Compensation Cuts Ahead for Money Managers

Incentive compensation for money managers will decline this year from 2008 levels, even as other financial services sectors, including major investment and commercial banks, enjoy a rebound, according to a midyear report by compensation boutique Johnson Associates.

Even with the recent rebound in equity markets, the report stated, market averages this year will trail 2008 levels “significantly.” As a result, incentive compensation for long-only equity managers could fall 35 percent this year from 2008, while that of fixed-income professionals could decline by 25 percent, the report predicted.

Meanwhile, hedge fund managers could see declines of 20 to 30 percent in incentive compensation, reflecting the impact on performance fees of funds being below their high-water marks, the report said.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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