It is a Good Time to Ask for that Raise
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Tuesday, November 30, 2004

It is a Good Time to Ask for that Raise

Fund industry executives may see their wallets grow fatter in the next year predicts an executive recruiting firm. Russell Reynolds Assoiciates says in its fifth annual study of trends in the investment industry employment that a "surge in demand for senior compliance, risk management and independent board positions" is creating "one of the most competitive employment markets in years."

That competition could drive senior-level executives pay up by as much as 15 to 20 percent, the report predicts. The report is titled "What's Hot, What's Not and What's Different" and is based on qualitative and anecdotal report reflecting first-hand observations of industry leaders by partners in Russell Reynolds Associates' Investment Management Practice.

The Russell Reynolds partners also predict that more fund executives who made the jump to the hedge fund world will return as they find they overestimated their prospects in the unregulated, greener pastures of alternative investments.

"We have moved past the bulk of corporate cutbacks and have seen a renewed focus on top-line growth. This year sparked a new war for talent, wherein outstanding candidates, even those in transition, have numerous opportunities from which to choose. However, the increased market scrutiny and oversight have left a lasting footprint on hiring practices," said J. Nicholas Hurd, managing director and head of Russell Reynolds Associates' Investment Management Practice.

Russell Reynolds also found that those hoping to reach the top of a firm an equally good chance of taking over where they instead of landing a new job at another firm. Half of the appointments at the CEO and president level were made via internal promotions, it found. That does not hold true for investment professionals, however, as 85 percent of CIO jobs were filled with external hires.

Among the "hot" trends noted in the report is the inclusion in contracts of long-term incentive arrangements and provisions that call for immediate separation if the executive is found to have taken part at questionable practices during a stint at a prior employer. The increase in long-term incentives appears to be part of a shift away from bonus compensation which was up only 10 to 15 percent this year, according to the study.

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