Bonuses for fundsters (and other traditional asset management employees) may fall by 10 percent to 15 percent this year, when compared with 2019.
That's one of the projections in Johnson Associates'
latest "Financial Services Compensation" report, released
yesterday and featuring information on "second quarter trends and year-end projections" for alternative asset managers, investment banks, and commercial banks, as well as traditional asset managers. Overall, the consulting firm's team "projects broad decreases in incentive compensation across financial services," as the effects of the coronavirus crisis continue.
"Despite market recovery, asset management, hedge funds, and private equity incentives are also expected to decline," the Johnson team writes. They note that, for asset managers, the "investor shift to lower fee products [is] weighing on revenues."
In the report, the Johnson team notes that asset managers' flows are stable overall but that investors continue "shifting to lower risk, lower fee products," which hits total revenue. They also project "increased technology and infrastructure costs," plus layoffs continuing "through year-end and into 2021."
"It's not just where the markets are, it's the fees you collect," Alan Johnson
, managing director of his eponymous firm, tells P&I
. "We have these systemic changes within the market. We've moved from active to passive; we've moved to ETFs."
"There's going to be a fair amount of job insecurity," Johnson adds. "Firms found that they don't need as many people as they thought they did. And adding the tragedies and stresses of the pandemic, it's going to be a very difficult year-end."
that, according to Johnson, "layoffs this year could be significant."
Neil Anderson, Managing Editor
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