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Pay costs mount for fund managers, says PwC

Asset management firms are reporting pressure to increase their bonus and salary figures to avoid mass talent migration, according to research by PricewaterhouseCoopers.

As a percentage of net revenues, compensation costs have increased by 4 per cent over the last financial year.

Despite 63 per cent of those polled experiencing a fall in profits over 2008-09, a typical firm has increased the annual bonus spend as a percentage of pre-bonus operating profit by 9 per cent. Some have increased this amount by as much as 20 per cent.

Some 40 per cent increased their bonus pool last year, whereas only a third reduced opted for a reduction.
Tim Wright, the remuneration director at PwC, says asset management companies are worried about losing talent over supposedly suppressed pay levels.

Base salaries are accordingly being negotiated up on top of this to reflect a shared talent pool between asset management and banking sectors.

Existing employees are more likely to demand pay hikes as they notice market rates have increased.
The survey reveals there has been a decisive shift towards incentives that reflect multiple performance conditions rather than a single measure.

Of those firms using long-term incentives, 24 per cent used a single performance measure in 2010 compared with 49% in 2009. The use of multiple measures increased from 4 per cent in 2009 to 28 per cent in 2010.

It was also revealed that although total salary inflation among the chief executives of asset management firms exceeded both growth in the retail price index and FTSE All-Share index, total compensation tracked the FTSE All-Share.


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