The bear market isn't mauling everyone. Sign-on bonuses for top performers at leading mutual fund and brokerage firms "are now as high as the signing bonuses some professional sports teams pay for star athletes," notes Arthur Levitt, former chairman of the Securities and Exchange Commission, in his new book, Take on the Street (see interview, page 2).
At the height of the bull run, fund companies wooed star wholesalers with guaranteed annual contracts of half a million dollars or more, according to Cerulli Associates of Boston. Top rainmakers even commanded $1 million.
"Building up through 2000, it wasn't unusual to see mutual fund companies making two-to-three year guarantees of base and bonus, where total compensation jumped 50% to 100%," said George Wilbanks, a managing director with executive search firm Russell Reynolds of New York. That's in addition to firms "stepping up to buy out deferred compensation with a sign-on bonus," Wilbanks said.
Nearly three years into the bear market now, an estimated 60,000 people have been laid off on Wall Street. Chase and Merrill Lynch announced widespread layoffs last week (see related story, page 1).
The S&P 500 is off 23%, and the Nasdaq has been trounced 75% off its bull-run high. In the midst of all of this horror, fund firms are selective about guaranteeing princely sums to wholesalers or star portfolio managers.
Guarantees are no longer standard operating procedure, said Robin Soren, head of the asset management practice at New York executive recruiting firm Spencer Stuart.
Commissions are down, as well. Last year, fund and annuity wholesalers' total cash compensation dropped 18.6%, with the average fund wholesaler earning $190,400, according to a survey by DGL Consultants, an executive search and management consulting firm in Richford, Vt. [see MFMN 9/16/02].
Nonetheless, sign-on bonuses are still being paid. Some large fund complexes, particularly with a fixed-income or value bent, as well as a few agile boutiques or hedge funds looking to take advantage of idle talent on the Street, are snapping up wholesalers, marketing executives, analysts, even portfolio managers. The ungodly amounts of money that these investment professionals commanded over the past decade are a thing of the past, of course - but many talents in the business are being pursued.
Vision & Leadership
Sales and marketing, surprisingly, is one area where fund companies are hiring, recruiters say. Most of the hiring is being done by smaller firms, particularly those with "vision, leadership and [fixed income, value or alternative investment] products," since the larger fund complexes "are hurting more," Soren said.
TMP Worldwide of New York, parent of Monster.com and ChiefMonster.com, has handled a number of searches for fund companies looking to take advantage of this depressed market. Fund companies are particularly interested in capable people who were in "the wrong place at the wrong time," said Joel Millonzi, managing director and head of global financial services for TMP.
And these companies are "selectively" offering sign-on bonuses, Millonzi said. Fund firms are circumspectly offering enticements, particularly when "they want to add a new fund in a category they are not in," fixed income and value being two appealing themes, Millonzi said.
"We are now seeing fixed-income portfolio managers and analysts come back more into focus than they had been," Millonzi said. "Over the past 10 to 15 years, it was all equity."
Like his peers, Millonzi is also witnessing a counter-cyclical interest in sales and marketing among firms already looking ahead to how to take advantage of this down market to advance their market share.
"They want their brand emblazoned in the consumer's mind for the turnaround," Millonzi said.
Firms are also looking to upgrade the level of portfolio management, he said. They are looking for top salespeople, real "gunslingers," said Donald Lariviere, president of DGL. Some companies are looking to pick up big-name portfolio managers and analysts who were virtually untouchable during the boom years, Wilbanks said.