Talent and Compensation Trends in Asset Management

Talent and Compensation Trends in Asset Management Distribution Mid-Year Review August 2013 Laurie Thompson Chad Astmann Paul Charles

Charlie Kershaw Steven McCrindle

Heidrick & Struggles 1

Contents Introduction 3 Key Findings

4

Part One – Summary Broad General Trends across Traditional, Multi-Product, Hedge Funds, Placement Agents and Private Equity Firms

5

Profile of the Talent Pool

6

Capital Raising and Retention

9

Compensation 12 General Team Structure

14

The Product Specialist Role

15

Beyond Capital Raising and Retention – Measuring Performance

15

Global Hiring Environment and Strategies – Expanding Beyond the United States

16

Part Two – Focus on Firm Types Traditional Asset Managers – Independent

19 21

Traditional Asset Managers – Bank-Owned 33 Multi-Product Asset Manager – Independent 46 Multi-Product Asset Manager – Bank-Owned

58

Hedge Funds

70

Private Equity

83

Real Estate

96

Placement Agents

108

Part Three – Compensation Base Salary

119 123

Bonus 131 Do MBAs earn more?

139

Characteristics of an Outstanding Distribution Professional

141

Emerging Trends for 2014 and Beyond

142

Topics for Further Exploration

143

Study Methodology

144

Talent and Compensation Trends in Asset Management Distribution Mid-Year Review 2

Introduction While market conditions have stabilized since our last look at alternatives asset management distribution in 2009, the fundraising environment remains exceptionally competitive. In addition, several trends have emerged that are increasing the complexity of capital raising and retention while opening windows of opportunity for those firms best positioned to capture market share. These trends include the convergence of alternatives and traditional investing, increased attention to the high-net-worth client segment and markedly higher investor expectations regarding fees, transparency, risk and communication. The challenges and opportunities presented by these trends inspired us to publish a follow-on paper and to expand it across the broader asset management industry to include hedge funds, traditional asset managers, real estate, private equity and placement agents. As asset management firms evolve—reshaping their business models, redefining their investment strategies and creating stronger leadership and succession plans—distribution talent within them is evolving as well. The distribution professionals at the front lines are increasingly diverse, frequently in transition and under great pressure to perform at what seems like a higher level every year. What motivates and inspires them? What characteristics set the outstanding ones apart from the pack? How important is technical depth vs. relationships? How are different firms addressing client coverage needs? How are they thinking about handling overseas investors? Can firms leverage their existing sales force to market new types of products? How are firms sourcing, attracting, evaluating, compensating and retaining talent? What topics are front of mind for 2014 and beyond? A significant focus of Heidrick & Struggles’ work in recent years has been guiding clients through these dynamics and helping them recruit, retain and structure their distribution teams in the best way possible. In this paper we will share the perspectives and insights we have gained from these experiences. We will also be sharing the results of a recent survey we conducted of sales, investor relations and client services professionals from across the asset management industry. For the sake of simplicity, we will refer to people working in all of these job functions as “distribution professionals” throughout the paper.


Key Findings • Distinctions between alternatives, traditional and multi-product asset management firms are increasingly blurred. • Nearly 41% of respondents said their firms are actively recruiting or opportunistically meeting with potential candidates to fill distribution roles. • About 21% of respondents in the United States said their firms are recruiting distribution professionals for UK/Europe, 24% for Asia and 11% for the Middle East. • The majority of distribution professionals (about 57%) are not actively looking but are open to considering new opportunities if presented. • Respondents said the most compelling reasons for changing firms are (in order) the opportunity to build the sales/marketing effort, firm culture, compensation and people. This has strong implications for talent retention. • There has been a considerable amount of movement within the past three years, with 50% of respondents indicating they changed jobs during that period. • When changing jobs, 14% of respondents reported receiving “make whole” bonuses, 28% received a sign-on bonus and nearly 39% were given a minimum guaranteed bonus “floor.” • Respondents are cautiously optimistic about bonuses for 2013; 55% expect an increase compared to 2012 while 20.5% said it was still too early in the year to tell. • There is a disconnect between the way most firms compensate distribution professionals (purely discretionary) and the way most distribution professionals prefer to be compensated (hybrid formula/discretionary). • About 45% of respondents hold MBA degrees. We found that having an MBA tends to increase base salary but the impact on bonuses is less clear. • Beyond capital raising and retention, the top-ranked performance metric is teamwork and collaboration across the firm. • 17.4% of respondents hold the CFA designation—an increasingly valuable differentiator. • 61% of respondents said capital raising is more difficult than three years ago and 48% said capital retention is more difficult than three years ago. • Nearly two-thirds of capital inflows came from new investors and one-third from existing investors in 2012. • The perceived level of difficulty for raising and retaining capital is quite high, but the median amount of capital raised per marketer is trending positively for 2013 compared to 2012 across almost all firm types. • There is notable variability among distribution professionals within different firm types about many of the topics we explored


Part One – Summary Broad General Trends across Traditional, Multi-Product, Hedge Funds, Placement Agents and Private Equity Firms

Contents Profile of the Talent Pool

6

Capital Raising and Retention

9

Compensation

12

General Team Structure

14

The Product Specialist Role

15

Beyond Capital Raising and Retention – Measuring Performance

15

Global Hiring Environment and Strategies – Expanding Beyond the United States

16

Part One – Summary The population of distribution professionals is quite diverse, increasingly sophisticated around products and frequently on the move.

Academics: Historically, the majority of professionals grew up on the sell side or in classic sales roles; today professionals are also entering the business directly from undergraduate or graduate programs or transitioning in from investment roles. Increasingly, the CFA has become an important differentiation, with 17.42% of respondents holding this certification. In addition, 44.92% of respondents hold MBAs and 11.59% hold a Master’s degree. What is the highest level of education you have completed? Answer Options Bachelor’s Degree

Response Percent

Response Count

41.1%

202

Master’s Degree (non MBA)

11.6%

57

MBA

44.9%

221

Ph.D.

2.4%

answered question

12 492

Certifications: Do you hold any certifications? Answer Options

Response Percent

Response Count

17.4%

77

CAIA

6.1%

27

CPA

1.8%

8

Series 3

22.4%

99

Series 6

12.2%

54

Series 7

72.2%

319

Series 24

19.9%

88

CFA

Series 31

3.8%

17

Series 63

62.0%

274

Series 65

17.0%

75

No other certifications

10.9%

48

Other (please specify)

51

answered question

442

Other certifications cited were series 66, CIMA and CPA

Movement: At Heidrick & Struggles, we value stability and tenure in the professionals we recruit. That may sound like a curious statement coming from executive recruiters who are often brought in to effect change, but our clients look for such demonstrations of loyalty and therefore we do as well. In our view, the frequency of job moves during recent years has presented hiring managers with a real challenge. Beyond questions about culture fit that frequent moves raise, it has


Summary

Profile of the Talent Pool

that candidates often are not in their seats long enough to build momentum within an institutional sales cycle that typically takes one to four years.

How pervasive is this trend and what is driving this frequency of moves? Interestingly, 50.1% of survey respondents reported changing jobs during the past three years. Did you change firms during the past 3 years? Answer Options

Response Percent

Response Count

Yes

50.1%

190

No

49.9%

189

answered question

379

When considering their motivation, we were surprised to see that while compensation remained an important driver of job changes, more than one-quarter of respondents who had made a move within the past three years reported their compensation remained flat from firm to firm, and very few ranked compensation as the number one driver in making the move. If yes, by what percentage did your total compensation change? Answer Options Remained Flat Increased by 1% - 9%

Response Percent

Response Count

26.7%

56

7.1%

15

14.8%

31

Increased by 20% - 29%

15.7%

33


10.0%

21

Increased by 40%+

8.1%

17

Decreased by 1% - 9%

1.0%

2


3.8%

8


3.3%

7


3.8%

8

Decreased by 40%+

5.7%

12


answered question

210

We often advise clients that minimum floors or “make-whole” bonuses are required to attract the strongest talent—a particularly relevant topic moving into the second half of the year. When changing jobs within the past three years, 14% of individuals reported receiving a “make-whole” bonus and 38.7% were offered a minimum bonus floor


Summary

also become increasingly difficult to assess performance and effectiveness, particularly around capital raising, given

Answer Options

Response Percent

Response Count

Sign-on bonus

28.0%

52

Buy out of equity

11.3%

21

Make whole bonus (100% of anticipated bonus at previous firm)

14.0%

26

Minimum bonus floor (% of anticipated bonus at previous firm)

38.7%

72

Not applicable

37.1%

69


11

answered question

186

Beyond compensation, what motivates a distribution professional to consider a new opportunity? We asked survey participants to rank reasons for changing firms in order of importance. The top four drivers (based on an average ranking) were: 1. Opportunity to grow and build the marketing effort 2. Firm culture 3. Compensation 4. People

If you changed firms in the past 3 years, please rank your primary motivation(s) for change: Answered: 187 6.67

Management opportunity Compensation

8.96

Firm Culture

9.07 6.93

Brand

8.57

Marketability of products Layoffs or restructuring

6.99

Ability to have influence outside of fundraising

6.94 7.20

Level of value placed on marketing

8.84

People Opportunity to grow/build the marketing effort Greater opportunities for advancement Firm's willingness to meet client expectataions

9.45 8.09 5.96

In our experience, most candidates are not actively looking to make a change but are open to our outreach calls. This view is supported by feedback from survey respondents, with the majority (56.8%) characterizing their current state of mind as not actively looking but open to considering new opportunities.


Summary

If you changed firms, were you offered a (check all that apply):

respondents we realized they made up more than one-fifth (22.6%) of the population. These numbers are extraordinarily high for a group of professionals who already experienced high levels of movement between 2009–2012, and raise interesting challenges for managers regarding retention. How would you characterize your current state of mind? Answer Options Actively looking (unemployed)

Response Percent

Response Count

4.8%

17

Actively looking (currently employed)

17.8%

63

Not looking but open to considering new opportunities if presented

56.8%

201

Not open to considering new opportunities

20.6%

73


9

answered question

354

Capital Raising & Retention There is clear consensus that raising and retaining capital has become increasingly competitive among asset management firms due to the broader economic climate as well as challenges unique to the industry. Clients have higher expectations than ever, and even the most “institutionalized” asset managers have had to raise their game to keep pace. We found that 61.5% of respondents think capital raising is more difficult than three years ago, 17.5% think it is about the same and 20.9% think it is easier. Nearly half (48.5%) said retention of capital is more difficult than three years ago, 40.7% said about the same and just 10.7% said it is easier. What is your view on the level of difficulty in raising capital today compared to 3 years ago? Answer Options

Response Percent

Response Count

Slightly more difficult

8.8%

33

Moderately more difficult

23.3%

88

Significantly more difficult

29.4%

111

About the same

17.5%

66

Moderately easier

17.5%

66

Significantly easier

3.4%

13

Other (please specify) answered question

7 377


Summary

Looking at those who described themselves as “actively looking,” when we combined employed and unemployed

Answer Options

Response Percent

Response Count


12.3%

46


23.1%

86


13.1%

49

About the same

40.8%

152

Moderately easier

9.7%

36


1.1%

4


6

azznswered question

373

Percentage of inflows from new vs. existing investors On average, respondents reported approximately two-thirds of capital coming from new investors and one-third coming from existing investors in 2012. % Inflows from New Investors

% Inflows from Existing Investors

Hedge Fund

59.70

40.30

Multi-product Asset Managers Bank Owned

63.42

36.58

Multi-product Asset Managers Independent

71.12

28.88

Private Equity

59.55

40.45

Real Estate

75.89

24.11

Firm Type

Traditional Asset Management Bank-Owned

70.00

30.00

Traditional Asset Management Independent

65.15

34.85

Summary Average

65.48

34.52


Summary

What is your view on the level of difficulty in retaining client assets today compared to 3 years ago?

firm types, assets under management, strategies and experience levels, which may warrant deeper exploration. We were surprised by comparatively strong capital-raising levels YTD 2013 vs. 2012, especially given the high level of perceived difficulty and the fact that we are only halfway through the year.

Capital raising levels per marketer (as of June 7, 2013)

Firm Type

Year

Mean

Median

Range

# of marketers that raised zero capital

% of marketers that raised zero capital

Hedge Fund

2012

302,525,000

100,000,000

0 - 5,000,000,000

12/61

19.67%

Hedge Fund

2013

315,546,875

150,000,000

0 - 2,000,000,000

9/64

14.06%

Traditional Asset Manager Independent

2012

466,857,142

180,000,000

0 - 3,300,000,000

8/35

22.08%


2013

771,478,947

190,000,000

04,000,000,000

4/40

10.00%

Traditional Asset Manager - BankOwned

2012

805,538,461

270,000,000

0 - 3,000,000,000

2/15

13.33%

Traditional Asset Manager - BankOwned

2013

1,061,785,714

320,000,000

0 - 5,000,000,000

2/14

14.28%

Multi-Product Asset Manager Independent

2012

459,826,923

250,000,000

0 - 3,000,000,000

5/52

9.61%


2013

1,167,061,403

300,000,000

0 - 5,000,000,000

6/58

10.34%

Multi-Product Asset Manager Bank Owned

2012

400,285,714

250,000,000

0 - 2,000,000,000

2/28

7.14%


2013

331,678,571

115,000,000

0 - 1,500,000,000

4/29

13.79%

Minus 1 outlier citing $5bln

Private Equity

2012

335,000,000

115,000,000

0 - 800,000,000

3/15

20.00%

Minus 1 outlier citing 4bln

Private Equity

2013

725,166,666

275,000,000

0 - 5,000,000,000

5/18

27.77%

Four marketers up over $1bln

Real Estate

2012

131,166,666

100,000,000

0 - 522,000,000

4/12

33.33%

Real Estate

2013

177,318,181

162,500,000

0 - 650,000,000

3/11

27.27%

Placement Agents

2012

358,571,429

105,000,000

0 - 2,000,000,000

2/15

13.33%

Placement Agents

2013

494,000,000

500,000,000

0 - 1,000,000,000

1/16

6.25%

Notes

Minus 2 outliers at $8bln and $10bln for 2013 YTD

Minus 5 outliers citing $6bln, $7bln, $8bln, $10bln and $12bln


Summary

We also looked at capital raised per individual in 2012 and YTD 2013 and found a broad range of experiences across

Compensation following insights: Distribution professionals are cautiously optimistic about their bonus expectations for 2013, with 55% expecting an increase, 20.5% saying it’s too early in the year to speculate and 6.9% expecting a decrease. What are your bonus expectations for 2013 compared to 2012? Answer Options

Response Percent

Response Count

Increased by less than 10%

10.5%

37


10.0%

35


8.3%

29


9.1%

32


3.1%

11


2.6%

9


6.3%

22

Increased by greater than 40%

5.1%

18

Flat from my 2012 bonus

17.7%

62

Decreased by less than 10%

2.0%

7


0.3%

1


0.9%

3


0.3%

1


0.6%

2


1.1%

4


0.3%

1

Decreased by greater than 40%

1.4%

5

Still too early in the year to estimate

20.5%

72


17

answered question

351


Summary

Broadly speaking, when looking at compensation across all levels, firm types and functions, we uncovered the

deferred in 2012 while 31.1% had more than 10% of their cash bonus deferred. What percentage of your cash bonus was deferred in 2012? Answer Options

Response Percent

Response Count

67.8%

236

Less than 10% 10% - $19%

8.3%

29

20% - 29%

13.8%

48

30% - 39%

4.0%

14

40% - 49%

1.1%

4

50% - 60%

3.2%

11

60% - 70%

1.1%

4

70%+

0.6%

answered question

2 348

We also looked at other components to a compensation package beyond cash, and found a high percentage of distribution professionals are offered equity or equity-like participation. What other components comprise your total compensation (check all that apply)? Answer Options

Response Percent

Response Count

Stock options

30.5%

60

Participation in the funds

27.4%

54

Equity-like participation

45.7%

90

Sign on bonus

13.7%

27

Retention bonus

10.7%

21


25

answered question

197

Some of the “other” incentives respondents were offered include long-term compensation, profit sharing, commissions and benefits such as 401(k) contributions. For fundraising professionals, the debate over formulaic vs. discretionary bonuses continues. Anecdotal evidence tells us that pure formulas are less common every year, and this view is supported by the survey data. Only 11% of respondents are paid purely by formula and 44% are paid on a purely discretionary basis. The remainder receive bonuses based on a hybrid model, often with a strong metrics component. Which option best characterizes your current bonus structure? Answer Options

Response Percent

Response Count

Purely formulaic

11.0%

39

Loosely formulaic driven by metrics

12.7%

45

Purely Discretionary

44.4%

157

Part formula / part discretionary

31.9%

113


6 354


Summary

When looking at deferred compensation, we found that 67.82% of respondents had less than 10% of their cash bonus

only 12.7% preferred a purely discretionary bonus structure. In our experience, a discretionary model provides firms and hiring managers very useful control over managing compensation, particularly in volatile markets, and helps support the cultivation of a collaborative team culture. But the disparity between the number of individuals being paid on a purely discretionary basis (44%) and the number who actually prefer it (12.7%) raises a potentially interesting opportunity for hiring firms looking to differentiate their compensation structure in order to attract and retain top talent. Which bonus structure do you prefer? Answer Options

Response Percent

Response Count

Purely formulaic

16.6%

59


15.5%

55


12.7%

45


49.0%

174

Agnostic

6.2%

22


7

answered question

355

General Team Structure Looking across the full spectrum of asset management firms, we compiled the average and median numbers of professionals allocated to different job functions and looked at how teams are aligned. Mean

Median

Range

# of sales/fundraising professionals

10.8

5

1 - 100

# of product specialists

8.4

4

1 - 100

# of client-facing investor relations professionals

5.9

3

0 - 100

# of non–client-facing client services professionals

9.83

4

0 - 320

Answer Options

Response Percent

Response Count

Geographically

50.3%

186

Client Channel

20.0%

74

Product

1.9%

7

No formal alignment

27.8%

103

1

1. For firms employing product specialists

We also considered how teams are aligned. How is coverage among your current sales team (primarily) aligned?


