Fifty-two percent of executives at asset management firms expect bonuses for distribution and marketing professionals to rise in 2012, and 39% foresee additional hiring, according to a Russell Reynolds survey of 529 executives.
“Given the current global macroeconomic backdrop, many firms have understandably adopted a more cautious approach toward their businesses,” said Kurt Harrison, a managing director and head of the firm’s asset and wealth management practice. “However, we are seeing several of our clients capitalize upon this period of uncertainty by enhancing their investment management talent and product offerings, expanding the scope of their marketing and distribution capabilities, and strengthening their risk management and transparency.”
Lisa Baird, another managing director in the practice, added: “The biggest challenge most firms face isn’t the economy, but a shortage of senior executives with the right leadership capabilities to manage through these uncertain times. While many firms may be making the right near-term tactical moves, the long-term winners will be the asset managers with strong and determined leaders who can sustain a differentiated strategy over time, keep the troops energized and win over a skeptical investor community.”
The survey, which included qualitative interviews, also found that asset manages are focused on designed new products, improving transparency, reducing costs and boosting operational efficiency.
Large companies are at the greatest advantage, since they are attracting inflows and charging the highest fees, Russell Reynolds found. This is enabling them to diversify and attract top talent. On the other side of the scale, alternative boutique firms are also seeing strong inflows.
Likewise, a similar barbell is appearing with regards to products: a rise in both alpha-oriented strategies and low-cost beta, passively managed index and exchange-traded funds. In addition, executives foresee continued strong demand for international and emerging markets funds.
While bonuses, overall, are expected to be tepid in 2011, with 52% of firms expecting a decrease, 32% are expecting increases. Twenty-eight percent of firms have implemented clawback provisions, the executives said. Fifty-two percent of executives think that distribution and marketing people will get larger bonuses this year.