Johnson Associates in the news
Human Resources Executive
“Decades ago, employers took a broader sociological view to determine if the real wages of their employees were going up over time,” says Johnson. “Now, employers see wage growth as something out of their control. They may be reasonably competitive with wages or benefits, but it may only be okay for employees, not great. And they think ‘I can’t do much about it because it’s out of my control.’ ”
“At the next board meeting, people will be talking about it,” says Alan Johnson, founder of Wall Street compensation consulting firm Johnson Associates. “It will be front of mind.”
It’s possible, though, that if the company regains market value, “by the end of the year, these days might be forgotten or it may have not really happened,” Johnson says.
“The industry has been on a fundraising and realization high,” Alan Johnson, managing director of Johnson Associates, said of private equity.
“It’s going to be challenging to manage people’s expectations,” he said in an interview. “As we get toward the end of the year I think people will expect to get paid more than they will. How do you manage people who get 5 percent more but maybe they were thinking they would get 10 to 15?”
Compensation Consultant Alan Johnson of Johnson Associates in New York said the potential 3% grid-rate bump is, nevertheless, “dramatic” enough to get advisors’ attention.
“Three points is a lot,” said Johnson when briefed on the details of the plan by a reporter. “Morgan Stanley is signaling that [financial plans and asset gathering] are important to the client, to the business and to the advisor, and whether you agree or not, we’re moving significantly in this direction.”
Johnson said he expected equities “to be up for the rest of the year,” but not on par with the “euphoric trading” of 2007 and 2008.
“This is not your grandma’s trading. This is a more constrained, client-driven trading,” Johnson said. “We won’t see perhaps the profits we saw before the crisis.”
“The mantra is hedge funds should make more money in volatile markets, that’s always been their elixir,” Johnson said. “That’s not as automatic as it once was.”
Johnson Associates bases bonus estimates on first-quarter results and conversations with clients. The forecasts often change throughout the year.
“They’re just going to go to the salary they wanted to do in the first place,” said Alan Johnson, a financial compensation expert who runs the consulting firm Johnson & Associates. “The only reason you would change it because of the tax law is because you never believed in bonuses.”
Similarly, Alan Johnson, managing director and founder at Johnson & Associates, suggests these pay disclosures may be only the beginning. For example, consider the gender pay gap information that companies are being required to disclose in the U.K. this year, he says.
“I think we’re going to have ratios like this in different states in the U.S. that people are going to be required to disclose. Investors are asking about some of these things,” Johnson says.
Firms are demonstrating willingness to give hefty pay boosts to particularly talented young tech experts. However, “these big jumps are still cheap relative to the much bigger compensation packages required to retain more-senior employees,” said Johnson Associates managing director Francine McKenzie in the report.
“Even with the recent market volatility, we continue to forecast a positive outlook for 2018 asset management compensation, which would build on the significant pay levels delivered in 2017,” she told Money Management Executive, while noting the trajectory could change if there is a sustained and deep downturn.
“With increased market and sector volatility, we are likely to see more outliers, depending on strategy and focus, than we did in 2017, where many boats rose in tandem with the market,” she says. “Those in the industry that would especially benefit from volatility would be the large brokers whose advice and guidance during turbulence is often sought.”
Overall, she adds, despite the challenges, “large asset management firms are well- managed, positioned and structured, and will continue to offer real career and compensation opportunities.”