28

answered question

370


Summary

Just about half (49%) of respondents reported a preference for the part formula/part discretionary hybrid model and

The Product Specialist Role become an increasingly important function as traditional and alternative investment strategies continue to converge and clients demand more sophisticated product expertise. Most respondents view the role as either highly successful or moderately successful within their firms, although many took a neutral position, noting the recent establishment of the role within their firms and saying, in effect, it is still too early to judge its success. Some mentioned avoiding the sales vs. investment team debate altogether by having product specialists report to product development, client services or an unaffiliated managing principal. Several said their firms are in the process of hiring and integrating product specialists for the first time this year. Where do product specialists at your firm report to? Answer Options

Response Percent

Response Count

Investment team

26.3%

94

Sales team

20.7%

74

Dual reporting to investment and sales teams

10.9%

39

Not applicable - my firm does not employ product specialists

42.2%

151


20

answered question

358

How successful has the product specialist been within your current firm? Answered: 367 17%

Highly successful

26%

Moderately successful 13%

Neutral Not very successful Not at all successful N/A - my firm does not employ product specialists

3% 1% 41%

Beyond Capital Raising and Retention – Measuring Performance We are often asked which metrics are employed when measuring the success of fundraising and client services professionals. In our study, we found that the most frequently cited metric by far is teamwork and collaboration with distribution colleagues, the investment and middle office teams, and senior management. The challenge with quantifying collaboration, of course, is that it’s so subjective. To put it bluntly, even those professionals with the sharpest elbows will define themselves as collaborative. Heidrick & Struggles evaluates this characteristic in candidates through formal and informal referencing, a confidential exercise that often spans several stages in a candidate’s career and that never results in direct feedback. (One area we would like to explore further in future research is how firms define and evaluate collaboration and team orientation internally and whether that information is being communicated.)


Summary

In our client work, we have seen a high level of debate around the product specialist role. The product specialist has

etc.) as an important metric for measuring performance. Quite a few mentioned firm-building involvement in areas such as product development, brand awareness, mentorship and recruiting: in essence, what is the distribution professional’s strategic value to the firm beyond capital raising and retention? Client feedback and overall firm performance were also cited as performance metrics.

Global Hiring Environment and Strategies – Expanding Outside the United States In addition to deeper penetration within the United States market, asset management firms are increasingly looking beyond their U.S. investor base for potential sources of capital. While the U.S. remains the most active recruiting market for distribution professionals, a good number of the firms we surveyed reported either actively recruiting or opportunistically meeting with potential candidates in the UK/Europe, Asia and the Middle East. And while 5.2% of respondents reported a reduction in the size of their U.S. teams, projected reductions outside the U.S. are much lower, ranging from 0.7% in the Middle East to 2.9% in UK/Europe through the remainder of 2013.

US: How would you best characterize your current firm’s hiring plans within *US* distribution for the remainder of 2013? Answer Options

Response Percent

Response Count

Currently actively recruiting

15.0%

52

Opportunistically meeting potential candidates

25.9%

90

Team will remain flat through year-end

53.9%

187

Currently reducing the size of the team

5.2%

18


5

answered question

347

Asia: How would you best characterize your current firm's hiring plans within *Asia* distribution for the remainder of 2013? Answer Options

Response Percent

Response Count


7.6%

24


16.5%

52


25.9%

82


1.9%

6

No current presence or plans to expand in to Asia

48.1%

152

answered question

316


Summary

Many respondents cited activity (number of calls and meetings, consultant approval ratings, number of final meetings

Answer Options

Response Percent

Response Count


7.3%

23


13.7%

43


35.5%

111


2.9%

9

No current presence or plans to expand in the UK or Europe

40.6%

127


1

answered question

314

Middle East: How would you best characterize your current firm's hiring plans within *Middle Eastern* distribution for the remainder of 2013? Answer Options

Response Percent

Response Count

1.6%

5


9.8%

30


23.3%

71



0.7%

2

No current presence or plans to expand in the Middle East

64.6%

197


5

answered question

305

In your view, what is the most effective strategy for a firm to expand its marketing effort overseas? Answer Options

Response Percent

Response Count

Exporting an existing team member overseas

15.9%

52

Hiring an outside candidate within the local region

58.5%

192

Cover the region from the US

8.2%

27

Not applicable: my current firm does not have a marketing presence outside of the US

17.4%

57


16

answered question

328

How does your firm typically recruit sales & client services professionals? (Check all that apply) Answer Options

Response Percent

Response Count

Leveraging industry network

57.7%

198

Sourcing investors

7.6%

26

LinkedIn

14.3%

49

Retained executive search

51.9%

178

Contingency executive search

24.2%

83

Professional associations

12.5%

43

Employee referrals

54.8%

188

Internal recruiting function

31.2%

107


4 343


Summary

UK/Europe: How would you best characterize your current firm's hiring plans within *UK/European* distribution for the remainder of 2013?

not to use a local placement agent. By far, the most effective strategy cited among respondents is to hire an outside candidate from within the local geography (58.5%).

Considerations Unique to Asia and Europe Asia (Author: Steven McCrindle, Hong Kong) Firms that historically had reasonable success partnering with local intermediaries and flying in and out of Asia to pick up business have been struggling to raise and retain assets from Asian investors over the past several years. As a result, most firms have opted to put at least one sales person on the ground in Asia to manage client/ intermediary relationships. More progressive firms have built distribution teams of four to six professionals. The question now isn’t really “should we have someone on the ground in Asia,” it’s “how many people do we need on the ground in Asia?” While it’s possible to cover the 20 largest institutional investors in Asia (excluding Japan) with one senior sales person on the ground backed up by a sales support team in the head office, for firms looking to expand beyond the top two or three institutional investors in individual Asian markets (Korea, Singapore, Hong Kong, Taiwan, China, etc.), it’s imperative to add local language sales/client service capability. Firms that use placement agents/intermediaries extensively in the region still benefit from having their own sales people on the ground in Asia to manage the process in tandem with intermediaries where it makes the most sense (e.g., Japanese corporate pension funds) and go direct where there’s little benefit in using an intermediary (e.g., sovereign wealth funds). The largest distribution teams in the region take this approach.

Europe/UK (Author: Charlie Kershaw, London) Marketing in Europe involves multiple cultural nuances, which supports the case for having staff on the ground there. Even European hedge funds tend to organize their teams by sub-geography rather than channel for that very reason. There are very different eco-systems at work in the different markets. The UK investor base, for example, tends to be consultant-led, and nurturing relationships with investors can be a very slow process. Scandinavia is seen as quite advanced in the way its major investors allocate to alternatives, with a large number of direct investors who will work actively to find the best funds for capital allocation within each strategy. Continental Europe, however, tends to require a different approach; it is an imperfect market with many small investors and a heavier emphasis on trust and relationships. The major downside to adding dedicated marketing staff in Europe at present is the regulatory environment. While some of the finer points in AIFMD are still not clear, the prevailing message is that it will greatly restrict hedge funds from soliciting capital in Europe. Additionally, hedge funds that do have European investors will have to become compliant with other parts of AIFMD, including compensation restrictions.


Summary

There is considerable debate about how to penetrate markets outside the U.S. most effectively when firms decide

Part Two – Focus on Firm Types

Contents Traditional Asset Managers – Independent

21

Traditional Asset Managers – Bank-Owned

33

Multi-Product Asset Manager – Independent

46

Multi-Product Asset Manager – Bank-Owned

58

Hedge Funds

70

Private Equity

83

Real Estate

96

Placement Agents

108

Part Two – Focus on Firm Types In Part One of this report, we looked at a number of trends related to distribution professionals in the asset management industry. In Part Two we will explore these trends as they relate more specifically to different firm types across traditional, alternatives and multi-product platforms. Given the amount of overlap and complexity within these firm structures, we did our best to segment them in a way that provides the most relevant insights into this dynamic and evolving industry. We asked survey respondents how they would best characterize their current firms, and it’s important to note that participants self-selected their categories. With so much convergence happening across the asset management world, we acknowledge the difficulty of trying to categorize an industry in flux. For example, 10.3% of respondents chose “other” to describe their firm. In some cases, individuals from within the very same organization chose different categories. Overall, there is a lack of standardization about how firms are defined, and in future studies we will try to develop a more precisely defined structure. Finally, while we did receive feedback from participants working at hedge funds of funds, OCIOs and private equity fund of funds, the sample sizes in those cases were too limited to include them as categories in our analysis.

How would you characterize your current firm? Answered: 454 Traditional Asset Managers – Independent

15.2%


5.9%

Multi-Product Asset Manager – Independent

22.0%

Multi-Product Asset Manager – Bank-Owned

11.5%

Hedge Funds

20.9%

Private Equity

6.4%

Hedge Fund of Funds

3.3%

Private Equity Fund of Funds

1.5%

Real Estate

5.1%

Placement Agents

5.9%

OCIO

2.2%


Traditional Asset Managers – Independent management firms. This phenomenon has been driven by a number of factors, including mergers and acquisitions, shifting product focus, industry consolidation and compensation dynamics. Of 54 distribution professionals who reported working for independent traditional asset managers, well over half (57%) changed firms in the past three years. Although compensation is not the sole motive, a substantial majority (71%) indicated they moved to a position that offered a pay increase, with 35% indicating a healthy bump of 10%-29% and more than 10% seeing a 30% uptick over their previous compensation total. Nearly half (46%) were offered a minimum bonus floor and almost 30% received a sign-on bonus. We find this data to be consistent with the pick-up in hiring and increased demand for sales talent in the independent asset management space. When asked to rank a dozen reasons for making a change on a scale from 1 to 10, respondents ranked layoffs/ restructuring lowest and opportunity to grow/build the market as the leading reason. Participants also rated firm culture and people as significant draws. These factors were ranked surprisingly higher than others such as marketability of products and firm brand value, which usually rate high in our conversations with distribution professionals. Given heavy talent movement over the past three years, an uptick in compensation and motivation for change, we thought it would be interesting to know how distribution professionals feel about changing platforms in the future. When asked about their current state of mind, 14% of participants indicated they were looking actively for a new role and 58% were open to considering new options if presented. Only 28% said they were not open to new opportunities. We concluded that while the talent war is swinging to the side of supply, organizations with a good culture and reasonable aspirations have a good opportunity to at least engage leading talent in conversations. The relatively low level of distribution professionals indicating an active approach to changing firms may be related to the positive outlook on 2013 compensation. About 57% of respondents indicated an increase in compensation over 2012, with the majority expecting a moderate increase of less than 15%. A few indicated an increase above 30%, but such cases seem to be rare. We also found that the cash compensation for more than 70% of the respondents was minimally deferred but that nearly half (48%) received some form of stock options or equity. When it comes to determining bonuses, we found that most compensation models have some degree of discretionary determination; only 14% of participants said their bonuses are determined under purely formulaic structures. Notably, 36% of respondents indicated working under a purely discretionary model and 34% have a blended (discretionary/ formulaic) model. These figures are surprisingly mismatched with what distribution professionals actually want. When asked what their preference would be on bonus structure, more than half (52%) indicated a blended compensation structure. In addition to capital raising and retention, respondents in this category cited team collaboration, consultant-relations ratings and general business development activity as commonly used performance metrics. Although designing a sales compensation model is an ongoing challenge for all asset managers, independent managers have comparatively greater freedom and should be constantly seeking input from the sales team and executive committee regarding structure. Our survey revealed some decidedly positive results worth mentioning, especially with regard to asset raising and asset flows. On average, marketers are experiencing larger sales in 2013 (median of $190 million per salesperson) than in 2012 (median of $180 million raised). Notably, 65% of the flows have been coming from new investors. We also took a look at how firms are currently structuring their distribution organizations. Respondents indicated the average number of pure sales members within their firms is 7, product specialists 6 and client services 7. Sales teams


Traditional Asset Managers – Independent

There has been significant movement over the past three years among distribution talent working for traditional asset

more than 50% of firms now employ product specialists and that they are evenly split between reporting to sales and reporting to the investment teams. For the most part, the sales talent polled in this survey said product specialists are either moderately successful (21%) or have had only minimal impact (18%) on the sales process. Several respondents noted the newly established nature of these roles within their organization, and were taking a wait-and-see approach to its effectiveness. Of the respondents who provided information on their firms’ hiring plans, most seem to think their firms are active across the globe. The region targeted for highest growth appears to be the United States, with 37% of participants indicating their firm is either opportunistically or actively recruiting to their sales ranks there. There seems to be moderate activity in Asia (26%) and in UK/Europe (21%), with participants indicating moderate or aggressive hiring activity and planning. The Middle East seems the most stagnant with nearly 80% of participants indicating no plans for hiring in the region. When asked how to cover a new region most effectively, most respondents (58%) indicated that hiring external talent from within the region is the most effective approach. Lastly, the survey participants were in clear agreement that a good recruitment strategy includes a healthy combination of approaches. When asked how their firm typically finds talent, more than 60% said the firm calls on a retained search firm, 51% said employee referrals and 43% said the firm’s own industry network. Consistent with these findings, more than 60% of our respondents indicated that their organization had hired a retained search firm in the past two years to find distribution talent.

What is the highest level of education you have completed Answer Options

Response Percent

Response Count

Bachelor's Degree

46.4%

32

Master's Degree (non MBA)

4.3%

3

MBA

49.3%

34

Ph.D.

0.0%

0

answered question

69

Did you change firms during the past 3 years? Answer Options

Response Percent

Response Count

Yes

57.4%

31

No

42.6%

answered question

23 54



are organized predominantly along geographic lines (60%) rather than client channels (17%). Notably, we found that

Answer Options

Response Percent

Response Count

16.1%

5


9.7%

3


22.6%

7


12.9%

4


6.5%

2

Increased by 40%+

3.2%

1


0.0%

0


6.5%

2


3.2%

1


9.7%

3

Decreased by 40%+

9.7%

3

Remained Flat

answered question

31

If you changed firms, were you offered a (check all that apply): Answer Options

Response Percent

Response Count

Sign-on bonus

28.6%

10

Buy out of equity

8.6%

3


11.4%

4


45.7%

16

Not applicable

31.4%

11


2

answered question

35


Management opportunity

9.05

Compensation

9.23

Firm Culture Brand

7.00 8.26

Marketability of products Layoffs or restructuring Ability to have influence outside of fundraising Level of value placed on marketing

6.22 6.89 7.18 8.51


9.66 7.50 6.33



If you changed firms within the past 3 years, by what percentage did your total compensation change?

Answer Options

Response Percent

Response Count

0.0%

0

Actively looking (unemployed) Actively looking (currently employed)

14.0%

7


58.0%

29


28.0%

14


1

answered question

50

What is your view on the level of difficulty in raising capital today compared to 3 years ago? Answer Options

Response Percent

Response Count


11.1%

6


27.8%

14


22.2%

17

About the same

15.1%

8

Moderately easier

13.2%

7


1.9%

1


3

answered question

53

What is your view on the level of difficulty in retaining client assets today compared to 3 years ago? Answer Options

Response Percent

Response Count


13.7%

7


23.5%

12


7.8%

4

About the same

43.1%

22

Moderately easier

9.8%

5


2.0%

1


1

answered question

51

Percentage of inflows from new vs. existing investors Firm Type Traditional Asset Management – Independent

% Inflows from New Investors


65.15

34.85



How would you characterize your current state of mind?

% of marketers that raised zero capital Notes

Firm Type

Year

Mean

Median

Range



2012

$466,857,142

$180,000,000

$0 - $3,300,000,000

8/35

22.08%


2013 *YTD

$771,478,947

$190,000,000

$0 - $4,000,000,000

4/40

10.00%

Minus 2 outliers at $8bln and $10bln for 2013 YTD

* YTD as of June 2013 What are your bonus expectations for 2013 compared to 2012? Answer Options

Response Percent

Response Count


17.6%

9


11.8%

6


5.9%

3


5.9%

3


3.9%

2


2.0%

1


3.9%

2


5.9%

3


17.6%

9


3.9%

2


0.0%

0


2.0%

1


2.0%

1


3.9%

2


3.9%

2


0.0%

0


0.0%

0


9.8%

5


0

answered question

51



Capital raising levels per marketer

Answer Options

Response Percent

Response Count

69.4%

34

Less than 10% 10% - $19%

8.2%

4

20% - 29%

16.3%

8

30% - 39%

4.1%

2

40% - 49%

0.0%

0

50% - 60%

2.0%

1

60% - 70%

0.0%

0

70%+

0.0%

0

answered question

49

What other components comprise your total compensation (check all that apply)? Answer Options

Response Percent

Response Count

Stock options

48.3%

14


3.4%

1


37.9%

11

Sign on bonus

24.1%

7

Retention bonus

3.4%

1


7

answered question

29

Which option best characterizes your current bonus structure? Answer Options

Response Percent

Response Count

Purely formulaic

14.0%

7


16.0%

8


36.0%

18


34.0%

17


0

answered question

50

Which bonus structure do you prefer? Answer Options

Response Percent

Response Count

Purely formulaic

23.5%

12


11.8%

6


11.8%

6


51.0%

26

Agnostic

2.0%

1


0

answered question

51



What percentage of your cash bonus was deferred in 2012?

Mean

Median

Range


7.3

6

2 - 60

# of product specialists (for firms with product specialists)

5.7

4

1 - 30

# of client-facing investor relations professionals

5.9

3

1 - 50

# of non–client-facing client services professionals

6.9

4

0 - 50

Answer Options

Response Percent

Response Count

Geographically

59.6%

31

How is coverage among your current sales team (primarily) aligned?

Client Channel

17.3%

9

Product

1.9%

1

No formal alignment

21.2%

11


5

answered question

52

Where do product specialists at your firm report in to? Answer Options

Response Percent

Response Count

Investment team

20.4%

10

Sales team

20.4%

10

Dual Reporting to investment and sales teams

14.3%

7


44.9%

22


4

answered question

49

How successful has the product specialist role been within your current firm? Answered: 53 11%

Highly successful

21%

Moderately successful

19%

Neutral Not very successful Not at all successful N/A - my firm does not employ product specialists

4% 0% 45%



How are independent traditional asset managers structuring their distribution efforts?

Answer Options Currently actively recruiting

Response Percent

Response Count

10.4%

5


27.1%

13


60.4%

29


2.1%

1


1

answered question

48

Asia: How would you best characterize your current firm’s hiring plans within *Asia* distribution for the remainder of 2013? Answer Options

Response Percent

Response Count

7.1%

3


19.0%

8


21.4%

9



0.0%

0


52.4%

22

answered question

42

UK/Europe: How would you best characterize your current firm's hiring plans within *UK/European* distribution for the remainder of 2013? Answer Options Currently actively recruiting

Response Percent

Response Count

7.5%

3


15.0%

6


25.0%

10


7.5%

3


45.0%

18


0

answered question

40


Response Percent

Response Count


2.6%

1


7.7%

3


12.8%

5


0.0%

0


76.9%

30


2

answered question

39



US: How would you best characterize your current firm’s hiring plans within *US* distribution for the remainder of 2013?

Answer Options

Response Percent

Response Count


8.3%

4


58.3%

28


12.5%

6


20.8%

10


0

answered question

48

How does your firm typically recruit sales & client services professionals? (Check all that apply) Answer Options Leveraging industry network

Response Percent

Response Count

42.9%

21

Sourcing investors

0.0%

0

LinkedIn

8.2%

4


61.2%

30


16.3%

8


16.3%

8

Employee referrals

51.0%

25


24.5%

12


2

answered question

49

Has your firm used retained search in the past 2 years to hire sales & client services professionals? Answer Options

Response Percent

Response Count

Yes

60.0%

30

No

30.0%

15

I don't know

10.0%

answered question

5 50



In your view, what is the most effective strategy for a firm to expand its marketing effort overseas?

