Is This Expense Rising At Least 12 Percent?
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Wednesday, November 17, 2021

Is This Expense Rising At Least 12 Percent?

Fundsters should still expect firms' bonus spending to up by double digits compared with last year, according to a financial services-focused compensation consulting firm.

Asset managers' "incentive funding" is now projected to rise by 12 to 18 percent in 2021 (as compared with 2020) on a headcount-adjusted basis, according to the third quarter trends and year-end projections report released yesterday by the folks at New York City-based Johnson Associates. (That's up from the 10 to 15 percent range they expected three months ago.) They note that, thanks to "market appreciation and moderate inflows," AUM is on the rise.

Among 10 asset management firms (not named in the report) surveyed by the Johnson Associates team, the median projected bonus pool increase this year (based on actual bonus data for the first half of 2021 and projections for the second half) is 17.5 percent (up from 15 percent three months ago). One of the ten firms' bonus pools is projected to stay level with its 2020 levels; none are projected to drop this year, five are projected to jump by 20 percent, two by 15 percent, and two by 10 percent.

In comparison with traditional asset managers, investment and commercial banking management and mid/large private equity firms are projected to see similar bonus pool increases. Hedge funds, investment and commercial banking staff, fixed income sales and trading, and retail and commercial banking are projected to see smaller bonus pool increases than their traditional asset manager counterparts. And mega private equity firms, investment banking advisory and underwriting, and equities trading are projected to see bigger bonus pool jumps.

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