Firms See Technology as Savior to Cut Costs, Offer Competitive Edge

As money managers continue to evolve to better integrate technology into their business, demand for professionals with this expertise also grows.

And while firms are moving to lower-fee investment products and facing increased operational costs, the “best technologists and data analytics (professionals) continue to be expensive,” said Alan Johnson, managing director of Johnson Associates Inc., New York.

Despite this, moving into 2020, pay for asset management staff, on average, is expected to look similar to 2019, “down slightly,” according to Mr. Johnson.

Year-end incentives, which include cash bonuses and equity awards, for asset management professionals were projected to be flat to down 5% compared to year-end 2018, a November report by Johnson Associates said.

“I think (compensation declines) probably would be worse, but firms continue to look at their headcount to make sure they don’t have too many people,” Mr. Johnson said of pay projections heading into 2020.

Pensions & Investments / January 13, 2020

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Choppy Markets Leave U.S. Bank Bonus Decisions in Limbo

“There may be people working New Year’s because they’ve got to finalize this January 10 or 15,” said compensation consultant Alan Johnson. “People are going to be particularly vigilant to make sure that they’re going to be paying the right amount, figuring it out right up to the end of the year.” At one bank last year, trading heads were told in late-December that millions of dollars needed to be shifted from their bonus pool to other divisions, a source familiar with the matter told Reuters on the condition that the bank and person not be named. The industry is trying to avoid situations like that again this year, Johnson said.

Johnson’s firm publishes a closely watched annual report forecasting where Wall Street bonuses are headed. It found that most employees will likely see a decline from last year, especially in equities trading where bonuses could fall 10-15%. Investment bankers can generally expect to see declines of 5-10%, Johnson Associates predicted.

Reuters / December 10, 2019

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Wall Street Bonuses Set to Drop as Banks Focus on Cutting Costs

“Pay is down in a healthy market—that just tells you how much competition there really is,” Alan Johnson, managing director of Johnson Associates, said in an interview. “We’re clearly in the new normal.”

Banks have faced muted capital markets results in recent quarters amid uncertainty around geopolitics and interest rates. The industry’s healthy third quarter is unlikely to counteract the worst first half in a decade for Wall Street’s trading desks, particularly because the last three months of the year tend to be weak, Johnson said.

Crain’s New York Business / November 12, 2019

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Bonuses for Money Manager Execs Could Drop by 5%

Executives at traditional asset management firms can expect to see their 2019 year-end bonuses either remain flat or decline by 5% from the previous year, according to a report from compensation consultant Johnson Associates.

Johnson Associates’ third-quarter report added that professionals within the hedge fund and private equity industries, meanwhile, are projected to see an increase as much as 5% in their year-end payouts…

Mr. Johnson added that he expects “selective layoffs and less hiring to continue as firms buckle down on expense management,” which will contribute to “a downward impact on compensation in 2020.”

Pensions & Investments / November 12, 2019

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Most Wall Street Workers to Get Slightly Smaller Bonuses in 2019: Study

“All signs are pointing to an overall disappointing and lackluster year on Wall Street,” said Alan Johnson, managing director of the firm that did the report…

Payments are pressured by a number of factors, including increased competition among investment banks, declines in equity trading and underwriting activity this year, and overall higher expenses, in part from technology investments and hiring.

“All the big banks are well run and solidly profitable, but the investment banking businesses continue to face extreme competition,” Johnson said.

Reuters / November 12, 2019

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The Paycheck Prognosis

It used to be a straight shot from what the markets did to Wall Street and asset management paychecks. This is the first year those two have diverged significantly, according to Johnson Associates’ yearly analysis of incentive compensation…

“If you look from January 1st, the markets look terrific,” said Alan Johnson, the founder and managing director of the compensation and consulting firm, in an interview. “So lower comp will be surprising to the industry. They’ll say, ‘Hey, it’s been a great year!’ But, no, not really. It depends on the time frame. if you include the fourth quarter [of 2018], it doesn’t look so good,” he added.

Johnson said the industry is decoupling from traditional measures of success anyway, such as assets under management. 

Institutional Investor / November 12, 2019

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