European asset managers need to shake-up pay practices and hire distribution experts

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Asset management arms of European banks and insurers are struggling to fend off competition from foreign rivals for both assets and, importantly, talent. They need to shake up their pay practices and heavily recruit sales and distribution professionals if they want to reverse the flow.

If you work at one of these firms - which include UBS, SocGen, Allianz and BNP Paribas - the chances are that your pay is heavily weighted towards fixed compensation, and includes little in the way of equity options directly related to the asset management business.

This means there's less incentive to stick around than there is at US and UK firms, where bonuses and stock options more closely correlated to your own performance are more prevalent, suggests a recent report by consultants Casey Quirk.

The research also says that the asset management arms of European banks and insurers are viewed as "utilities that provide services to their other core businesses" and that 75% of net new inflows to European mutual funds are heading towards foreign rivals.

Part of the appeal of foreign asset managers to clients is that they're confident that staff turnover will be low, as compensation structures are based on long-term value creation. European asset managers instead focus on short-term objectives, claims the report.

Asset management headhunters admit that these European arms are fruitful poaching grounds. "European houses generally pay less than US or UK companies and it's never a stretch to persuade people to makes the switch," claims one.

Distribution professionals are hot property

If all this hasn't put you off working for an asset management arm of a European bank or insurer, the good news is that there's an imperative to hire distribution staff.

The Casey Quirk report claims that there's a "glaring underinvestment" in sales and marketing staff - particularly consultant relation officers and portfolio specialists - and that there's a real need to hire "aggressive distribution leaders".

Bearing in mind their policy of paying less than their foreign competitors, European asset managers may find it challenging bringing on board the best distribution staff unless they're willing to dig deep.

"There has been a huge amount of distribution hiring over the last 12 months, with just about every asset manager aiming to expand," says Patrick Morrissey, group managing director at Sheffield Haworth.

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