Traditional Asset Managers – Independent: Demographics Answer Options

Response Percent

Response Count

0.0%

0

Senior Associate

0.0%

0

Vice President

14.3%

9

Senior Vice President

15.9%

10

Director/Principal

27.0%

17

Managing Director (individual contributor)

15.9%

10

Managing Director (management role)

25.4%

16

Partner

0.0%

0

N/A - Not currently employed

1.6%

1

Associate


8

answered question

63

How many years of total work experience do you have? Answer Options

Response Percent

Response Count

5 - 10

1.5%

1

11 - 15

14.7%

10

16 - 20

19.1%

13

21 - 25

35.3%

24

26+

29.4%

answered question

20 68

How many years of asset management distribution experience do you have? Answer Options

Response Percent

Response Count

5 - 10

21.7%

15

11 - 15

29.0%

20

16 - 20

26.1%

18

21 - 25

14.5%

10

26+

8.7%

6

answered question

69



What is your current job title?

Answer Options

Response Percent

Response Count

New York

40.4%

23

Connecticut

8.8%

5

Boston

12.3%

7

Chicago

21.1%

12

San Francisco

5.3%

3

Los Angeles

5.3%

3

Minneapolis

0.0%

0

Philadelphia

5.3%

3

Miami

0.0%

0

Houston

0.0%

0

Dallas

1.8%

1

Washington D.C.

0.0%

0


12

answered question

57

Which investment products are offered by your current firm (check all that apply)? Answer Options

Response Percent

Response Count

Long Only Equity

86.8%

59

Long Only Fixed Income

54.4%

37

Hedge Funds

26.5%

18

Private Equity

10.3%

7

Hedge Fund of Funds

13.2%

9


8.8%

6

Real Estate

14.7%

10

Commodities

14.7%

10

Infrastructure

8.8%

6


5

answered question

68

How would you characterize the primary focus of your current role? Answer Options Sales / Fundraising

Response Percent

Response Count

56.7%

38

Investor Relations / Client Service (client facing)

3.0%

2

Investor Relations / Client Service (non-client facing / support)

3.0%

2

Hybrid Sales & Investor Relations

9.0%

6

Product Specialist

7.5%

5

Consultant Relations

20.9%

14


5

answered question

67



Where do you work?

Answer Options

Response Percent

Response Count

1.4%

1

$200mln - $500mln

1.4%

1

$500mln - $1bln

4.3%

3

$1bln

1.4%

1

$2bln

7.2%

5

$3bln

2.9%

2

$4bln

4.3%

3

$5bln

2.9%

2

$6bln

0.0%

0

$7bln

0.0%

0

$8bln

1.4%

1

$9bln

2.9%

2

$10bln

4.3%

3

$11bln

1.4%

1

$12bln

1.4%

1

$13bln

0.0%

0

$14bln

0.0%

0

$15bln

0.0%

0

$16bln

1.4%

1

$17bln

0.0%

0

$18bln

1.4%

1

$19bln

1.4%

1

$20bln - $29bln

11.6%

8

$30bln - $39bln

0.0%

0

$40bln - $49bln

8.7%

6

$50bln - $59bln

4.3%

3

$60bln+

33.3%

23

<$200mln


0

answered question

69



What are the total assets under management of your current firm?

Traditional Asset Managers – Bank-Owned for this category is relatively small and definite conclusions are difficult to draw. Nevertheless, we observed several trends worth exploring. There are a number of similarities between distribution professionals at bank-owned traditional asset managers and their counterparts at independent firms. One difference we noted, however, has to do with changing jobs. More than 44% of respondents working for bank-owned traditional asset managers switched firms within the past three years, compared to 57% of those at independent firms. Although the sample size is too small for statistical significance, we can say that of the six individuals at bank-owned firms who reported about compensation in their new job, two saw their compensation remain flat, three experienced an uptick and one saw a decrease; half were offered a minimum bonus floor. This group ranked the opportunity to grow and build a marketing effort as the highest motivator for changing firms. About three-fifths of respondents (61.5%) said they were not looking to change jobs but were open to considering new opportunities. It is worth noting that 15.4% of the respondents in the bank-owned category were not employed at the time, compared to 0% of the respondents at independent traditional firms. The percentage of marketers who think it is more difficult to raise capital today than three years ago is the same at both bank-owned and independent traditional asset managers: 61%. Their views on capital retention also are virtually identical, with about 45% of respondents in both categories saying capital retention was difficult. Reported inflow rates were quite similar as well. However, the median reported levels of capital raising per marketer were notably higher for bank-owned asset managers, at $270 million for 2012 and $320 million YTD for 2013. This is most likely due to firm size rather than any difference in talent, with 70% of respondents employed at bank-owned firms with more than $60 billion in assets under management. Another notable difference between the two groups relates to bonus expectations for 2013. About 36% of distribution professionals with bank-owned asset managers said it’s still too early in the year to estimate bonuses, compared to only 9.8% of those at independent firms. Deferred bonus levels were essentially the same in both groups, with 70% reporting that less than 10% of their 2012 bonus was deferred. We observed another notable difference regarding bonus structure: 78.6% of those at bank-owned firms characterized their bonus as purely discretionary compared with 36% at independent firms. Given the small sample size, we are curious whether there is truly such a difference between the two firm types. Most respondents in both groups reported a preference for a part formulaic/part discretionary bonus structure. How are bank-owned traditional asset managers structuring their distribution efforts? Because they are working at larger organizations, the distribution teams at bank-owned traditional asset managers tend to be much larger than those at independent firms, with an average of 24 sales and fundraising professionals who are aligned primarily by geography (55.6%) or client channel (44.4%). None of the 18 respondents to this question chose “no formal alignment” when describing their team’s structure, a notable difference from the independent firms, where 21.2% of respondents said that was the case.



With only 27 survey respondents characterizing their firms as bank-owned traditional asset managers, our sample size

firms said their product specialists report to the investment team; at independent firms, reporting lines were equally divided, with 20.4% reporting to the investment team and 20.4% to the sales team. Only 17.6% of respondents said their firms do not employ product specialists, compared to 44.9% at independent managers. Those at bank-owned firms also viewed the product specialist role within their firm as more successful than their independent counterparts, with 38.89% of respondents choosing “highly successful” when asked to rate the function’s effectiveness. The hiring forecast for the remainder of 2013 in the United States among bank-owned traditional asset managers looks quite similar to the independent firms, with 16.7% of respondents saying their firms were actively recruiting at the time of the survey (June 2013) and 33.3% saying their firms were opportunistically meeting candidates. In Asia, hiring seems more robust, with 16.7% of respondents reporting their firms were actively recruiting and 25% opportunistically meeting candidates. However, we need to be mindful that our sample size of 12 on this question is likely too small to draw a solid conclusion. Similarly, while we are excited to see 18.2% of firms actively recruiting in the UK/Europe region, our sample size on this question is 11 respondents. Overall, while the small sample makes it difficult to support any firm views about this category, it is interesting to note some of the characteristics that are unique to distribution professionals at bank-owned traditional asset managers, not the least being how they characterize themselves given the diversity of products reported on these platforms (see demographics below).

What is the highest level of education you have completed? Answer Options

Response Percent

Response Count

Bachelor's Degree

25.9%

7


25.9%

7

MBA

48.1%

13

Ph.D.

0.0%

0

answered question

27


Response Percent

Response Count

Yes

44.4%

8

No

55.6%

10

answered question

18



Product specialists are another differentiator between the two groups. About 53% of respondents at bank-owned

Answer Options

Response Percent

Response Count

Remained Flat

33.3%

2


16.7%

1


0.0%

0


0.0%

0


0.0%

0

Increased by 40%+

33.3%

2


0.0%

0


0.0%

0


16.7%

1


0.0%

0

Decreased by 40%+

0.0%

answered question

0 6


Response Percent

Response Count

Sign-on bonus

16.7%

1

Buy out of equity

16.7%

1


16.7%

1


50.0%

3

Not applicable

33.3%

2


0

answered question

6



If you changed firms within the past three years, by what percentage did your total compensation change?

Answered: 6 7.60


8.33

Compensation

7.60

Firm Culture

7.80

Brand

9.33

Marketability of products 7.75

Layoffs or restructuring Ability to have influence outside of fundraising

6.67 8.80


8.83


10.82 6.83 4.60

How would you characterize your current state of mind? Answer Options

Response Percent

Response Count

15.4%

2


7.7%

1


61.5%

8


15.4%

2

Actively looking (unemployed)


1

answered question

13


Response Percent

Response Count


11.1%

2


27.8%

5


22.2%

4

About the same

22.2%

4

Moderately easier

11.1%

2


5.6%

1


0

answered question

18



If you changed firms in the past 3 years, please rank your primary motivation(s) for change:

Answer Options

Response Percent

Response Count


16.7%

3


16.7%

3


11.1%

2

About the same

38.9%

7

Moderately easier

11.1%

2


5.6%

1


0

answered question

18

Percentage of inflows from new vs. existing investors Firm Type



70.00

30.00

Traditional Asset Management – Bank-Owned


Firm Type

Year

Mean

Median

Range



Traditional Asset Manager - Bank Owned

2012

$805,538,461

$270,000,000

$0 - $3,000,000,000

2/15

13.33%

Traditional Asset Manager - Bank Owned

2013 *YTD

$1,061,785,714

$320,000,000

$0 - $5,000,000,000

2/14

14.28%

Notes

* YTD as of June 2013




Answer Options

Response Percent

Response Count

14.3%

2


7.1%

1


7.1%

1


14.3%

2


0.0%

0


0.0%

0


0.0%

0


0.0%

0


14.3%

2


7.1%

1


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


35.7%

5



2

answered question

14

What percentage of your cash bonus was deferred in 2012? Answer Options

Response Percent

Response Count

Less than 10%

70.6%

12

10% - $19%

5.9%

1

20% - 29%

11.8%

2

30% - 39%

5.9%

1

40% - 49%

0.0%

0

50% - 60%

5.9%

1

60% - 70%

0.0%

0

70%+

0.0%

0

answered question

17



What are your bonus expectations for 2013 compared to 2012?

Answer Options Stock options

Response Percent

Response Count

33.3%

3


11.1%

1


44.4%

4

Sign on bonus

11.1%

1

Retention bonus

22.2%

2


2

answered question

9


Response Percent

Response Count

Purely formulaic

0.0%

0


7.1%

1


78.6%

11


14.3%

2


0

answered question

14


Response Percent

Response Count

Purely formulaic

0.0%

0


14.3%

2


14.3%

2


64.3%

9

7.1%

1

Agnostic Other (please specify)

0

answered question

14

How are Bank-Owned Traditional Asset Managers structuring their distribution efforts? Mean

Median

Range


24

10.5

2 - 100


5.2

3.5

1 - 15

# of client facing investor relations professionals

4.3

3

2 - 10

# of non - client facing client services professionals

10.1

6

1 - 50



What other components comprise your total compensation (check all that apply)?

Answer Options

Response Percent

Response Count

Geographically

55.6%

10

Client Channel

44.4%

8

Product

0.0%

0

No formal alignment

0.0%

0


0

answered question

18


Response Percent

Response Count

Investment team

52.9%

9

Sales team

23.5%

4


5.9%

1


17.6%

3


2

answered question

17

How successful has the product specialist role been within your current firm? Answered: 18

39%

Highly successful 17%


22%

Neutral 6%

Not very successful Not at all successful N/A - my firm does not employ product specialists

0% 17%


Response Percent

Response Count


16.7%

2


33.3%

4


50.0%

6


0.0%

0


0

answered question

12




Answer Options

Response Percent

Response Count


16.7%

2


25.0%

3


0.0%

0


8.3%

1


50.0%

6

answered question

12

UK/Europe: How would you best characterize your current firm's hiring plans within *UK/European* distribution for the remainder of 2013? Answer Options

Response Percent

Response Count

18.2%

2


9.1%

1


9.1%

1



0.0%

0


63.6%

7


0

answered question

11

Middle East: How would you best characterize your current firm's hiring plans within *Middle Eastern* distribution for the remainder of 2013? Answer Options Currently actively recruiting

Response Percent

Response Count

0.0%

0


0.0%

0


18.2%

2


0.0%

0


81.8%

9


0

answered question

11

In your view, what is the most effective strategy for a firm to expand its marketing effort overseas? Answer Options Exporting an existing team member overseas Hiring an outside candidate within the local region Cover the region from the US Not applicable: my current firm does not have a marketing presence outside of the US

Response Percent

Response Count

9.1%

1

63.6%

7

9.1%

1

18.2%

2


2

answered question

11



Asia: How would you best characterize your current firm’s hiring plans within *Asia* distribution for the remainder of 2013?

Answer Options

Response Percent

Response Count


38.5%

5

Sourcing investors

0.0%

0

LinkedIn

7.7%

1


69.2%

9


23.1%

3


7.7%

1

Employee referrals

46.2%

6


15.4%

2


0

answered question

13


Response Percent

Response Count

Yes

57.1%

8

No

21.4%

3

I don't know

21.4%

answered question

3 14



How does your firm typically recruit sales & client services professionals? (Check all that apply)

Traditional Asset Managers – Bank Owned: Demographics Answer Options

Response Percent

Response Count

0.0%

0

Senior Associate

0.0%

0

Vice President

13.0%

3


17.4%

4

Director/Principal

13.0%

3


8.7%

2


39.1%

9

Partner

0.0%

0


8.7%

2

Associate


4

answered question

23


Response Percent

Response Count

5 - 10

0.0%

0

11 - 15

11.1%

3

16 - 20

33.3%

9

21 - 25

25.9%

7

26+

29.6%

8

answered question

27


Response Percent

Response Count

5 - 10

11.1%

3

11 - 15

25.9%

7

16 - 20

37.0%

10

21 - 25

14.8%

4

26+

11.1%

3

answered question

27




Answer Options

Response Percent

Response Count

50.0%

10

Connecticut

5.0%

1

Boston

25.0%

5

Chicago

10.0%

2

San Francisco

5.0%

1

Los Angeles

0.0%

0

Minneapolis

0.0%

0

Philadelphia

5.0%

1

Miami

0.0%

0

Houston

0.0%

0

Dallas

0.0%

0

Washington D.C.

0.0%

0

New York


7

answered question

20


Response Percent

Response Count

Long Only Equity

74.1%

20


77.8%

21

Hedge Funds

33.3%

9

Private Equity

18.5%

5

Hedge Fund of Funds

18.5%

5


14.8%

4

Real Estate

29.6%

8

Commodities

22.2%

6

Infrastructure

18.5%

5


4

answered question

27

How would you characterize the primary focus of your current role? Answer Options

Response Percent

Response Count

Sales / Fundraising

62.5%

15


8.3%

2

Investor Relations / Client Service (non client facing / support)

0.0%

0


4.2%

1

Product Specialist

0.0%

0


25.0%

6


2

answered question

24



Where do you work?

Answer Options <$200mln

Response Percent

Response Count

0.0%

0

$200mln - $500mln

0.0%

0

$500mln - $1bln

0.0%

0

$1bln

0.0%

0

$2bln

0.0%

0

$3bln

0.0%

0

$4bln

0.0%

0

$5bln

3.7%

1

$6bln

0.0%

0

$7bln

3.7%

1

$8bln

0.0%

0

$9bln

0.0%

0

$10bln

0.0%

0

$11bln

0.0%

0

$12bln

0.0%

0

$13bln

0.0%

0

$14bln

0.0%

0

$15bln

0.0%

0

$16bln

0.0%

0

$17bln

0.0%

0

$18bln

0.0%

0

$19bln

0.0%

0

$20bln - $29bln

11.1%

3

$30bln - $39bln

7.4%

2

$40bln - $49bln

0.0%

0

$50bln - $59bln

3.7%

1

$60bln+

70.4%

19


0

answered question

27




Multi-Product Asset Manager – Independent organizations, including many firms that have recently expanded beyond their historical roots. We did not clearly define parameters for inclusion in this category; rather, survey participants self-selected into this group through question 7, “How would you characterize your current firm?” The profile of the talent pool for independent multi-product asset managers mirrors the overall industry in terms of academics, although respondents in this category reported a slightly higher rate of CFA designation (22.68%) compared to the industry as a whole (17.4%). Movement rates during the past three years were also similar at 52.6%. The majority (50.9%) of individuals at independent multi-product organizations who changed firms saw a compensation increase, with 28.6% remaining flat and 20.3% experiencing a decrease. Candidates who joined independent multi-product firms reported higher rates for sign-on bonuses (38.1%), equity buy-outs (16.7%), make-whole bonuses (16.7%) and minimum bonus floors (40.5%) than the industry as a whole. Firm culture was the highest-ranked motivator for making a move, with compensation ranking second; the opportunity to grow and build the marketing effort was tied for third with people. Respondents characterized their current state of mind as follows: 27.1% actively looking, 48.6% not looking but open to considering new opportunities and 24.3% not open to considering new opportunities. The perceived level of difficulty for capital raising and retention among distribution professionals at independent multi-product firms mirrors that of the industry overall, with 59.2% of respondents saying fundraising is more difficult and 50.7% saying client retention is more difficult than three years ago. Respondents reported that 71.12% of inflows in 2012 came from new investors, slightly higher than the industry average. The median amount of capital raised per marketer at independent multi-product firms was $250 million in 2012 and $300 million YTD for 2013. It is worth noting that five outliers cited significant capital raises ranging from $6 billion to $12 billion for 2013. Bonus expectations for 2013 are similar to the overall industry, with a slightly higher percentage of respondents (60.1%) expecting an increase in their total compensation, 14.7% expecting bonuses to remain flat, 7.8% expecting a decrease and 17.3% indicating it was still too early in the year to estimate. We did not find any meaningful differences in the way total compensation is structured, with similar rates of deferred compensation, stock options, participation in the funds, equity-like participation, sign-on bonuses and retention bonuses. Bonus structure is also similar to the industry norm, with 14.7% of respondents on a purely formulaic plan. The only interesting difference we observed was a higher preference among distribution professionals at independent multi-asset firms for a purely formulaic structure, with 26.7% of respondents expressing a preference for a purely formulaic structure compared to the industry average of 16.6%. Distribution teams in this category are more likely to be formally structured than in the industry as a whole, with 57.9% of respondents indicating the teams are aligned by geography, 26.3% by client channel and 2.6% by product; only 13.2% of respondents indicated no formal alignment. The product specialist role is fairly common within independent multi-product firms, with only 15.3% of respondents saying their firm does not have this function. About 43% of respondents indicated that product specialists report to the investment team, 30.6% to the sales team and 11.1% have a dual reporting line. Overall, the product specialist function seems to be viewed positively and successfully by the great majority of survey participants.


