Managers are currently “loath to add in fixed costs, and I don’t see that changing,” said Alan Johnson, managing director of Johnson Associates Inc., New York. And given industry headwinds such as fee pressures, he doesn’t believe managers would try to make up for a dearth of big bonuses by increasing salaries or other entitlements for staff.

“As the industry continues (in this direction), it will make some people uncomfortable because pay isn’t as predictable as it once was,” he said.

Since 2015, year-end incentives for asset management professionals in traditional equities and fixed income have wavered, drifting down in 2016, then increasing in 2017 and 2018. Johnson Associates predicts year-end bonuses for 2019 will be flat to down 5%.

In comparison, 2019 bonuses for private equity and hedge fund professionals are expected to be flat to up 5% over last year, Johnson Associates predicts…

Recruiters had mixed thoughts on the effect that technology may have on pay.

Chris Connors, an associate at Johnson Associates, said in an email that the advent of new technologies for money managers will have a “neutral” impact on professionals in investment and sales.

“Assuming they have the analytical skills that are required going forward, (they) should not be heavily impacted,” he wrote.

For professionals in support roles, however, “we believe there will be a negative impact on pay due to technology. There will be more people than jobs available and technology will likely reduce their impact going forward,” Mr. Connors wrote.

Pensions & Investments / January 27, 2020