With increased competition in the asset management industry, fund companies are stepping up their efforts to retain key employees.

In addition to compensation, fund companies have also focused on enhancing their work environments while also adding financial incentives in the form of stock options and ownership stakes. Asset managers surveyed in a recent Talent and Compensation Trends in Asset Management Distribution survey organized by Heidrick & Struggles indicated compensation, firm culture and opportunities for sales/marketing efforts as some reasons that factor into changing companies. Half of the more than 200 asset managers polled said they changed jobs from 2010 to 2013.

Chad Astmann, head of Heidrick & Struggles' asset management practice in North America, says being part of a positive work environment is becoming an increasingly important aspect of employee satisfaction at fund companies.

"Culture and environment tend to be the most important aspects for this community," says Astmann, who previously was a search consultant in the United Kingdom for global investment management firms. "Culture ranks as extremely high in terms of retention."Astman says a follow-up asset management retention survey was conducted this spring with results slated to be released later this year.


Geoffrey Bobroff, a mutual fund consultant based in East Greenwich, R.I., says many asset managers in recent years have been creating incentives in the form of ownership as a way of holding onto portfolio managers. This can include stock options for public companies or a small stake for privately-held firms.

"The key to retain talent is through some kind of ownership," says Bobroff, a former senior vice president at Lipper Analytical Services whose career in the investment management industry spans four decades. "It gives them a sense of participation beyond just pure compensation."Bobroff says negative backlash that Boston-based Wellington Management suffered in the late 1990s after suing a former employer regarding a non-compete clause has served as a wakeup call for investment management firms to not play hardball with employer agreements.

"The courts do not look fondly at employer agreements because they are looked at as a view of involuntary servitude," says Bobroff. "It is not looked at as an effective approach by asset management firms."

One asset management firm that has excelled with retaining important employees is Eaton Vance, which was number one on the investment management category in the Boston Globe's annual Top Places to Work Survey last year. Mark Burkhard, who has been Eaton Vance's director of human resources for the last 18 years, says the company has a low yearly turnover rate of about 9%, which he attributes in large part to creating a positive corporate culture that embraces collaboration along with competitive pay and benefits.

"The retention rate in my 18 years has always been excellent," says Burkhard. "We've never had a time where we are losing employees at a fast pace."

Burkhard says employees are offered stock options, which has enabled employees from top to bottom to feel involved in the outcome of the company.

"The interests of the company are aligned with the interests of the employees," says Burkhard. "We feel it is important that everyone feel a part of the company's success."


Consulting firm kasina recently surveyed national sales managers in the asset management industry for a soon-to-be released study on how wholesaler compensation can be better aligned with firm goals that indicated concerns about how sweeping changes could lead to losing top talent. Jeff Strange, a director at kasina, says wholesalers are primarily compensated through gross sales, but many asset managers would prefer instead to place heavier weight on the quality of assets and relationships brought in. Strange says the asset management industry is now wrestling with how to adjust their wholesaler compensation structure without harming retention rates.

"They see it as a better way to pay wholesalers but realize that if they do make the change they will probably lose a lot of the wholesalers," said Strange.

Hay Group, a global consulting firm, has conducted studies across many industries including asset management that in recent years have shown that an employees' comfort level at a company can play just as important a role as compensation when it comes to staying or leaving.

"Compensation is important but we have found across different sectors that people will leave organizations not because of money but other factors that have to do with fairness," says Tom McMullen, rewards practice leader at Hay Group. "It tends to be the non-financial needs that drive people out of the organization."

While asset managers like Eaton Vance have proved successful with retaining staff, Burkhard emphasizes that new initiatives always need to be explored as the industry evolves and becomes younger.

"The challenge is to make sure that we continue to be a great place to work," says Burkhard. "It's something we never take for granted."

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