles, there is a trend away from discretionary bonuses to a performance-related system.

For retail sales, bonus expectations have dropped from 300% to between 100% and 150% of basic salaries.

Hiring across traditional fund management has been opportunistic, the survey said, while hiring of retail people remains a priority. Back office and administration positions have been hit hardest by redundancies and these areas are still experiencing a hiring freeze.

The survey said the profile of private banking has increased over the past year, giving banks an appetite for hiring, in contrast to many other areas. Banks have expanded their operations by buying whole businesses, with UBS acquiring Paine Webber, CSFB purchasing DLJ and Morgan Stanley buying Quilters & Co.