39 Percent of Firms Surveyed See Workforce Growth in 2012
52 Percent Expect Bonuses to Rise for Distribution and Marketing Professionals
Leadership Bench Shortcomings May Prove an Obstacle for Many
Despite the conventional wisdom that the current economic environment has the asset and wealth management industry mired in uncertainty, many firms are quietly investing in people and products to lay the groundwork for future growth, according to a pair of studies released today by Russell Reynolds Associates, the global executive search and assessment firm.
"Given the current global macroeconomic backdrop, many firms have understandably adopted a more cautious approach toward their businesses," said Kurt Harrison, a managing director and head of the firm's Asset & Wealth Management practice. "However, we are seeing several of our clients capitalize upon this period of uncertainty by enhancing their investment management talent and product offerings, expanding the scope of their marketing and distribution capabilities, and strengthening their risk management and transparency."
Russell Reynolds Associates has been issuing annual surveys of the asset and wealth management industry since 1996. This year, for the first time, the survey is being issued in two parts: a qualitative report based on hundreds of conversations with industry leaders throughout the year, titled Seizing The Moment: Building Tomorrow's Winning Asset & Wealth Management Leadership and a quantitative online survey of 29 business and human resources leaders regarding compensation trends at their firms.
"The biggest challenge most firms face isn't the economy, but a shortage of senior executives with the right leadership capabilities to manage through these uncertain times," said Lisa Baird, a Managing Director in the practice. "While many firms may be making the right near term tactical moves, the long term winners will be the asset managers with strong and determined leaders who can sustain a differentiated strategy over time, keep the troops energized, and win over a skeptical investor community."
Key findings from Seizing the Moment include:
- Asset managers are optimistic—but retain a healthy dose of caution. To maintain margins in a period of significant volatility and increased regulatory change, fund managers are designing new products, improving transparency, reducing costs and boosting operating efficiency. The largest firms with the best operational infrastructures are dominating flows and charging the highest fees, enabling them to diversify, scale, and attract top talent. Alternatives managers that consistently deliver returns through the extreme turbulence are realizing similar benefits.
- Product dynamics continue to shift. Product shifts that occurred prior to the crisis are now clearly entrenched, with visible growth to both alpha-oriented alternative strategies and passively managed products, such as ETFs, that seek beta. There is continued transition away from long-only US equities into global equity strategies, with a particularly high demand for emerging markets equities and debt. Institutional investors returned to alternatives—as long as they were supported by strong track records and effective risk management.
- Consolidation has tapered, but team lift-outs continue. While large deals have slowed, tactical talent acquisitions continue as firms look to fill gaps or selectively establish a presence in new markets. But failures in integration due to "tissue rejection" have been common, pushing acquirers to fully investigate cultural fit when reviewing potential acquisition targets.
Seizing the Moment—Building Tomorrow's Winning Asset & Wealth Management Leadership:
http://www.russellreynolds.com/content/asset-and-wealth-management-leadership-trends-2011
Key findings from the compensation survey include:
- Bonus pool predictions for 2011 are tepid-to-negative, but a meaningful minority of firms expects bonus pools to increase. While more than half (52 percent) of firms expect their bonus pools to decrease, a third (32 percent) are expecting increases, defying broad-brush generalizations.
- Distribution/Marketing professionals are most likely to see bonus increases. More than half (52 percent) of the firms surveyed expect bonuses to rise for this group, confirming the strategic importance placed on this function and on retaining A players.
- Clawback provisions become more common. More than a quarter (28 percent) of firms surveyed report having implemented compensation clawback provisions, suggesting that they are becoming a more accepted risk-management tool.
- A significant minority of firms plan to increase their workforce in 2012. While 44 percent of firms anticipate no significant workforce change next year, and 17 percent will be trimming their headcount, a surprisingly large number—39 percent—are planning a workforce increase, pointing to a more aggressive growth strategy.
2011 Asset & Wealth Management Compensation Pulse Survey Results:http://www.russellreynolds.com/content/asset-and-wealth-management-compensation-survey-2011
About Russell Reynolds Associates
Leadership. In today's global business environment, success is driven by the talent, vision and leadership capabilities of senior executives
Russell Reynolds Associates is a leading global executive search and assessment firm with more than 300 consultants based in 39 offices worldwide. Our consultants work closely with public and private organizations to identify, assess and recruit senior executives and board members to drive long-term growth and success. We value teamwork, serving our clients with a collaborative approach that spans our international network of sector and functional experts.
Our in-depth knowledge of major industries and our clients' specific business challenges, combined with our understanding of who and what makes an effective leader ensure that our clients secure the best leadership teams for the ongoing success of their businesses. For more information, please visit us at www.russellreynolds.com.
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