For institutional investors and consultants assessing the health of money managers, there isn’t necessarily a direct relationship between desired headcount levels and AUM at firms, “especially in today’s market where revenue plays a larger role given the wide range of fee structures for different products,” Francine McKenzie, managing director at compensation consultant Johnson Associates Inc., New York, said in emailed comments.

“I would think AUM might be one factor, but in conjunction with the kind (complexity, associated risk factors, etc.) and number of products,” as some require more staff than others to manage, she added.

Still, a significant drop in AUM and headcount “could signal instability to investors which is obviously undesirable, especially if coupled with poor investment returns,” Ms. McKenzie wrote.

Pensions & Investments / September 2, 2019