Multi-Product Asset Managers – Independent

Our survey of distribution professionals at multi-product asset managers includes responses from a wide range of

Interestingly, activity (number of meetings, etc.) was cited as the leading performance metric for multi-product asset managers. In addition to capital raising and retention, the top three performance metrics were (in order): 1. Activity 2. Team collaboration 3. Firm building Hiring activity for distribution professionals among independent multi-product asset managers is mixed. 17.1% of respondents said their firms were actively recruiting distribution professionals in the United States and 34.2% were opportunistically meeting candidates—recruiting rates that are similar to the industry overall. Growth and penetration outside the U.S. seem much stronger for the independent multi-product managers than the broader industry, however. Only 32.8% of respondents said their firm has no presence or plans to expand in Asia compared to an industry average of 48.1%. The numbers for UK/Europe are 20.9% and 40.6% respectively, and 44.8% compared to 64.6% for the Middle East.

What is the highest level of education you have completed? Answer Options

Response Percent

Response Count

Bachelor's Degree

42.0%

42


12.0%

12

MBA

44.0%

44

Ph.D.

2.0%

2

answered question

100


Response Percent

Response Count

Yes

52.6%

40

No

47.4%

36

answered question

76

If yes, by what percentage did your total compensation change? Answer Options

Response Percent

Response Count

Remained Flat

28.6%

14


2.0%

1


8.2%

4


16.3%

8


12.2%

6

Increased by 40%+

12.2%

6


2.0%

1


6.1%

3


4.1%

2


2.0%

1

Decreased by 40%+

6.1%

answered question

3 49



Beyond capital raising and retention, how are independent multi-asset managers measuring performance?

Answer Options

Response Percent

Response Count

Sign-on bonus

38.1%

16

Buy out of equity

16.7%

7


16.7%

7


40.5%

17

Not applicable

31.0%

13


3

answered question

42

If you changed firms in the past 3 years, please rank your primary motivation(s) for change: Answered: 40 Management opportunity

5.44 8.87

Compensation

9.74

Firm Culture 7.16

Brand

8.73

Marketability of products Layoffs or restructuring Ability to have influence outside of fundraising

6.81 6.43 7.24

Level of value placed on marketing People

8.85

Opportunity to grow/build the marketing effort

8.85

Greater opportunities for advancement Firm's willingness to meet client expectataions

8.55 6.06

How would you characterize your current state of mind? Answer Options Actively looking (unemployed)

Response Percent

Response Count

6.8%

5


20.3%

15


48.6%

36


24.3%

18


4

answered question

74




Answer Options

Response Percent

Response Count

5.3%

4


28.9%

22


25.0%

19


About the same

17.1%

13

Moderately easier

21.1%

16


2.6%

2


0

answered question

76


Response Percent

Response Count

6.5%

5

Slightly more difficult Moderately more difficult

27.3%

21


16.9%

13

About the same

40.3%

31

Moderately easier

9.1%

7


0.0%

0


1

answered question

77




71.12

28.88

Multiproduct Asset Managers – Independent


Firm Type

Year

Mean

Median

Range



2012

$459,826,923

$250,000,000

$0 - $3,000,000,000

5/52

9.61%


2013 *YTD

$1,167,061,403

$300,000,000

$0 - $5,000,000,000

6/58

10.34%


Notes

Excluding 5 outliers citing $6bln, $7bln, $8bln, $10bln and $12bln

*YTD as of June 2013



What is your view on the level of difficulty in raising capital today compared to 3 years ago?

Answer Options

Response Percent

Response Count

12.0%

9


13.3%

10


12.0%

9


6.7%

5


2.7%

2


4.0%

3


2.7%

2


6.7%

5


14.7%

11


1.3%

1


1.3%

1


1.3%

1


0.0%

0


0.0%

0


1.3%

1


1.3%

1



1.3%

1


17.3%

13


2

answered question

75


Response Percent

Response Count

Less than 10%

63.0%

46

10% - $19%

6.8%

5

20% - 29%

17.8%

13

30% - 39%

5.5%

4

40% - 49%

1.4%

1

50% - 60%

4.1%

3

60% - 70%

1.4%

1

70%+

0.0%

0

answered question

73




Answer Options

Response Percent

Response Count

Stock options

34.7%

17


24.5%

12


49.0%

24

Sign on bonus

16.3%

8

Retention bonus

14.3%

7


4

answered question

49


Response Percent

Response Count

Purely formulaic

14.7%

11


14.7%

11


38.7%

29


32.0%

24


2

answered question

75


Response Percent

Response Count

Purely formulaic

26.7%

20


12.0%

9


8.0%

6


48.0%

36

Agnostic

5.3%

4


3

answered question

75

How are independent multi-product asset managers structuring their distribution efforts? Mean

Median

Range


17.8

9

2 - 100


9.25

5

1 - 60


9.6

5

1 - 60

# of non - client facing client services professionals *

14.1

8

1 – 100

*Excluding one outlier respondent who cited 320 non-client facing client services professionals at their firm



What other components comprise your total compensation (check all that apply)??

Answer Options

Response Percent

Response Count

Geographically

57.9%

44

Client Channel

26.3%

20

Product

2.6%

2

No formal alignment

13.2%

10


7

answered question

76


Response Percent

Response Count

Investment team

43.1%

31

Sales team

30.6%

22


11.1%

8


15.3%

11


5

answered question

72


Highly successful

36%


Neutral Not very successful Not at all successful

3% 0%

N/A - my firm does not employ product specialists

20%


Response Percent

Response Count


17.1%

13


34.2%

26


44.7%

34


3.9%

3


0

answered question

76




Answer Options

Response Percent

Response Count


11.9%

8


26.9%

18


26.9%

18


1.5%

1


32.8%

22

answered question

67


Response Percent

Response Count


10.4%

7


25.4%

17


41.8%

28


1.5%

1


20.9%

14


0

answered question

67


Response Percent

Response Count

3.0%

2


14.9%

10


35.8%

24

Currently reducing the size of the team No current presence or plans to expand in the Middle East

1.5%

1

44.8%

30


1

answered question

67


Response Percent

Response Count


21.5%

14


56.9%

37


7.7%

5


13.8%

9


6

answered question

65




Answer Options Leveraging industry network

Response Percent

Response Count

58.3%

42

Sourcing investors

6.9%

5

LinkedIn

15.3%

11


55.6%

40


27.8%

20


12.5%

9

Employee referrals

54.2%

39


37.5%

27


0

answered question

72


Response Percent

Response Count

Yes

53.4%

39

No

21.9%

16

I don't know

24.7%

answered question

18 73




Multi-Product Asset Manager – Independent: Demographics Answer Options Associate

Response Percent

Response Count

0.0%

0

Senior Associate

0.0%

0

Vice President

24.7%

22


19.1%

17

Director/Principal

19.1%

17


18.0%

16


11.2%

10

Partner

5.6%

5


2.2%

2


11

answered question

89


Response Percent

Response Count

5 - 10

5.0%

5

11 - 15

26.0%

26

16 - 20

21.0%

21

21 - 25

34.0%

34

26+

14.0%

14

answered question

100

How many years of asset management distribution experience do you have? Answer Options 5 - 10

Response Percent

Response Count

36.7%

36

11 - 15

21.4%

21

16 - 20

23.5%

23

21 - 25

11.2%

11

7.1%

7

26+ answered question

98




Answer Options

Response Percent

Response Count

52.3%

46

New York Connecticut

4.5%

4

Boston

10.2%

9

Chicago

13.6%

12

San Francisco

9.1%

8

Los Angeles

8.0%

7

Minneapolis

0.0%

0

Philadelphia

2.3%

2

Miami

0.0%

0

Houston

0.0%

0

Dallas

0.0%

0

Washington D.C.

0.0%

0


14

answered question

88


Response Percent

Response Count

Long Only Equity

81.6%

80


70.4%

69

Hedge Funds

71.4%

70

Private Equity

46.9%

46

Hedge Fund of Funds

27.6%

27


23.5%

23

Real Estate

46.9%

46

Commodities

38.8%

38

Infrastructure

27.6%

27


10

answered question

98


Response Percent

Response Count

Sales / Fundraising

57.6%

53


6.5%

6


0.0%

0


13.0%

12

Product Specialist

3.3%

3


19.6%

18


10

answered question

92



Where do you work?

Answer Options

Response Percent

Response Count

<$200mln

1.0%

1

$200mln - $500mln

1.0%

1

$500mln - $1bln

2.1%

2

$1bln

5.2%

5

$2bln

0.0%

0

$3bln

5.2%

5

$4bln

2.1%

2

$5bln

1.0%

1

$6bln

0.0%

0

$7bln

2.1%

2

$8bln

3.1%

3

$9bln

1.0%

1

$10bln

1.0%

1

$11bln

1.0%

1

$12bln

0.0%

0

$13bln

0.0%

0

$14bln

0.0%

0

$15bln

1.0%

1

$16bln

0.0%

0

$17bln

0.0%

0

$18bln

0.0%

0

$19bln

0.0%

0

$20bln - $29bln

7.2%

7

$30bln - $39bln

0.0%

0

$40bln - $49bln

4.1%

4

$50bln - $59bln

4.1%

4

$60bln+

57.7%

56


4

answered question

97




Multi-Product Asset Manager – Bank-Owned independent counterparts, but there are still a number of observations worth sharing about this talent pool. There was a higher percentage of distribution professionals with MBAs at bank-owned firms (51.9%) than at their independent counterparts. They changed jobs less frequently, with 42.5% having switched firms during the past three years. Of those who did, 52.6% received a compensation increase. They were less likely to receive a sign-on or make-whole bonus when accepting a new position, but were equally likely to receive a buy-out of equity and a minimum bonus floor. The highest-ranking motivators for changing firms were the opportunity to grow and build the marketing effort, followed by compensation and the level of value placed on marketing within the firm. Firm culture ranked seventh. In contrast, firm culture ranked highest among distribution professionals at independent multi-asset managers and second across the industry overall. Another difference we observed with this group is their state of mind. Only 18.5% were actively looking for a new position, which is lower than the industry overall or their peers at independent platforms. A large majority (68.4%) said they were not looking but open to considering new opportunities if presented. The perception of difficulty for raising and retaining capital among respondents at bank-owned multi-product firms was high, with 67.5%% saying capital raising was significantly more difficult than three years ago and 47.5% saying retention was more difficult. Capital from new investors made up 63.42% of inflows, on par with the industry average but a bit lower than the independent firms. Interestingly, median amounts of capital raised per marketer in this category were the same as their peers at independent firms in 2012 but are lower mid-way through 2013, with respondents reporting a median of $250 million in 2012 and $115 million YTD in 2013. Respondents were fairly confident about bonus expectations for 2013, with the majority (57.5%) expecting an increase, 15% expecting bonuses to remain flat, 7.5% expecting a decrease and 20% saying it’s too early in the year to estimate. Not surprisingly, deferred compensation rates were higher for this group, with 45.9% reporting deferred bonus percentages of greater than 10% in 2012, with a range of 10%-70%. Other components of compensation are fairly standard and include stock options, fund participation, equity-like participation, sign-on bonuses and retention bonuses. Respondents at independent multi-product firms are more likely to receive stock options and less likely to participate in the funds than their peers at independent firms. This group is also less likely to be paid on a purely formulaic basis; the most common model is part formula/part discretionary, indicated by 50% of respondents. That model lines up with this group’s preferred bonus structure, an alignment not found in many of the other firm types we studied. Distribution teams are most frequently aligned by geography (56.8%) and are more likely to be formally structured than the industry overall. Product specialists are common, with just 16.2% of respondents saying their firm does not have that function. At bank-owned firms that use product specialists, they are more likely to report solely to the investment teams (51.4%) compared to the broader industry (26.3%). Most respondents viewed this function as moderately successful within their firms. Beyond capital raising and retention, how are bank-owned multi-product firms measuring performance? The top three performance metrics were essentially tied: 1. Team collaboration 2. Strategic firm building 3. Activity


Multi-Product Asset Managers – Bank-Owned

The sample size of 52 respondents for bank-owned multi-product firms is only about half the number of their

United States, with 27% of respondents saying there firms were actively recruiting and 32.4% opportunistically meeting candidates. These firms also seem to have a strong global presence and interest, with fewer respondents saying their firm does not have a current presence or plan to expand in Asia, UK/Europe or the Middle East. Hiring activity in this category across all of these geographies appears to be more robust than in the industry overall.

What is the highest level of education you have completed Answer Options Bachelor's Degree

Response Percent

Response Count

38.5%

20


5.8%

3

MBA

51.9%

27

Ph.D.

3.8%

answered question

2 52


Response Percent

Response Count

Yes

42.5%

17

No

57.5%

answered question

23 40


Response Percent

Response Count

Remained Flat

26.3%

5


10.5%

2


26.3%

5


15.8%

3


10.5%

2

Increased by 40%+

0.0%

0


5.3%

1


0.0%

0


0.0%

0


0.0%

0

Decreased by 40%+

5.3%

answered question

1 19



The hiring outlook for the remainder of 2013 for bank owned multi-product firms seems moderately strong in the

Answer Options

Response Percent

Response Count

Sign-on bonus

21.4%

3

Buy out of equity

14.3%

2

7.1%

1

Make whole bonus (100% of anticipated bonus at previous firm) Minimum bonus floor (% of anticipated bonus at previous firm)

35.7%

5

Not applicable

42.9%

6


2

answered question

14



9.12

Compensation 7.63

Firm Culture

7.24

Brand

7.69

Marketability of products

7.13


7.57 8.13


7.65


10.00 7.75 5.93


Response Percent

Response Count


5.3%

2


13.2%

5


68.4%

26


13.2%

5


0

answered question

38




Answer Options

Response Percent

Response Count

5.0%

2

Slightly more difficult Moderately more difficult

22.5%

9


40.0%

16

About the same

15.0%

6

Moderately easier

10.0%

4


7.5%

3


0

answered question

40


Response Percent

Response Count


12.5%

5


25.0%

10


10.0%

4

About the same

45.0%

18

Moderately easier

7.5%

3


0.0%

0


0

answered question

40




63.42

36.58

Multi-Product Asset Managers – Bank Owned

Capital raising levels per marketer % of marketers that raised zero capital

Firm Type

Year

Mean

Median

Range



2012

400,285,714

250,000,000

0 - 2,000,000,000

2/28

7.14%


2013 *YTD

331,678,571

115,000,000

0 - 1,500,000,000

4/29

13.79%

Notes

Minus 1 outlier citing $5bln





Answer Options

Response Percent

Response Count


5.0%

2


12.5%

5


17.5%

7


5.0%

2


2.5%

1


0.0%

0


7.5%

3


7.5%

3


15.0%

6


5.0%

2


0.0%

0


2.5%

1


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


20.0%

8


0

answered question

40


Response Percent

Response Count

Less than 10%

54.1%

20

10% - 7019%

13.5%

5

20% - 29%

16.2%

6

30% - 39%

8.1%

3

40% - 49%

2.7%

1

50% - 60%

0.0%

0

60% - 70%

5.4%

2

70%+

0.0%

0

answered question

37




Answer Options Stock options

Response Percent

Response Count

43.5%

10


17.4%

4


43.5%

10

Sign on bonus

17.4%

4

Retention bonus

13.0%

3


4

answered question

23


Response Percent

Response Count

Purely formulaic

2.6%

1


15.8%

6


31.6%

12


50.0%

19


2

answered question

38


Response Percent

Response Count

Purely formulaic

17.9%

7


17.9%

7

Purely Discretionary Part formula / part discretionary Agnostic

7.7%

3

48.7%

19

7.7%

3


0

answered question

39

How are bank owned multi-product asset managers structuring their distribution efforts? Mean

Median

Range

20.7

10

2 - 100

11

7

2-60


12.1

6

2 - 50

# of non - client facing client services professionals *

12.8

10

1-50

# of sales/fundraising professionals # of product specialists (for firms with product specialists)




Answer Options

Response Percent

Response Count

Geographically

56.8%

21

Client Channel

35.1%

13

Product

0.0%

0

No formal alignment

8.1%

3


6

answered question

37


Response Percent

Response Count

Investment team

51.4%

19

Sales team

16.2%

6


16.2%

6


16.2%

6


3

answered question

37

How successful has the product specialist role been within your current firm? Answered: 39 Highly successful

13% 56%

Moderately successful Neutral Not very successful Not at all successful N/A - my firm does not employ product specialists

10% 3% 5% 13%


Response Percent

Response Count


27.0%

10


32.4%

12


35.1%

13


5.4%

2


3

answered question

37




Answer Options Currently actively recruiting

Response Percent

Response Count

9.4%

3


21.9%

7


40.6%

13


6.3%

2


21.9%

7

answered question

32

UK/Europe: How would you best characterize your current firm's hiring plans within *UK/European* distribution for the remainder of 2013? Answer Options Currently actively recruiting

Response Percent

Response Count

12.5%

4


18.8%

6


50.0%

16


3.1%

1


15.6%

5


0

answered question

32


Response Percent

Response Count

0.0%

0


24.1%

7


44.8%

13


0.0%

0


31.0%

9


1

answered question

29


Response Percent

Response Count


21.1%

8


76.3%

29


0.0%

0


2.6%

1


0

answered question

38





Response Percent

Response Count

68.4%

26

Sourcing investors

7.9%

3

LinkedIn

31.6%

12


60.5%

23


26.3%

10


18.4%

7

Employee referrals

76.3%

29


57.9%

22


1

answered question

38


Response Percent

Response Count

Yes

50.0%

19

No

21.1%

8

I don't know

28.9%

answered question

11 38




Multi-Product Asset Manager – Bank-Owned: Demographics Answer Options

Response Percent

Response Count

0.0%

0

Senior Associate

0.0%

0

Vice President

15.6%

7

Associate


17.8%

8

Director/Principal

26.7%

12


13.3%

6


26.7%

12

Partner

0.0%

0


0.0%

0


11

answered question

45


Response Percent

Response Count

5 - 10

3.8%

2

11 - 15

9.6%

5

16 - 20

36.5%

19

21 - 25

21.2%

11

26+

28.8%

15

answered question

52


Response Percent

Response Count

5 - 10

19.2%

10

11 - 15

28.8%

15

16 - 20

32.7%

17

21 - 25

15.4%

8

26+

3.8%

2

answered question

52




Answer Options

Response Percent

Response Count

48.9%

22


2.2%

1

Boston

13.3%

6

Chicago

17.8%

8

San Francisco

4.4%

2

Los Angeles

11.1%

5

Minneapolis

0.0%

0

Philadelphia

2.2%

1

Miami

0.0%

0

Houston

0.0%

0

Dallas

0.0%

0

Washington D.C.

0.0%

0


9

answered question

45


Response Percent

Response Count

Long Only Equity

80.8%

42


80.8%

42

Hedge Funds

61.5%

32

Private Equity

36.5%

19

Hedge Fund of Funds

50.0%

26


34.6%

18

Real Estate

57.7%

30

Commodities

40.4%

21

Infrastructure

38.5%

20


8

answered question

52


Response Percent

Response Count

Sales / Fundraising

52.1%

25


4.2%

2


0.0%

0


12.5%

6

Product Specialist

4.2%

2


27.1%

13


9

answered question

48



Where do you work?

