Compensation levels for investment professionals in 2011 are expected to be flat to modestly higher than those reported in 2010, according to a new report released jointly by Greenwich Associates and Johnson Associates.
Within traditional asset management organisations, compensation for 2011 is projected to be flat from 2010 levels to 5% lower for equity professionals and flat to 5% higher in fixed income. Within hedge funds, year-end compensation is expected to vary widely based on company performance for both equity and fixed-income professionals, with some down and others flat or up versus 2010.
“These expectations are bullish compared with industry projections for trading and investment banking professionals in investment and commercial banks, for which average total incentives are projected by industry analysts to fall as much as 30% or more,” says Johnson Associates Managing Director Francine McKenzie.
Investment professionals are watching such industry-wide projections closely following a year in which compensation levels could best be described as a tale of two markets. As Greenwich Associates Director of Institutional Marketing Jennifer Litwin explains: “In fixed income, compensation last year rose in step with the increased demand for talent and a spike in employee turnover. Average total compensation for fixed-income professionals working for traditional asset management organisations increased by roughly 10% from 2009 to 2010 and jumped 18% for fixed-income investment professionals at hedge funds. The story was much different in equities, where average total compensation dropped 13% from 2009 to 2010 at traditional asset management firms and declined by 10% at hedge funds.”