New York / July 30, 2009 – After a challenging year in the financial services industry, total compensation for risk professionals in asset management declined by 14% in 2008 over 2007, to an average below levels reported in 2004. These losses were driven by a 20% decline in bonuses, while salaries reflect either modest growth or some loss, depending on the type of asset management and seniority. These figures were revealed in the fifth annual Professional Compensation Survey- Asset Management by Risk Talent Associates, a leading risk management executive search firm.
For alternative investment firms (hedge funds and fund of funds), for which growth in total compensation was 25% in 2007 over 2006, the decline was -16% in 2008 over 2007. For traditional asset management firms, which previously showed growth of 14% in 2007 over 2006, the decline was -15%. Total compensation for insurance risk professionals fell less steeply, from 10% in 2007 over 2006, to a decline of -7%. Michael Woodrow, president and founder of Risk Talent Associates comments, “It comes as no surprise that total compensation for hedge funds, which offer bonuses that are most closely tied to performance, fell the hardest.”
While total compensation and salary ranges peak for those with more than 16 years of experience, growth declines were most steep for these seasoned professionals. Declines in total compensation were -3% for those with 0-6 years of experience, -10% for those with 7-15 years of experience and -25% for those with more than 16 years of experience. Declines were also steepest for the most senior titles including Chief Risk Officer and Managing Director. Michael Woodrow continues “we expected 2008 to be a major departure from past trends, but it was interesting to actually quantify the losses in compensation. We should note, however; that compensation for risk managers declined less than front office personnel and financial professionals are optimistic about compensation for 2009.“
Despite turmoil in the financial system, trends in job movement remained similar to those reported in last year’s survey. For alternative investment professionals, 29% reported changing jobs in the last two years compared to 20% of insurance professionals and 25% of traditional asset managers. A total of 64% of survey respondents expect that their risk group will stay the same size during the coming year, compared to 16% who expect a size reduction and 21% who expect growth. This expected rate for downsizing is triple the number reported in the 2008 survey.
Over 170 risk professionals representing asset management participated in this year’s Risk Talent Associates salary survey, including executives from traditional asset management (50%), alternative investments including hedge funds and fund of funds (23%) and insurance (27%). By the end of 2009, Risk Talent Associates will publish surveys covering asset management, capital markets, compliance and other risk fields (software, consulting, energy and corporate). All surveys analyze compensation trends by years of experience and title, industry segment, risk focus, and geography.
About Risk Talent Associates
Risk Talent Associates (www.risktalent.com) is the leading international executive search firm focused exclusively on positions in the fields of market, credit and operational risk, as well as financial compliance and risk technology. Risk Talent’s expertise, industry knowledge, proprietary network and dedicated focus shorten the recruiting process to deliver senior and mid-level risk managers in the capital markets, asset management, energy, consulting and software industries. Risk Talent has offices in New York, Chicago, London, and Hong Kong.
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