Answer Options

Response Percent

Response Count

<$200mln

2.0%

1

$200mln - $500mln

0.0%

0

$500mln - $1bln

0.0%

0

$1bln

2.0%

1

$2bln

0.0%

0

$3bln

0.0%

0

$4bln

0.0%

0

$5bln

2.0%

1

$6bln

0.0%

0

$7bln

0.0%

0

$8bln

0.0%

0

$9bln

0.0%

0

$10bln

2.0%

1

$11bln

0.0%

0

$12bln

0.0%

0

$13bln

0.0%

0

$14bln

0.0%

0

$15bln

0.0%

0

$16bln

0.0%

0

$17bln

0.0%

0

$18bln

0.0%

0

$19bln

0.0%

0

$20bln - $29bln

3.9%

2

$30bln - $39bln

5.9%

3

$40bln - $49bln

5.9%

3

$50bln - $59bln

2.0%

1

$60bln+

74.5%

38


1

answered question

51




Hedge Funds number of positions open globally appears smaller than in the broader asset management industry. For example, 25% of hedge fund employees who participated in our survey reported that their firms were either actively looking or opportunistically meeting potential candidates in the United States, compared to 40.9% of survey participants overall. This disparity is likely due to smaller assets under management and team size at hedge fund managers, significant talent movement over the past several years and, possibly, ongoing performance challenges. While fundraising remains a major challenge for many hedge funds, inflows in 2013 are looking more positive on average than they were in 2012, even taking into account some early summer performance issues that caused many investors to pause and further extend an already lengthy sales cycle. The shift of inflows to the larger hedge funds has only intensified this year as we have witnessed a flight to safety and continued migration out of fund of funds, leaving many smaller or nascent funds in a difficult situation. Several marketers reported larger ticket sizes from public funds in 2013 but cited fee pressure from these investors as a challenge. In light of the frequency of movement during the past three years and the number of firms revamping their distribution efforts, a number of respondents said fundraising may be up in 2013 because they have gained traction this year after having moved into their current roles and focused on building infrastructure and momentum in 2011 and 2012. When we conduct marketing and investor relations searches for hedge fund clients, many hiring managers express the desire for candidates with an MBA or CFA; yet only 44.7% of respondents have an MBA and only 13.6% have a CFA. Movement among hedge fund distribution professionals during the past three years was high, with 60% of respondents reporting they changed firms during that period. Respondents in this category ranked the desire to build and grow a marketing effort as the top motivator for change; greater opportunities for advancement and compensation ranked second and third respectively. In contrast, respondents at other types of asset managers ranked culture and people more highly as reasons to change firms. We see this “build” characteristic in many of our candidates, particularly the most talented and successful ones. As the larger hedge funds continue to expand their teams, we often hear from candidates that “it’s getting crowded” and they feel like they have less ability to build, create, and influence. It pays for hedge fund managers to be mindful of this motivating character trait and to provide those who possess it with suitable opportunities wherever possible—for example, by leveraging their insight into new product development or assigning a team captain to a new product. We found that hedge fund marketing and investor relations professionals have an attitude toward changing firms that is similar to their broader industry peers, with most respondents (53.5%) describing themselves as “not looking but open to considering new opportunities.” We took a closer look at how movement affected compensation and found that 56.2% of respondents who reported moving within the past three years saw an increase in total compensation, with the top 10.9% enjoying a 40%+ increase. About one-quarter saw their compensation remain flat and 15.1% actually saw a decrease. When joining a new firm, 50% received a minimum bonus floor and 15% a make-whole bonus, above the norm compared to their asset management peers in the industry as a whole. Nearly 62% of respondents said capital raising is more difficult today compared to three years ago, with 10.8% viewing it the same and 17.6% as easier. Regarding the retention of capital, 54% view it as more difficult, 35.1% as about the same and 10.9% as easier. Participants reported an average of 59.7% of inflows coming from new investors and 40.3% from existing investors. The median amount of capital raised YTD in 2013 is $150 million per marketer, compared to $100 million in 2012.


Hedge Funds

Midway through 2013, hedge funds remain an active recruiting market for distribution professionals, although the

too early in the year to tell, 19.2% expecting bonuses to remain flat and 4.1% expecting a decrease. The majority of respondents (65.3%) are paid on a purely discretionary basis (compared to 44.4% across the broader asset management industry) but only 21% prefer that structure. Nearly half prefer to be paid on a part formula/part discretionary basis—something firms might keep in mind when trying to attract talent. Deferred compensation levels are low among hedge funds, with 65.8% of respondents having less than 10% of their 2012 cash bonus deferred. Hedge funds differ from the rest of the asset management industry in that most firms (at least 71.2%) do not employ product specialists and many do not employ non-client-facing investor relations professionals. Additionally, a higher percentage of respondents in this category described their roles as hybrid sales and investor relations—different from traditional asset management, which tends to be much more segmented. Among firms that do employ product specialists, the majority report to the sales team and the role is viewed as successful within the firm. In measuring a distribution professional’s individual performance beyond capital raising and retention, hedge funds view fund performance as more important than other asset management firms. The top four performance metrics are: 1. Strategic/firm building 2. Fund performance 3. Team collaboration 4. Activity Finally, the global hiring outlook for hedge fund distribution seems less robust than it is in the asset management industry overall. As noted above, only 25% of respondents working at hedge funds said their firms were actively recruiting or opportunistically meeting candidates in the United States, compared with 40.9% for the entire industry. Only 6.1% said their firms were actively recruiting or opportunistically meeting candidates in Asia, compared to 24.1% of the industry overall, and 66.2% said their firms have no presence or plans to expand in Asia, compared to the broader industry at 48.1%. In the UK/Europe we are seeing the same trend, with just 12.4% saying their firms were actively recruiting or opportunistically meeting candidates compared with an industry average of 21%. In Europe, hedge funds face the additional pressure of an increasingly challenging regulatory environment. In the Middle East, no respondents said their firms were actively interviewing and just 4.8% reported they were opportunistically meeting candidates, while 11.4% of asset managers overall were actively interviewing or opportunistically meeting candidates in that region. The overall asset management industry, with a deeper presence outside the U.S. than most hedge funds, also seems more confident that hiring an outside candidate from the local region is the most effective way to expand marketing efforts overseas. (In subsequent studies, we will look at the Americas more broadly.) When recruiting sales and investor relations talent, hedge fund respondents reported only slightly lower rates (46.3%) of partnering with retained executive search firms than the broader asset management industry (51.9%). There are so many nuances and variables that affect hedge fund distribution efforts—strategy, performance, assets under management, ownership structure, sophistication of the sales and investor relations team, culture, etc. We hope to explore them further in future reports.


Hedge Funds

Bonus expectations are quite mixed, with 56.2% of respondents expecting an increase in 2013, 20.5% saying it’s

Answer Options Bachelor's Degree

Response Percent

Response Count

47.9%

45


6.4%

6

MBA

44.7%

42

Ph.D.

1.1%

answered question

1 94


Response Percent

Response Count

Yes

60.0%

45

No

40.0%

30

answered question

75


Response Percent

Response Count

Remained Flat

26.1%

12


6.5%

3


6.5%

3


21.7%

10


13.0%

6

Increased by 40%+

10.9%

5


0.0%

0


4.3%

2


4.3%

2


4.3%

2

Decreased by 40%+

2.2%

1

answered question

46


Response Percent

Response Count

Sign-on bonus

25.0%

10

Buy out of equity

12.5%

5


15.0%

6


50.0%

20

Not applicable

30.0%

12


1

answered question

40


Hedge Funds

What is the highest level of education you have completed

Answered: 44 Management opportunity

6.83

Compensation

8.90

Firm Culture

8.80

Brand

6.34 8.49

Marketability of products 7.13

Layoffs or restructuring Ability to have influence outside of fundraising Level of value placed on marketing

6.86 6.34 8.88


9.92 9.03 6.18

How would you characterize your current state of mind? Answer Options Actively looking (unemployed)

Response Percent

Response Count

2.8%

2


15.5%

11


53.5%

38


28.2%

20


2

answered question

71


Response Percent

Response Count


10.8%

8


29.7%

22


31.1%

23

About the same

10.8%

8

Moderately easier

14.9%

11


2.7%

2


1

answered question

74


Hedge Funds

If you changed firms in the past 3 years, please rank your primary motivation(s) for change:

Answer Options Slightly more difficult

Response Percent

Response Count

16.2%

12


21.6%

16


16.2%

12

About the same

35.1%

26

Moderately easier

9.5%

7


1.4%

1


1

answered question

74

Capital raising levels per marketer # of marketers that raised zero capital


Firm Type

Year

Mean

Median

Range

Hedge Fund

2012

$302,525,000

$100,000,000

$0 $5,000,000,000

12/61

19.67%

Hedge Fund

2013 *YTD

$315,546,875

$150,000,000

$0 $2,000,000,000

9/64

14.06%

Notes

* YTD as of June 2013 What are your bonus expectations for 2013 compared to 2012? Answer Options

Response Percent

Response Count


11.0%

8


9.6%

7


4.1%

3


12.3%

9


1.4%

1


4.1%

3


8.2%

6


5.5%

4


19.2%

14


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


1.4%

1


0.0%

0


2.7%

2


20.5%

15


3

answered question

73


Hedge Funds


Answer Options

Response Percent

Response Count

65.8%

48

Less than 10% 10% - $19%

8.2%

6

20% - 29%

16.4%

12

30% - 39%

4.1%

3

40% - 49%

1.4%

1

50% - 60%

4.1%

3

60% - 70%

0.0%

0

70%+

0.0%

0

answered question

73

What other components comprise your total compensation (check all that apply)?? Answer Options

Response Percent

Response Count

Stock options

10.3%

3


41.4%

12


37.9%

11

Sign on bonus

13.8%

4

Retention bonus

6.9%

2


4

answered question

29


Response Percent

Response Count

Purely formulaic

5.6%

4


6.9%

5


65.3%

47


22.2%

16


2

answered question

72


Response Percent

Response Count

Purely formulaic

5.6%

4


18.3%

13


21.1%

15


47.9%

34

Agnostic

7.0%

5


1

answered question

71


Hedge Funds

What percentage of your cash bonus was deferred in 2012?

Mean

Median

Range


3.7

2

1 - 25

# of product specialists (for firms with product specialists) 1

1.7

1

1-8

# of client facing investor relations professionals 2

3.1

2

1-16

# of non - client facing client services professionals 3

3.3

2

1-12

(1) most hedge funds do not employ product specialists (2) there is significant crossover with sales/IR combined in hybrid roles (3) 26% of respondents said their firms do not employ any non-client-facing client services professionals

How is coverage among your current sales team (primarily) aligned? Answer Options

Response Percent

Response Count

Geographically

32.9%

24

Client Channel

13.7%

10

Product

4.1%

3

49.3%

36

No formal alignment Other (please specify)

3

answered question

73


Response Percent

Response Count

Investment team

4.1%

3

Sales team

17.8%

13


6.8%

5


71.2%

52


2

answered question

73


Hedge Funds

How are hedge funds structuring their distribution teams?

Hedge Funds


Highly successful Moderately successful Neutral Not very successful Not at all successful

11% 4% 1% 0%


71%


Response Percent

Response Count


10.3%

7


14.7%

10


67.6%

46


7.4%

5


1

answered question

68


Response Percent

Response Count


1.5%

1


4.6%

3


26.2%

17


1.5%

1


66.2%

43

answered question

65


Response Percent

Response Count


6.2%

4


6.2%

4


32.3%

21


1.5%

1


53.8%

35


1

answered question

65


Answer Options

Response Percent

Response Count


0.0%

0


4.8%

3


20.6%

13


0.0%

0


74.6%

47


1

answered question

63


Response Percent

Response Count

16.7%

11


37.9%

25


21.2%

14


24.2%

16



5

answered question

66

How does your firm typically recruit sales & client services professionals? (check all that apply) Answer Options

Response Percent

Response Count


65.7%

44

Sourcing investors

16.4%

11

LinkedIn

6.0%

4


46.3%

31


20.9%

14


10.4%

7

Employee referrals

53.7%

36


19.4%

13


0

answered question

160


Response Percent

Response Count

Yes

37.7%

26

No

55.1%

38

I don't know

7.2%

answered question

5 69


Hedge Funds

Middle East: How would you best characterize your current firm's hiring plans within *Middle Eastern* distribution for the remainder of 2013?

Hedge Funds: Demographics

Answer Options

Response Percent

Response Count

0.0%

0

Senior Associate

1.1%

1

Vice President

6.7%

6

Associate


6.7%

6

Director/Principal

31.5%

28


15.7%

14


23.6%

21

Partner

11.2%

10


3.4%

3


8

answered question

89


Response Percent

Response Count

5 - 10

6.3%

6

11 - 15

30.5%

29

16 - 20

26.3%

25

21 - 25

25.3%

24

26+

11.6%

11

answered question

95


Response Percent

Response Count

5 - 10

35.1%

33

11 - 15

38.3%

36

16 - 20

17.0%

16

21 - 25

9.6%

9

26+

0.0%

0

answered question

94


Hedge Funds


Answer Options

Response Percent

Response Count

New York

72.8%

67

Connecticut

10.9%

10

Boston

1.1%

1

Chicago

6.5%

6

San Francisco

4.3%

4

Los Angeles

2.2%

2

Minneapolis

1.1%

1

Philadelphia

0.0%

0

Miami

0.0%

0

Houston

0.0%

0

Dallas

1.1%

1

Washington D.C.

0.0%

0


3

answered question

92


Response Percent

Response Count

Long Only Equity

8.7%

8


10.9%

10

Hedge Funds

96.7%

89

Private Equity

18.5%

17

Hedge Fund of Funds

8.7%

8


1.1%

1

Real Estate

9.8%

9

Commodities

6.5%

6

Infrastructure

1.1%

1


5

answered question

92


Response Percent

Response Count

Sales / Fundraising

45.7%

42


12.0%

11


0.0%

0


35.9%

33

Product Specialist

2.2%

2


4.3%

4


6

answered question

92


Hedge Funds

Where do you work?

Answer Options Long short equity Long bias

Response Percent

Response Count

23.3%

21

1.1%

1

Credit

24.4%

22

Event driven

14.4%

13

1.1%

1

Global macro

13.3%

12

Relative Value

3.3%

3

Arbitrage

CTA/Managed futures

4.4%

4

Multi-strategy

14.4%

13


10

answered question

90


Hedge Funds

If your firm is a hedge fund, what is its primary investment strategy?

Answer Options

Response Percent

Response Count

<$200mln

9.6%

9

$200mln - $500mln

16.0%

15

$500mln - $1bln

3.2%

3

$1bln

8.5%

8

$2bln

8.5%

8

$3bln

6.4%

6

$4bln

4.3%

4

$5bln

4.3%

4

$6bln

3.2%

3

$7bln

6.4%

6

$8bln

0.0%

0

$9bln

2.1%

2

$10bln

5.3%

5

$11bln

1.1%

1

$12bln

7.4%

7

$13bln

1.1%

1

$14bln

0.0%

0

$15bln

2.1%

2

$16bln

2.1%

2

$17bln

0.0%

0

$18bln

2.1%

2

$19bln

1.1%

1

$20bln - $29bln

2.1%

2

$30bln - $39bln

1.1%

1

$40bln - $49bln

1.1%

1

$50bln - $59bln

0.0%

0

$60bln+

2.1%

2


0

answered question

94


Hedge Funds


Private Equity last fundraising efforts took place pre-2008, have recently seen or are about to experience a seismic shift in their approach to raising assets, since it now takes longer to raise funds and pre-fundraising is a much more important part of the process. Fewer clients are “re-upping” and many are allocating less funding than in recent years. As a result, there is a need to diversify into different channels and geographies to meet fundraising targets and reduce the risk of dependency on one or two client channels for future fundraises. As a result, it is now common practice for private equity firms to provide a high level of service to existing clients, providing more contact, portfolio information and greater access to the firm’s senior management team. We have therefore seen client relationship management become fundamentally more important in the last several years. Findings from our survey of distribution professionals suggest that private equity firms are hiring talent to cope with the more complex nature of fundraising and investor relations. As the demand for talent increases, we would consequently expect salaries to rise as well. (Please note: Throughout this section we refer to the different types of client team professionals at private equity firms—marketers, business developers, fundraisers, client relations managers—as investor relations (IR) professionals.) A relatively small sample of 29 investor relations professionals employed by private equity firms responded to our survey. They range from vice president to partner. Firm assets range from $1 billion to more than $60 billion. The firms are located across the United States, with a large proportion headquartered in New York. Most of them prefer to hire investor relations professionals with advanced degrees, and two-thirds of respondents reported having advanced degrees. Despite lengthy private equity fundraising cycles, steady economic recovery and more emphasis on long-term compensation, 40% of our respondents changed firms during the past three years, supporting our view that there is a high level of demand for investor relations professionals. Almost 60% of those who moved had an increase in compensation, with 25% of them receiving an increase of 30% to 40%. For one third of those who moved, however, compensation remained flat. This discrepancy is likely explained by the fact that some of the respondents were actively looking to move or were unemployed, while others were “poached” by their new employer. Of those who changed firms, almost 60% received some type of sign-on bonus. Approximately 28% were offered minimum bonus floors while none received absolute guarantees. When considering the reasons for changing jobs, the top motivator is people, followed by opportunity to grow and build the marketing function in second place and layoffs/restructuring coming in third. A very close fourth on the list of motivators is culture, which arguably can be tied to the people category, further strengthening the notion that a firm’s culture drives motivation. Other high-ranking motivators include marketability of products and the level of value placed on the marketing function, both of which we have found to be significant factors when IR professionals are deciding which firm to join. Although many people assume that compensation is a strong motivator, private equity respondents ranked it sixth. Apart from fundraising and client retention, the performance metrics that IR professionals said are most commonly used are team collaboration, firm profitability and consultant ratings. These findings magnify the importance of culture and indicate the growing importance of actively covering consultants.


