The median total compensation for investment professionals working for mutual funds jumped 38 percent, to $270,500 in 2001 from $196,000 in 1999, according to a survey released last week by the Association for Investment Management Research of Charlottesville, Va. and Russell Reynolds Associates of New York.
Mutual fund portfolio managers, analysts and top level executives make, on average, 37 percent more than their peers at banks, investment counseling firms, brokerages, insurance companies and private foundations, according to the survey. The survey, which is based on the anonymous responses of 10,000 AIMR members in the U.S., U.K., Canada, Hong Kong and Singapore, calculates compensation based on the respondents' current 2001 base salaries, anticipated 2001 cash bonuses and an estimate of the actual 2000 non-cash compensation, including incentive packages.
Of all the investment professionals, fund managers received the highest level of compensation along with securities broker/dealers and investment counselors, according to the survey. Incentive compensation is greatest with mutual fund and broker/dealer firms, accounting for half of the median total compensation, according to the report. Global equities portfolio managers received a 49 percent increase in compensation since 1999, the largest increase of all professionals in similar investment related positions, according to the survey. Compensation was the lowest for investment professionals working for banks, plan sponsors and endowments and foundations, according to the results. The median total compensation for investment managers with less than five years experience is $125,000, however 10 percent of those managers earned $350,000 or more, according to the survey.
For managers with 20 years experience, the median compensation jumped to $253,000, with 10 percent earning more than $1 million.
Overall, U.S. investment professionals made an average of $190,000 compared to $200,000 for U.K. professionals. The median total compensation for the top 10 percent in the U.K. and the U.S. is $710,000 and $650,000, respectively. The average Canadian investment professional makes $108,000, according to the survey. Investment professionals working in Hong Kong and Singapore made a median of $136,000 and $112,000, respectively.
While the increase in median compensation represents a significant rise from 1999 compensation levels, most of the increase in salaries are likely to have occurred in the first part of 2000, before many fund companies' asset bases began to decline, according to Richard Lannamann, global head of the investment management practice at Russell Reynolds. The trend in rising salaries may not continue much longer, he said.
"Compensation can't continue to go in the opposite direction of assets and revenues for very long," he said.
Survey respondents include portfolio managers, chief investment officers, research directors and securities analysts. The survey indicates a significant gender gap in compensation levels among investment professionals with ten to 20 years of experience. In the U.S., men with ten to 20 years of experience earned 22 percent more than women with similar experience, according to the survey. The gap in compensation between men and women across all regions and levels of experience was 16 percent, the survey found.