Private Equity

The private equity industry has experienced a transformation in fundraising and investor relations. Many firms, whose

and approximately 20% said they were actively looking while employed. While our small sample size may have skewed the data, we have found that people are generally open to talking about new opportunities. About 48% of respondents think it is more difficult to raise capital than it was three years ago, while 24% think it’s easier and 28% think it is about the same. The perceived difficulty of raising assets may be a significant reason why so many respondents changed firms in the past three years and why so many are open to considering career moves. Respondents said 60% of capital inflows are coming from new investors and 40% from current clients. While the figures may vary significantly depending on fund performance, on average 40% is a large proportion and demonstrates the importance of providing high-level client service during non-fundraising periods. Assets raised per IR professional appear to be up significantly from 2012 in the first six months of 2013. This may be explained by a number of factors: more investors are putting money to work in private equity (a shift in asset classes); more private equity firms are raising money this year; private equity firms have more funds in the market. There is also the possibility that institutional investors have greater liquidity than in previous years. It should be noted that, while the mean level of assets raised has increased, a higher percentage of IR professionals have raised zero capital in 2013 compared to 2012. While some firms may not be actively fundraising, the more likely explanation is that more funds are under-performing. Compensation in 2013 appears to be up from 2012, with 65% of respondents seeing an increase and 35% reporting an increase of 20% or more. Approximately 80% of respondents said less than 10% of their cash compensation was deferred and 10% had 20-29% of their cash compensation deferred. Approximately 50% of respondents said they receive carried interest. Carry, as a percentage of total compensation, can vary widely, from 0%-75%, with higher percentages noted among more senior level professionals. The typical range is somewhere between 3%-40%. Although we know that an increasingly higher proportion of investor relations professionals are receiving carried interest, it will be interesting to see how this trend evolves in years to come, particularly as firms expand their product offerings and these programs become more complex to manage. Slightly more than 50% of respondents receive equity participation or stock options. About 45% said their bonus structure is part formulaic/part discretionary, while 35% have a purely discretionary structure and just 10% have a purely formulaic structure. At the same time, 45% of respondents favor a part formulaic/part discretionary bonus structure, which suggests that IR professionals want to be rewarded for performance but also for harder-to-quantify factors such as training, building an IR function, branding, improving marketing materials, innovative ideas for client relationship management and extensive premarketing campaigns. Our survey suggests that IR teams are clearly split between geographical coverage models and no formal alignment. Only 8% of respondents said IR teams are aligned by client channel, distinguishing private equity firms from typical asset managers and hedge funds, where more teams are aligned by client channel. About 40% of respondents said their firms have product specialists, half of whom report to the investment teams and half to the sales teams. Of those who work at firms with product specialists, approximately 50% think the product specialist role is moderately successful and approximately 20% think it is highly successful. Almost 30% think the product specialist role is neither successful nor unsuccessful, suggesting that some IR professionals are unfamiliar with the product specialist role or that it may be new to their firms.


Private Equity

A startling 71% of respondents said they are opportunistic when it comes to considering other career opportunities

States, while the other half said they are not looking to recruit additional members to the IR teams. On the international front, there seems to be a relatively low level of active recruiting currently taking place in Asia and Europe and it looks like most firms are going to maintain their existing team size. Two-thirds of respondents said the best way to handle overseas private equity investor relations coverage is to hire an outside candidate within the local region, while just under one-third said the most effective strategy is to export an existing team member overseas. In summary, there appears to be increased demand for investor relations talent in the U.S. as private equity firms have increasingly realized the importance of the investor relations function. This conclusion is supported by the fact that 40% of respondents changed firms in the past three years and that compensation is trending up. And at a time when demand for talent is high, investor relations professionals are very open to considering career moves and exploring employment opportunities.

What is the highest level of education you have completed? Answer Options Bachelor's Degree

Response Percent

Response Count

34.5%

10


20.7%

6

MBA

34.5%

10

Ph.D.

10.3%

answered question

3 29


Response Percent

Response Count

Yes

40.0%

10

No

60.0%

15

answered question

25


Response Percent

Response Count

Remained Flat

33.3%

4


25.0%

3


8.3%

1


0.0%

0


16.7%

2

Increased by 40%+

8.3%

1


0.0%

0


0.0%

0


0.0%

0


0.0%

0

Decreased by 40%+

8.3%

answered question

1 12


Private Equity

Half of the respondents said their firms are actively recruiting or are open to meeting with potential hires in the United

Answer Options

Response Percent

Response Count

Sign-on bonus

57.1%

4

Buy out of equity

14.3%

1


0.0%

0


28.6%

2

Not applicable

28.6%

2


0

answered question

7



8.14

Compensation

9.29

Firm Culture 7.43

Brand

8.86

Marketability of products

9.60


7.43 8.00

Level of value placed on marketing People

10.00

Opportunity to grow/build the marketing effort

9.88


6.57 3.83


Response Percent

Response Count


0.0%

0


19.0%

4


71.4%

15


9.5%

2


4

answered question

21


Private Equity


Answer Options

Response Percent

Response Count

8.0%

2


16.0%

4


24.0%

6

About the same

28.0%

7

Moderately easier

24.0%

6


0.0%

0



1

answered question

25


Response Percent

Response Count


8.3%

2


20.8%

5


16.7%

4

About the same

50.0%

12

Moderately easier

4.2%

1


0.0%

0


1

answered question

24




59.55

40.45

Private Equity

Capital raising levels per marketer % of marketers that raised zero capital

Firm Type

Year

Mean

Median

Range


Private Equity

2012

$335,000,000

$115,000,000

$0 - $800,000,000

3/15

20.00%

Minus 1 outlier citing 4bln

Private Equity

2013 *YTD

$725,166,666

$275,000,000

$0 $5,000,000,000

5/18

27.77%

Four marketers up over $1bln

Notes



Private Equity


Answer Options

Response Percent

Response Count


10.0%

2


10.0%

2


10.0%

2


15.0%

3


5.0%

1


0.0%

0


10.0%

2


5.0%

1


20.0%

4


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


15.0%

3


0

answered question

20


Response Percent

Response Count

Less than 10%

81.8%

18

10% - 19%

4.5%

1

20% - 29%

9.1%

2

30% - 39%

0.0%

0

40% - 49%

4.5%

1

50% - 60%

0.0%

0

60% - 70%

0.0%

0

70%+

0.0%

0

answered question

22


Private Equity


Answer Options

Response Percent

Response Count

23.1%

3


76.9%

10


30.8%

4

Sign on bonus

7.7%

1

Retention bonus

7.7%

1

Stock options


0

answered question

13


Response Percent

Response Count

Purely formulaic

10.0%

2


10.0%

2


35.0%

7


45.0%

9


0

answered question

20


Response Percent

Response Count

Purely formulaic

15.0%

3


5.0%

1


20.0%

4


45.0%

9

Agnostic

15.0%

3


1

answered question

20

How are private equity firms structuring their distribution efforts? Mean

Median

Range

# of sales/fundraising professionals (1)

7.2

4

1-20


6.2

4

3-25


5.5

4

1-22

# of non - client facing client services professionals (2)

8.3

5

1 - 48

(1) Not counting one outlier who cited 50 sales professionals (2) Not counting two outliers who cited 150 and 275 non-client facing client services professionals


Private Equity


Answer Options

Response Percent

Response Count

Geographically

48.0%

12

Client Channel

8.0%

2

Product

0.0%

0

No formal alignment

44.0%

11


1

answered question

25


Response Percent

Response Count

Investment team

20.8%

5

Sales team

20.8%

5


8.3%

2


50.0%

12


1

answered question

24


Highly successful

23%


Neutral Not very successful

0%

Not at all successful

0%


45%


Response Percent

Response Count


20.0%

4


30.0%

6


50.0%

10


0.0%

0


0

answered question

20


Private Equity


Answer Options

Response Percent

Response Count


6.3%

1


12.5%

2


31.3%

5


0.0%

0


50.0%

8

answered question

16


Response Percent

Response Count

5.6%

1


5.6%

1


44.4%

8


5.6%

1


38.9%

7



0

answered question

18


Response Percent

Response Count


6.3%

1


12.5%

2


12.5%

2


0.0%

0


68.8%

11


0

answered question

16


Response Percent

Response Count


27.8%

5


66.7%

12


5.6%

1


0.0%

0


0

answered question

18


Private Equity



Response Percent

Response Count

47.1%

8

Sourcing investors

0.0%

0

LinkedIn

17.6%

3


47.1%

8


35.3%

6


0.0%

0

Employee referrals

52.9%

9


17.6%

3


0

answered question

17


Response Percent

Response Count

Yes

33.3%

7

No

42.9%

9

I don't know

23.8%

answered question

5 21


Private Equity


Private Equity: Demographics

Answer Options

Response Percent

Response Count

0.0%

0

Senior Associate

0.0%

0

Vice President

10.7%

3


3.6%

1

Director/Principal

25.0%

7


28.6%

8


14.3%

4

Partner

17.9%

5


0.0%

0

Associate


1

answered question

28


Response Percent

Response Count

5 - 10

3.4%

1

11 - 15

37.9%

11

16 - 20

27.6%

8

21 - 25

17.2%

5

26+

13.8%

4

answered question

29


Response Percent

Response Count

5 - 10

41.4%

12

11 - 15

34.5%

10

16 - 20

17.2%

5

21 - 25

6.9%

2

26+

0.0%

0

answered question

29


Private Equity


Answer Options

Response Percent

Response Count

New York

57.7%

15

Connecticut

3.8%

1

Boston

7.7%

2

Chicago

3.8%

1

San Francisco

3.8%

1

Los Angeles

7.7%

2

Minneapolis

0.0%

0

Philadelphia

3.8%

1

Miami

0.0%

0

Houston

0.0%

0

Dallas

3.8%

1

Washington D.C.

7.7%

2


2

answered question

26


Response Percent

Response Count

Long Only Equity

10.7%

3


7.1%

2

Hedge Funds

28.6%

8

Private Equity

89.3%

25

Hedge Fund of Funds

10.7%

3


10.7%

3

Real Estate

32.1%

9

Commodities

3.6%

1

Infrastructure

32.1%

9


5

answered question

28


Response Percent

Response Count

Sales / Fundraising

37.5%

9


20.8%

5


4.2%

1


20.8%

5

Product Specialist

8.3%

2


8.3%

2


6

answered question

24


Private Equity

Where do you work?

Answer Options

Response Percent

Response Count

10.3%

3

$200mln - $500mln

6.9%

2

$500mln - $1bln

0.0%

0

$1bln

0.0%

0

$2bln

6.9%

2

$3bln

3.4%

1

$4bln

3.4%

1

$5bln

0.0%

0

$6bln

6.9%

2

$7bln

3.4%

1

$8bln

0.0%

0

$9bln

6.9%

2

$10bln

0.0%

0

$11bln

3.4%

1

$12bln

3.4%

1

$13bln

3.4%

1

$14bln

0.0%

0

$15bln

3.4%

1

$16bln

0.0%

0

$17bln

3.4%

1

$18bln

3.4%

1

$19bln

0.0%

0

$20bln - $29bln

6.9%

2

$30bln - $39bln

3.4%

1

$40bln - $49bln

3.4%

1

$50bln - $59bln

3.4%

1

$60bln+

13.8%

4

<$200mln


1

answered question

29


Private Equity


Real Estate managers, several interesting themes emerged from our study of this segment of the industry. Even though there is higher reported confidence in the strategy among institutional investors (according to the research firm Preqin), the fundraising environment for private real estate continues to prove challenging. Launching a new fund is particularly difficult with so many funds already in the market that are capable of demonstrating performance numbers through up and down markets. However, 2013 is trending positively, with some very welcome momentum for a group of fundraising professionals who have suffered their fair share of battle fatigue in recent years. A higher percentage of the talent pool focused on real estate hold advanced degrees than their broader asset management peers, with 73.9% holding an MBA or master’s degree compared to 56.5% of participants overall. Movement among this group has been very high, with 66% reporting they changed employers within the past three years. The majority of those who moved saw a compensation increase, with 30% remaining flat and 10% experiencing a decrease. When accepting a new position, 30% received a make-whole bonus, which was high compared to an industry average of 14%; sign-on bonuses were less common. Unlike any other asset management category we examined, real estate distribution professionals ranked compensation as the top motivator for changing firms. The opportunity to grow and build a marketing effort ranked second and firm culture ranked third. Currently employed respondents reported higher rates of “actively looking” when asked to describe their current state of mind—33.3% compared to the industry average of 17.8%. Regarding capital raising and retention, just 26.7% of respondents view capital raising as more difficult today compared to three years ago. That is quite an optimistic view compared to the broader industry, where 61.53% said capital raising is more difficult. Two-thirds of real estate respondents view the difficulty in retaining capital as “about the same,” compared to 48.5% of the industry overall. This optimism is likely a reflection of increasing institutional investor interest in specialized fixed-income products. The percentage of inflows coming from new investors was 75.9%, the highest of the firm types we looked at; the industry average was 65.48%. The median amount of capital raised per marketer was lower than the broader industry for 2012 ($100 million) and 2013 (projected to be $162.5 million for the year), and the percentage of marketers who reported raising zero capital in those calendar years was the highest in the industry. Nevertheless, inflows are trending positively for real estate funds. The view on compensation is cautiously optimistic, with half of respondents expecting an increase in their bonus this year and 35.7% thinking it’s too early in the year to estimate bonus levels; only 7.1% expect a decrease. More than half (53.3%) said their bonuses are structured on a part formula/part discretionary basis, which is the structure that 80% of them prefer. Deferred cash compensation remains low, with almost all of the respondents (92.3%) reporting that less than 10% of their 2012 cash bonus was deferred. Talent in the real estate category report a level of fund participation considerably higher than their peers, at 71.4% compared to an industry average of 27.4%. Real estate distribution teams are generally smaller and less structured than those in the broader industry, with 62.5% of respondents reporting no formal alignment and the rest equally split between geography (18.8%) and client channel (18.8%). Only 26.7% said their firms employ product specialists, who report either exclusively to the investment team or dually to the investment and sales teams.


Real Estate

Despite a limited sample size of 23 distribution professionals who identified their firms as private real estate asset

are (in order): 1. Contributions to firm building and adding value across the firm 2. Activity such as meetings, consultant contacts gained and calling 3. Team collaboration Hiring among real estate managers for the remainder of 2013 is expected to be relatively quiet in the United States, with 80% of respondents expecting their teams to remain flat. None reported that their firms were actively recruiting and 13.3% said they were meeting opportunistically with candidates. The majority of respondents reported that their firms do not have a marketing presence outside the U.S. and are not actively looking to build one. That is surprising, given conversations that Heidrick & Struggles started in recent months with several firms looking to build efforts in Asia and Europe. Earlier, we noted higher levels of optimism around inflows. If that optimism is borne out, we may see global hiring activity rise accordingly.


Response Percent

Response Count

21.7%

5


30.4%

7

MBA

43.5%

10

Ph.D.

4.3%

answered question

1 23


Response Percent

Response Count

Yes

66.7%

10

No

33.3%

5

answered question

15


Response Percent

Response Count

Remained Flat

30.0%

3


10.0%

1


10.0%

1


20.0%

2


20.0%

2

Increased by 40%+

0.0%

0


0.0%

0


0.0%

0


0.0%

0


10.0%

1

Decreased by 40%+

0.0%

0

answered question

10


Real Estate

How is performance measured beyond capital raising and retention? The most commonly cited performance metrics

Answer Options

Response Percent

Response Count

Sign-on bonus

20.0%

2

Buy out of equity

0.0%

0


30.0%

3


30.0%

3

Not applicable

40.0%

4


0

answered question

10


7.00 9.80

Compensation

9.20

Firm Culture Brand Marketability of products

6.75 6.89

Layoffs or restructuring

7.43


7.38 8.22


7.60


9.30 7.40 6.44


Response Percent

Response Count


6.7%

1


33.3%

5


40.0%

6


20.0%

3


0

answered question

15


Real Estate


Answer Options

Response Percent

Response Count


20.0%

3


0.0%

0


6.7%

1

About the same

33.3%

5

Moderately easier

33.3%

5


6.7%

1


0

answered question

15


Response Percent

Response Count


13.3%

2


13.3%

2


0.0%

0

About the same

66.7%

10

Moderately easier

6.7%

1


0.0%

0


0

answered question

15

Percentage of inflows from new vs. existing investors 2012



75.89

24.11

Real Estate


Firm Type

Range



Year

Mean

Median

Real Estate

2012

$131,166,666

$100,000,000

$0 - $522,000,000

4/12

33.33%

Real Estate

2013 *YTD

$177,318,181

$162,500,000

$0 - $650,000,000

3/11

27.27%

Notes



Real Estate


Answer Options Increased by less than 10%

Response Percent

Response Count

7.1%

1


0.0%

0


0.0%

0


28.6%

4


7.1%

1


0.0%

0


7.1%

1


7.1%

1


0.0%

0


7.1%

1


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


35.7%

5


1

answered question

14

What percentage of your cash bonus was deferred in 2012? Answer Options Less than 10% 10% - $19%

Response Percent

Response Count

92.3%

12

7.7%

1

20% - 29%

0.0%

0

30% - 39%

0.0%

0

40% - 49%

0.0%

0

50% - 60%

0.0%

0

60% - 70%

0.0%

0

70%+

0.0%

0

answered question

13


Real Estate


Answer Options

Response Percent

Response Count

Stock options

0.0%

0


71.4%

5


57.1%

4

Sign on bonus

14.3%

1

Retention bonus

0.0%

0


4

answered question

7


Response Percent

Response Count

Purely formulaic

13.3%

2


6.7%

1


26.7%

4


53.3%

8


0.0%

0


15


Response Percent

Response Count

Purely formulaic

13.3%

2


6.7%

1


0.0%

0


80.0%

12

Agnostic

0.0%

0


3

answered question

15

How are real estate managers structuring their distribution efforts? Mean

Median

Range


2.9

2

1-7


NA

NA

NA


2.7

2

1.7

# of non - client facing client services professionals

3.1

2.5

1-11


Real Estate


Answer Options

Response Percent

Response Count

Geographically

18.8%

3

Client Channel

18.8%

3

Product

0.0%

0

No formal alignment

62.5%

10


0

answered question

16


Response Percent

Response Count

Investment team

13.3%

2

Sales team

0.0%

0


13.3%

2


73.3%

11


0

answered question

15


Highly successful

13%

Moderately successful Neutral

7%

Not very successful

7% 0%

Not at all successful N/A - my firm does not employ product specialists

73%

US: How would you best characterize your current firm’s hiring plans within *US* distribution for the remainder of 2013? Answer Options Currently actively recruiting

Response Percent

Response Count

0.0%

0


13.3%

2


80.0%

12


6.7%

1


0

answered question

15


Real Estate


Answer Options

Response Percent

Response Count


0.0%

0


13.3%

2


6.7%

1


0.0%

0


80.0%

12

answered question

15


Response Percent

Response Count

0.0%

0


6.7%

1


20.0%

3



0.0%

0


73.3%

11


0

answered question

15


Response Percent

Response Count


7.1%

1


0.0%

0


0.0%

0


0.0%

0


92.9%

13


0

answered question

14


Response Percent

Response Count

7.1%

1


78.6%

11


0.0%

0


14.3%

2



0

answered question

14


Real Estate



Response Percent

Response Count

46.7%

7

Sourcing investors

0.0%

0

LinkedIn

20.0%

3


46.7%

7


20.0%

3


13.3%

2

Employee referrals

46.7%

7


33.3%

5


0

answered question

15


Response Percent

Response Count

Yes

40.0%

6

No

46.7%

7

I don't know

13.3%

answered question

2 15


Real Estate


Real Estate: Demographics

Answer Options

Response Percent

Response Count

Associate

0.0%

0

Senior Associate

4.8%

1

Vice President

9.5%

2


19.0%

4

Director/Principal

19.0%

4


23.8%

5


14.3%

3

Partner

9.5%

2


0.0%

0


2

answered question

21


Response Percent

Response Count

5 - 10

17.4%

4

11 - 15

21.7%

5

16 - 20

13.0%

3

21 - 25

17.4%

4

26+

30.4%

answered question

7 23


Response Percent

Response Count

5 - 10

45.5%

10

11 - 15

27.3%

6

16 - 20

9.1%

2

21 - 25

9.1%

2

26+

9.1%

2

answered question

22


Real Estate


Answer Options

Response Percent

Response Count

36.4%

8


4.5%

1

Boston

13.6%

3

Chicago

18.2%

4

San Francisco

13.6%

3

Los Angeles

0.0%

0

Minneapolis

0.0%

0

Philadelphia

9.1%

2

Miami

0.0%

0

Houston

0.0%

0

Dallas

0.0%

0

Washington D.C.

4.5%

1


1

answered question

22


Response Percent

Response Count

Long Only Equity

0.0%

0


0.0%

0

Hedge Funds

0.0%

0

Private Equity

8.7%

2

Hedge Fund of Funds

0.0%

0


4.3%

1

Real Estate

95.7%

22

Commodities

0.0%

0

Infrastructure

4.3%

1


0

answered question

23


Response Percent

Response Count

Sales / Fundraising

38.1%

8


33.3%

7


4.8%

1


23.8%

5

Product Specialist

0.0%

0


0.0%

0


2

answered question

21


Real Estate

Where do you work?

Answer Options

Response Percent

Response Count

<$200mln

4.5%

1

$200mln - $500mln

18.2%

4

$500mln - $1bln

13.6%

3

$1bln

18.2%

4

$2bln

0.0%

0

$3bln

9.1%

2

$4bln

9.1%

2

$5bln

0.0%

0

$6bln

0.0%

0

$7bln

4.5%

1

$8bln

0.0%

0

$9bln

0.0%

0

$10bln

4.5%

1

$11bln

4.5%

1

$12bln

0.0%

0

$13bln

0.0%

0

$14bln

0.0%

0

$15bln

0.0%

0

$16bln

0.0%

0

$17bln

0.0%

0

$18bln

0.0%

0

$19bln

0.0%

0

$20bln - $29bln

4.5%

1

$30bln - $39bln

4.5%

1

$40bln - $49bln

4.5%

1

$50bln - $59bln

0.0%

0

$60bln+

0.0%

0


4

answered question

22


Real Estate


Placement Agents too small to draw many hard and fast conclusions. Nevertheless, we wanted to share some insights into this unique population, particularly since a placement agent role can often serve as a stepping stone towards an in-house marketing role for those looking to make the transition. The majority of respondents had 10+ years of total work experience, with 29.6% reporting 26+ years. Nearly half (48.1%) had just 5-10 years of asset management experience, indicating they are relatively new to the business. Placement agents are more likely to have MBAs (51.9%) than the general asset management population. They are less likely to have changed firms in the past three years, with just 44.4% reporting they had done so. Individuals joining placement agents did not experience the same compensation gains as their broader industry peers: just 30.8% reported an increase in compensation, 46.2% remained flat and 23.1% saw a decrease. We do not know if these individuals were in fact making a career transition, but we suspect that is the case and that it influenced compensation. The highest-ranking motivator for making a change was overwhelmingly firm culture, followed by people and marketability of products, which tied for second place. About 32% of survey participants were actively looking for new roles and 47.4% were open to considering new opportunities. How do placement agents view the level of difficulty in capital raising today compared to three years ago? Respondents in this group proved quite divided in their views: 47.4% rated it as more difficult and 36.9% as easier, with 15.8% saying it is about the same. About 41% said retention of client assets is more difficult today and an equal number said it is about the same; just 17.7% rated retention as easier. Placement agents reported that an average of 59.88% of capital came from new investors in 2012. Our survey found median capital raising levels of $105 million per marketer in 2012 to be in line with the broader industry. Capital raising among placement agents appears to be going up substantially in 2013, with a median of $500 million raised per marketer YTD. When we looked closely at the reported numbers, we found four marketers who had already hit the $1 billion mark through the first six months of 2013 and only one who had not raised any capital so far this year. Given the small sample size for this question (16 respondents), these figures may not reflect the full population of placement agent distribution professionals. Perhaps corresponding to the reported capital amounts raised in the first six months of the year, bonus expectations for 2013 are generally high, with 53% of respondents expecting an increase from 2012, 11.8% expecting to remain flat and 35.3% saying it’s too early in the year to estimate. The majority of placement agents (68.8%) reported deferred bonus rates of less than 10% in 2012, with 25.1% indicating deferred bonus percentages of 50% or greater. Beyond base and cash bonus, survey respondents indicated being awarded stock options, the opportunity to participate in the funds and equity-like participation as part of their total compensation in 2012. About 39% of respondents said their bonuses were purely formulaic, with an equal number reporting a purely discretionary bonus. Placement agents seem to be quite divided about their preferred compensation structure. Oddly enough, the highest percentage (33.3%) said they prefer a purely formulaic bonus but many expressed the desire for more hybrid or discretionary models. Distribution teams at placement agents are most often aligned geographically (72.2%). Not surprisingly, product specialist roles are uncommon, with 66.7% of respondents reporting their firms do not employ product specialists, although when the function exists it is often viewed as successful.


Placement Agents

With just 5.9% of our survey respondents saying they worked at placement agents, the sample size (27 people) is

metrics are (in order): • Contributions to business development and project management • Team collaboration • Firm/brand building There is a decent amount of hiring activity among placement agents globally, although most will keep their teams flat for the year. About 18% of respondents said their firms were actively recruiting and 29.4% opportunistically meeting candidates in the United States. Outside the U.S., 21.1% of respondents said their firms were either actively recruiting or opportunistically meeting candidates in Asia, 16.7% in UK/Europe and 11.1% in the Middle East. Placement agents typically hire directly, with only 21.1% of respondents saying their firms use retained executive search as part of their recruiting strategy, well below the industry average of 51.9%.


Response Percent

Response Count

37.0%

10


11.1%

3

MBA

51.9%

14

Ph.D.

0.0%

answered question

0 27


Response Percent

Response Count

Yes

44.4%

8

No

55.6%

10

answered question

18


Response Percent

Response Count

46.2%

6


0.0%

0


15.4%

2


7.7%

1


0.0%

0

Increased by 40%+

7.7%

1


0.0%

0


7.7%

1


0.0%

0


0.0%

0

Decreased by 40%+

15.4%

2

Remained Flat

answered question

13


Placement Agents

Beyond capital raising, how are placement agents measuring performance? The most commonly cited performance

Answer Options

Response Percent

Response Count

Sign-on bonus

0.0%

0

Buy out of equity

0.0%

0


0.0%

0

0.0%

0

100.0%

8

Minimum bonus floor (% of anticipated bonus at previous firm) Not applicable Other (please specify)

1

answered question

8


3.25 9.17

Compensation

11.00

Firm Culture Brand

7.17 10.00

Marketability of products Layoffs or restructuring

6.80


8.33 9.75


10.00

People Opportunity to grow/build the marketing effort

8.00


8.00 6.75


Response Percent

Response Count


0.0%

0


31.6%

6


47.4%

9


21.1%

4


0

answered question

19


Placement Agents


Answer Options

Response Percent

Response Count


10.5%

2


15.8%

3


21.1%

4

About the same

15.8%

3

Moderately easier

31.6%

6


5.3%

1


0

answered question

19


Response Percent

Response Count


11.8%

2


11.8%

2


17.6%

3

About the same

41.2%

7

Moderately easier

11.8%

2


5.9%

1


0

answered question

17

Capital raising levels per marketer # of marketers that raised zero capital


Firm Type

Year

Mean

Median

Range

Placement Agents

2012

$358,571,429

$105,000,000

$0 – $2,000,000,000

2/15

13.33%

Placement Agents

2013 *YTD

$494,000,000

$500,000,000

$0 – $1,000,000,000

1/16

6.25%

Notes

Excluding 5 outliers citing $6bln, $7bln, $8bln, $10bln and $12bln



Placement Agents


Answer Options

Response Percent

Response Count


0.0%

0


5.9%

1


5.9%

1


5.9%

1


0.0%

0


5.9%

1


23.5%

4


5.9%

1


11.8%

2


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


0.0%

0


35.3%

6


2

answered question

17


Response Percent

Response Count

Less than 10%

68.8%

11

10% - $19%

6.3%

1

20% - 29%

0.0%

0

30% - 39%

0.0%

0

40% - 49%

0.0%

0

50% - 60%

12.5%

2

60% - 70%

6.3%

1

70%+

6.3%

1

answered question

16


Placement Agents


Answer Options

Response Percent

Response Count

Stock options

22.2%

2


22.2%

2


77.8%

7

Sign on bonus

0.0%

0

Retention bonus

0.0%

0


0

answered question

9


Response Percent

Response Count

Purely formulaic

38.9%

7


11.1%

2


38.9%

7


11.1%

2


0

answered question

18


Response Percent

Response Count

Purely formulaic

33.3%

6


16.7%

3


22.2%

4


22.2%

4

Agnostic

5.6%

1


0

answered question

18

How is coverage among your current sales team (primarily) aligned? Answer Options

Response Percent

Response Count

Geographically

72.2%

13

Client Channel

5.6%

1

Product

5.6%

1

No formal alignment

16.7%

3


1

answered question

18


Placement Agents


Answer Options

Response Percent

Response Count

Investment team

0.0%

0

Sales team

22.2%

4


11.1%

2


66.7%

12


0

answered question

18


Highly successful 5%


11%

Neutral Not very successful

0%

Not at all successful

0%


63%


Response Percent

Response Count


17.6%

3


29.4%

5


52.9%

9


0.0%

0


0

answered question

17


Response Percent

Response Count

5.3%

1


15.8%

3


36.8%

7


0.0%

0


42.1%

8


answered question

19


Placement Agents

Where do product specialists at your firm report in to?

Answer Options

Response Percent

Response Count


5.6%

1


11.1%

2


44.4%

8


0.0%

0


38.9%

7


0

answered question

18


Response Percent

Response Count


0.0%

0


11.1%

2


11.1%

2


0.0%

0


77.8%

14


0

answered question

18


Response Percent

Response Count


0.0%

0


88.2%

15


0.0%

0


11.8%

2


0

answered question

17


Placement Agents

UK/Europe: How would you best characterize your current firm's hiring plans within *UK/European* distribution for the remainder of 2013?

Answer Options

Response Percent

Response Count


57.9%

11

Sourcing investors

15.8%

3

LinkedIn

21.1%

4


21.1%

4


21.1%

4


10.5%

2

Employee referrals

52.6%

10


31.6%

6


0

answered question

19


Response Percent

Response Count

Yes

5.3%

1

No

78.9%

15

I don't know

15.8%

answered question

3 19


Placement Agents


Placement Agents: Demographics

Answer Options

Response Percent

Response Count

8.0%

2

Senior Associate

4.0%

1

Vice President

12.0%

3


0.0%

0

Director/Principal

20.0%

5


8.0%

2


8.0%

2

Partner

36.0%

9


4.0%

1

Associate


2

answered question

25


Response Percent

Response Count

5 - 10

18.5%

5

11 - 15

22.2%

6

16 - 20

11.1%

3

21 - 25

18.5%

5

26+

29.6%

answered question

8 27


Response Percent

Response Count

5 - 10

48.1%

13

11 - 15

14.8%

4

16 - 20

14.8%

4

21 - 25

14.8%

4

26+

7.4%

2

answered question

27


Placement Agents


Answer Options

Response Percent

Response Count

New York

56.5%

13

Connecticut

4.3%

1

Boston

8.7%

2

Chicago

4.3%

1

San Francisco

13.0%

3

Los Angeles

4.3%

1

Minneapolis

0.0%

0

Philadelphia

4.3%

1

Miami

4.3%

1

Houston

0.0%

0

Dallas

0.0%

0

Washington D.C.

0.0%

0


4

answered question

23


Response Percent

Response Count

Long Only Equity

16.0%

4


8.0%

2

Hedge Funds

40.0%

10

Private Equity

84.0%

21

Hedge Fund of Funds

8.0%

2


28.0%

7

Real Estate

60.0%

15

Commodities

20.0%

5

Infrastructure

36.0%

9


3

answered question

25


Response Percent

Response Count

Sales / Fundraising

76.9%

20


7.7%

2


0.0%

0


15.4%

4

Product Specialist

0.0%

0


0.0%

0


1

answered question

26


Placement Agents

Where do you work?

Part Three – Compensation Contents Base Salary •

Traditional asset managers: sales/fundraising and hybrid sales and investor relations

123

•

Multi-product asset managers: sales/fundraising and hybrid sales and investor relations

124

•

Hedge funds: sales/fundraising and hybrid sales and investor relations

125

•

Private equity: sales/fundraising and hybrid sales and investor relations

126

•

Real estate: sales/fundraising and hybrid sales and investor relations

127

•

Investor relations function

128

•

Product specialist function: all firm types and levels

129

•

Consultant relations function: all firm types and levels

129

•

Placement agents: all firm types and levels

130

•

Traditional asset managers: sales/fundraising and hybrid sales and investor relations

131

•


132

•


133

•


134

•


135

•


136

•

Product specialist function: all firm types

137

•

Consultant relations function: all firm types

137

•

Placement agents

138

Bonus

Compensation In the following pages we will present our findings on cash compensation, specifically base and bonus. We collected this data in range format rather than raw numbers, an approach that made it easier to capture the data but more difficult to present it. In future studies we will take a different approach. We had large sample sizes for the sales/fundraising and hybrid sales/fundraising roles, so in those cases we segmented the data by job function, level and firm type in order to provide the greatest level of clarity. Where we had smaller sample sizes, specifically for investor relations/client services, product specialists and consultant relations, we provided a broader view. The graphs represent the percentage of individuals reporting their compensation fell within certain ranges. Finally, we took a shot at answering the question, “Do MBAs earn more?” We found a higher representation of MBAs at the higher base levels, but an MBA’s impact on bonus compensation is less clear.


Compensation Summary Base compensation ranges: fundraising and hybrid/fundraising investor relations functions Traditional Long Only

Multi-Product

Private Equity

Hedge Funds

Real Estate

150,000 – 300,000+

125,000 – 300,000+

125,000 – 250,000

No data available

175,000 – 225,000


150,000 – 300,000

100,000 – 300,000

150,000 – 300,000+

150,000 – 275,000

200,000 – 250,000

Director/ Principal

125,000 – 275,000

150,000 – 300,000+

150,000 – 300,000+

125,000 – 275,000

100,000 – 300,000+

MD – Individual Contributor

200,000 – 300,000

150,000 – 300,000+

100,000 – 300,000+

150,000 – 300,000+

175,000 – 275,000+

MD – Management

175,000 – 300,000

175,000 – 300,00+

150,000 – 300,000+

150,000 – 300,000+

175,000 – 275,000+

Partner

No data available

No data available

No data available

175,000 – 300,000+

No data available

37

71

11

55

9

Title Vice President

Sample Size

Bonus compensation ranges: fundraising and hybrid/fundraising investor relations functions Title

Traditional Long Only

Multi-Product

Private Equity

Hedge Funds

Real Estate

Vice President

100,000 – 200,000

100,000 - 1.1mln

100,000 – 200,000

100,000 – 400,000

No data available


100,000 – 600,000 *plus two outliers reporting 1.7mln+

100,000 - 500,000 *plus two outliers reporting 1.2mln+

No data available

300,000 – 900,000

100,000 – 200,000

Director/ Principal

100,000 - 1.3mln

100,000 - 900,000

200,000 – 700,000

100,000 – 1.1mln

100,000 – 300,000

MD – Individual Contributor

100,000 – 1.1mln

100,000 – 1.1mln

100,000 – 400,000

100,000 – 3.5mln

100,000 – 1.1mln

MD – Management

100,000 - 1.7mln

100,000 – 2.5mln

100,000 – 600,000

100,000 – 3mln

No data available

Partner

No data available

100,000 – 1.6mln

300,000 – 1.9mln

200,000 – 1.9mln

No data available

37

72

11

55

9

Sample Size


Due to smaller sample sizes in several job functions, we summarized our findings below:

Base compensation ranges Function Investor Relations

Base Compensation Range

Sample Size

$125,000 – $300,000+

22

Product Specialist

$125,000 – $300,000+

13


$100,000 – $300,000+

54

Placement Agents

$100,000 – $300,000+

17

Function

Base Compensation Range

Sample Size

Investor Relations

$100,000 – $800,000

22

Bonus compensation ranges

Product Specialist

$100,000 – $1.1mln

13


$100,000 – $900,000

53

Placement Agents

$100,000 – $1.4mln

17


Base Salary Traditional asset managers: sales/fundraising and hybrid sales and investor relations

Vice President


$150,000 ‑ $174,000

66.7%

$150,000 ‑ $174,000

14.3%

$300,000+

33.3%

$175,000 ‑ $199,000

14.3%

$200,000 ‑ $224,000

14.3%

$225,000 ‑ $249,000

14.3%

$250,000 ‑ $274,000

14.3%

$300,000+

28.6%

Total Respondents

3

Director/Principal

Total Respondents

7

MD - Individual Contributor

$125,000 ‑ $149,000

25.0%

$200,000 ‑ $224,000

40.0%

$150,000 ‑ $174,000

25.0%

$225,000 ‑ $249,000

40.0%

$175,000 ‑ $199,000

12.5%

$275,000 ‑ $299,000

20.0%

$200,000 ‑ $224,000

25.0%

$250,000 ‑ $274,000

12.5%

Total Respondents

8

Total Respondents

5

MD – Managemen Role

Partner

$175,000 ‑ $199,000

7.1%

$200,000 ‑ $224,000

21.4%

$225,000 ‑ $249,000

14.3%

$250,000 ‑ $274,000

7.1%

$300,000+ Not currently employed

Total Respondents

42.9% 7.1%

14

No Respondents


Base Salary

Total number of respondents: 37


Vice President


$125,000 ‑ $149,000

17.7%

$100,000 ‑ $124,000

7.7%

$150,000 ‑ $174,000

5.9%

$125,000 ‑ $149,000

7.7%

$175,000 ‑ $199,000

29.4%

$150,000 ‑ $174,000

30.1%

$200,000 ‑ $224,000

29.4%

$200,000 ‑ $224,000

38.5%

$275,000 ‑ $299,000

5.9%

$250,000 ‑ $274,000

7.7%

$300,000+

5.9%

$275,000 ‑ $299,000

7.7%

Not currently employed

5.9%

Total Respondents

13

Total Respondents

17

Director/Principal


$150,000 ‑ $174,000

15.4%

$150,000 ‑ $174,000

21.4%

$175,000 ‑ $199,000

15.4%

$200,000 ‑ $224,000

35.7%

$200,000 ‑ $224,000

15.4%

$225,000 ‑ $249,000

14.3%

$225,000 ‑ $249,000

15.4%

$250,000 ‑ $274,000

21.4%

$250,000 ‑ $274,000

15.4%

$300,000+

7.1%

$275,000 ‑ $299,000

7.7%

$300,000+

15.4%

Total Respondents

13

MD – Management Role

Total Respondents

14

Partner

$175,000 ‑ $199,000

8.3%

$150,000 ‑ $174,000

50.0%

$200,000 ‑ $224,000

25.0%

$200,000 ‑ $224,000

50.0%

Total Respondents

2

$225,000 ‑ $249,000

8.3%

$250,000 ‑ $274,000

41.7%

$300,000+

16.7%

Total Respondents

12


Base Salary



Vice President $100,000 ‑ $124,000

Total Respondents

Senior Vice President 100.0%

2

Director/Principal

$150,000 ‑ $174,000

20.0%

$200,000 ‑ $224,000

60.0%

$250,000 ‑ $274,000

20.0%

Total Respondents

5


$125,000 ‑ $149,000

12.5%

$150,000 ‑ $174,000

12.5%

$150,000 ‑ $174,000

18.8%

$200,000 ‑ $224,000

25.0%

$175,000 ‑ $199,000

6.3%

$225,000 ‑ $249,000

25.0%

$200,000 ‑ $224,000

31.3%

$250,000 ‑ $274,000

25.0%

$225,000 ‑ $249,000

6.3%

$300,000+

12.5%

$250,000 ‑ $274,000

25.0%

Total Respondents

16


Total Respondents

8

Partner

$175,000 ‑ $199,000

5.9%

$175,000 ‑ $199,000

14.3%

$200,000 ‑ $224,000

23.5%

$200,000 ‑ $224,000

42.9%

$225,000 ‑ $249,000

5.9%

$250,000 ‑ $274,000

14.3%

$250,000 ‑ $274,000

41.2%

$300,000+

28.6%

$275,000 ‑ $299,000

5.9%

$300,000+

17.7%

Total Respondents

17

Total Respondents

7


Base Salary



Vice President

Base Salary

Total number of respondents: 11 Senior Vice President

$225,000 ‑ $249,000

100.0%

Total Respondents

1

Director/Principal

No Respondents MD - Individual Contributor

$150,000 ‑ $174,000

25.0%

$100,000 ‑ $124,000

50.0%

$200,000 ‑ $224,000

25.0%

$225,000 ‑ $249,000

50.0%

$225,000 ‑ $249,000

25.0%

$300,000+

25.0%

Total Respondents

2

Total Respondents

4


Partner

$150,000 ‑ $174,000

50.0%

$300,000+

50.0%

Total Respondents

2

$300,000+

Total Respondents

100.0%

2



Vice President


No Respondents Director/Principal

$200,000 ‑ $224,000

50.0%

$225,000 ‑ $249,000

50.0%

Total Respondents

2


< $100,000

50.0%

$225,000 ‑ $249,000

66.7%

$250,000 ‑ $274,000

25.0%

$250,000 ‑ $274,000

33.3%

$275,000 ‑ $299,000

25.0%

Total Respondents

3

Total Respondents

3


Partner

$175,000 ‑ $199,000

100.0%

Total Respondents

1

No Respondents


Base Salary



Traditional Asset Manager (independent)

Traditional Asset Manager (bank owned)

$150,000 ‑ $174,000

100.0%

$125,000 ‑ $149,000

100.0%

Total Respondents

1

Total Respondents

1

Multi - Product Asset Manager (independent)

Multi - Product Asset Manager (bank owned)

$150,000 ‑ $174,000

50.0%

$125-149k

$175,000 ‑ $199,000

50.0%

Total Respondents

2

Hedge Fund

Total Respondents

100.0%

1

Real Estate

$100,000 ‑ $124,000

10.0%

$175,000 ‑ $199,000

50.0%

$125,000 ‑ $149,000

10.0%

$200,000 ‑ $224,000

50.0%

$150,000 ‑ $174,000

10.0%

$175,000 ‑ $199,000

20.0%

$200,000 ‑ $224,000

10.0%

$225,000 ‑ $249,000

10.0%

$250,000 ‑ $274,000

10.0%

$300,000+

10.0%

Not currently employed

10.0% Total Respondents

2

Total Respondents

10

Private Equity $125,000 ‑ $149,000

20.0%

$150,000 ‑ $174,000

20.0%

$250,000 ‑ $274,000

20.0%

$300,000+

40.0%

Total Respondents

5


Base Salary



$125,000 ‑ $149,000

15.4%

$150,000 ‑ $174,000

7.7%

$200,000 ‑ $224,000

23.1%

$225,000 ‑ $249,000

15.4%

$250,000 ‑ $274,000

7.7%

$275,000 ‑ $299,000

7.7%

$300,000+

23.1%

Total Respondents

13

Consultant relations function: all firm types and levels Total number of respondents: 54 $100,000 - $124,000

1.9%

$125,000 - $149,000

7.4%

$150,000 - $174,000

18.5%

$175,000 - $199,000

18.5%

$200,000 - $224,000

14.8%

$225,000 - $249,000

14.8%

$250,000 - $274,000

16.7%

$275,000 - $299,000

3.7%

$300,000+

3.7%

Total Respondents

54


Base Salary


Placement Agents: all firm types and levels

< $100,000

11.8%

$100,000 ‑ $124,000

11.8%

$125,000 - $149,000

23.5%

$175,000 - $199,000

17.7%

$200,000 - $224,000

11.8%

$250,000 - $274,000

11.8%

$300,000+

11.8%

$275,000 - $299,000

3.7%

$300,000+

3.7%

Total Respondents

17


Base Salary


Bonus Traditional asset managers: sales/fundraising and hybrid sales and investor relations

Vice President

Bonus


< $99,000

66.7%

< $99,000

14.3%

$100,000 ‑ $199,000

33.3%

$300,000 ‑ $399,000

28.6%

$400,000 ‑ $499,000

14.3%

$500,000 ‑ $599,000

14.3%

$1,700,000 ‑ $1,799,000

14.3%

$2,000,000 ‑ $2,499,000

14.3%

Total Respondents

3

Director/Principal

Total Respondents

7


$100,000 ‑ $199,000

12.5%

< $99,000

20.0%

$200,000 ‑ $299,000

37.5%

$200,000 ‑ $299,000

20.0%

$300,000 ‑ $399,000

12.5%

$300,000 ‑ $399,000

20.0%

$800,000 ‑ $899,000

12.5%

$1,000,000 ‑ $1,099,000

40.0%

$1,100,000 ‑ $1,199,000

12.5%

$1,200,000 ‑ $1,299,000

12.5%

Total Respondents

8


5

Partner

< $99,000

21.4%

$100,000 ‑ $199,000

7.1%

$200,000 ‑ $299,000

14.3%

$400,000 ‑ $499,000

14.3%

$700,000 ‑ $799,000

7.1%

$800,000 ‑ $899,000

14.3%

$1,000,000 ‑ $1,099,000

7.1%

$1,400,000 ‑ $1,499,000

7.1%

$1,600,000 ‑ $1,699,000

7.1%

Total Respondents

Total Respondents

14

No Respondents



Vice President

Bonus


< $99,000

23.5%

Less than $99,000

15.4%

$100,000 ‑ $199,000

29.4%

$100,000 ‑ $199,000

15.4%

$300,000 ‑ $399,000

17.7%

$200,000 ‑ $299,000

15.4%

$500,000 ‑ $599,000

11.8%

$300,000 ‑ $399,000

23.1%

$800,000 ‑ $899,000

5.9%

$400,000 ‑ $499,000

7.7%

$1,000,000 ‑ $1,099,000

5.9%

$1,200,000 ‑ $1,299,000

7.7%

No bonus paid (unemployed)

5.9%

$1,300,000 ‑ $1,399,000

7.7%

No bonus paid (employed)

7.7%

Total Respondents

17

Director/Principal

Total Respondents

13


$100,000 ‑ $199,000

15.4%

< $99,000

7.1%

$200,000 ‑ $299,000

15.4%

$100,000 ‑ $199,000

21.4%

$300,000 ‑ $399,000

23.1%

$200,000 ‑ $299,000

7.1%

$400,000 ‑ $499,000

7.7%

$300,000 ‑ $399,000

14.3%

$500,000 ‑ $599,000

15.4%

$400,000 ‑ $499,000

21.4%

$700,000 ‑ $799,000

15.4%

$500,000 ‑ $599,000

7.1%

$800,000 ‑ $899,000

7.7%

$800,000 ‑ $899,000

14.3%

$1,000,000 ‑ $1,099,000

Total Respondents

13


Total Respondents

7.1%

14

Partner

$100,000 ‑ $199,000

15.4%

< $99,000

50.0%

$300,000 ‑ $399,000

7.7%

$1,500,000 ‑ $1,599,000

50.0%

$400,000 ‑ $499,000

23.1%

$500,000 ‑ $599,000

15.4%

$600,000 ‑ $699,000

15.4%

$2,000,000 ‑ $2,499,000

15.4%


7.7%

Total Respondents

13

Total Respondents

2



Vice President

Bonus


< $99,000

50.0%

$300,000 ‑ $399,000

60.0%

$300,000 ‑ $399,000

50.0%

$400,000 ‑ $499,000

20.0%

$800,000 ‑ $899,000

20.0%

Total Respondents

5

Total Respondents

2

Director/Principal


< $99,000

12.5%

< $99,000

12.5%

$100,000 ‑ $199,000

6.3%

$100,000 ‑ $199,000

12.5%

$200,000 ‑ $299,000

18.8%

$300,000 ‑ $399,000

12.5%

$300,000 ‑ $399,000

18.8%

$400,000 ‑ $499,000

12.5%

$400,000 ‑ $499,000

6.3%

$500,000 ‑ $599,000

12.5%

$500,000 ‑ $599,000

6.3%

$800,000 ‑ $899,000

12.5%

$600,000 ‑ $699,000

6.3%

$1,000,000 ‑ $1,099,000

12.5%

$700,000 ‑ $799,000

6.3%

$3,000,000 ‑ $3,499,000

12.5%

$800,000 ‑ $899,000

6.3%

$1,000,000 ‑ $1,099,000

6.3%


6.3%

Total Respondents

16


Total Respondents

8

Partner

< $99,000

5.9%

$200,000 ‑ $299,000

14.3%

$100,000 ‑ $199,000

11.8%

$600,000 ‑ $699,000

14.3%

$200,000 ‑ $299,000

11.8%

$1,000,000 ‑ $1,099,000

14.3%

$400,000 ‑ $499,000

5.9%

$1,100,000 ‑ $1,199,000

28.6%

$500,000 ‑ $599,000

5.9%

$1,800,000 ‑ $1,899,000

14.3%

$700,000 ‑ $799,000

11.8%


14.3%

$900,000 ‑ $999,000

5.9%

$1,000,000 ‑ $1,099,000

11.8%

$1,200,000 ‑ $1,299,000

5.9%

$1,300,000 ‑ $1,399,000

5.9%

$1,700,000 ‑ $1,799,000

5.9%

$2,500,000 ‑ $2,999,000

5.9%


5.9%

Total Respondents

17

Total Respondents

7



Vice President

Bonus


$100,000 ‑ $199,000

100.0%

Total Respondents

1

Director/Principal

No Respondents MD - Individual Contributor

$200,000 ‑ $299,000

25.0%

< $99,000

50.0%

$300,000 ‑ $399,000

25.0%

$300,000 ‑ $399,000

50.0%

$400,000 ‑ $499,000

25.0%

$600,000 ‑ $699,000

25.0%

Total Respondents

4

Total Respondents

2


Partner

< $99,000

50.0%

$300,000 ‑ $399,000

50.0%

$500,000 ‑ $599,000

50.0%

$1,800,000 ‑ $1,899,000

50.0%

Total Respondents

2

Total Respondents

2



Vice President

Bonus


No Respondents Director/Principal

$100,000 ‑ $199,000

100.0%

Total Respondents

2


< $99,000

50.0%

< $99,000

33.3%

$200,000 ‑ $299,000

25.0%

$300,000 ‑ $399,000

33.3%


25.0%

$1,000,000 ‑ $1,099,000

33.3%

Total Respondents

3

MD – Management Role No bonus paid (employed)

Total Respondents

Total Respondents

3

Partner 100.0%

1

No Respondents



Traditional Asset Manager (independent) < $99,000

Total Respondents

Bonus

Total number of respondents: 22 Traditional Asset Manager (bank owned) 100.0%

$100,000 ‑ $199,000

100.0%

1

Total Respondents

1

Multi - Product Asset Manager (independent)

Multi - Product Asset Manager (bank owned)

$300,000 ‑ $399,000

100.0%

$100,000 ‑ $199,000

100.0%

Total Respondents

2

Total Respondents

1

Hedge Fund

Real Estate

$100,000 ‑ $199,000

20.0%

$100,000 ‑ $199,000

50.0%

$200,000 ‑ $299,000

30.0%

$200,000 ‑ $299,000

50.0%

$400,000 ‑ $499,000

10.0%

$700,000 ‑ $799,000

10.0%


10.0%


20.0%

Total Respondents

2

Total Respondents

10

Private Equity Less than $99,000

20.0%

$100,000 ‑ $199,000

20.0%

$200,000 ‑ $299,000

20.0%

$300,000 ‑ $399,000

20.0%

$500,000 ‑ $599,000

20.0%

Total Respondents

5



< $99,000

7.7%

$100,000 ‑ $199,000

15.4%

$200,000 ‑ $299,000

38.5%

$400,000 ‑ $499,000

7.7%

$600,000 ‑ $699,000

7.7%

$800,000 ‑ $899,000

15.4%

$1,000,000 ‑ $1,099,000

7.7%

Total Respondents

13

Consultant relations function: all firm types and levels Total number of respondents: 53 < $99,000

5.7%

$100,000 ‑ $199,000

20.8%

$200,000 ‑ $299,000

35.9%

$300,000 - $399,000

15.1%

$400,000 - $499,000

5.7%

$500,000 - $599,000

3.8%

$600,000 - $699,000

3.8%

$700,000 - $799,000

3.8%

$800,000 - $899,000

1.9%


1.9%


1.9%

Total Respondents

53


Bonus


Placement agents: all firm types and levels

< $99,000

33.3%

$100,000 - $199,000

5.6%

$200,000 - $299,000

11.1%

$300,000 - $399,000

5.6%

$500,000 - $599,000

11.1%

$700,000 - $799,000

16.7%

$1,300,000 - $1,399,000

5.6%


5.6%

Total Respondents

53


Bonus


Do MBAs earn more? For a bit of fun, we explored how the compensation of distribution professionals with MBAs compares to those without MBAs. Since virtually all of our survey respondents are at the vice president level and above, we feel confident that most individuals have either pursued an MBA or decided against it by this point in their career. Because our survey captured base and bonus levels in a range format rather than raw numbers, we looked at the percentage of individuals reporting compensation within each respective range. Interestingly, we noticed a meaningful difference in base salary but not so much on the bonus. For base salary, there is clearly higher representation of MBAs in the higher ranges ($225,000+). For bonuses, there is a higher representation of MBAs in the $500,000 to $1.1 million range, but there is little differentiation beyond that, perhaps due to a much smaller sample size. We plan to collect raw numbers in future studies in order to present a clearer view on compensation overall.

Base Salary 30%

120%

Bachelors

MBA

0% Not currently employed

0% <$100,000

20%

$100,000 - $124,000

5%

$125,000 - $149,000

40%

$150,000 - $174,000

10%

$175,000 - $199,000

60%

$200,000 - $224,000

15%

$225,000 - $249,000

80%

$250,000 - $274,000

20%

$275,000 - $299,000

100%

$300,000+

25%


$4,000,000+


Less than $99,000

$100,000 - $199,000

$200,000 - $299,000

$300,000 - $399,000

$400,000 - $499,000

$500,000 - $599,000

$600,000 - $699,000

MBA

$700,000 - $799,000

$800,000 - $899,000

$900,000 - $999,000

$1,000,000 - $1,099,000

$1,100,000 - $1,199,000

$1,200,000 - $1,299,000

$1,300,000 - $1,399,000

$1,400,000 - $1,499,000

$1,500,000 - $1,599,000

30%

$1,600,000 - $1,699,000

$1,700,000 - $1,799,000

$1,800,000 - $1,899,000

$1,900,000 - $1,999,000

$2,000,000 - $2,499,000

$2,500,000 - $2,999,000

$3,000,000 - $3,499,000

$3,500,000 - $3,599,000

Bonus

Bachelors 120%

25% 100%

20% 80%

15% 60%

10% 40%

5% 20%

0% 0%


Great judgment about leveraging the investment team(s)

Able to articulate and position complex strategies effectively to a range of investors and consultants

Manages expectations, communicates proactively, meets deadlines

Strong academics including MBA and / or CFA

Serves as a calm, trusted advisor during challenging times

Analytical / technical depth

Willing to address difficult situations proactively

Demonstrated loyalty and tenure throughout their career

Demonstrates ownership and self-awareness around missteps and lessons learned from the experience

Culture fit

Quantifiable track record of raising capital successfully throughout different economic cycles Highly responsive; provides thoughtful, substantive and consistent follow-up

Willing and able to discuss products and solutions beyond a specific product offering

Truly collaborative and team-oriented

Track record of cultivating long-term relationships within key client channels or geographies

Considers investors’ needs holistically; offers solutions rather than a product-centric sales approach

Characteristics of an Outstanding Distribution Professional

The outstanding distribution professional possesses a unique mix of qualities, characteristics and experiences. We pieced together this “portrait” from a variety of sources, including: - allocator feedback during referencing and sourcing - commonalities among the “wish lists” from our clients regarding the ideal candidate profile - Heidrick & Struggles interview observations Long-term focus on building trust, respect and credibility with investors

Demonstrates respect for investors’ time; skilled at running meetings efficiently, communicating concisely and listening

Strong work ethic and competitive spirit coupled with good sportsmanship and collaboration

Career history of growth and success in roles of increased complexity and responsibility Professional behavior; consistently demonstrates strong values in business as well as social settings Able to master a specific product offering as well as understand a firm’s full range of capabilities across strategies

Willing to serve as a mentor Demonstrates patience, calm and commitment to outstanding service during client interactions

Superior written, verbal and interpersonal communication skills; able to present with confidence and influence

Entrepreneurial by nature; passionate about building and growing the business

Agile thinker; able to adapt quickly and calmly to shifting priorities and demands Communicates with genuine passion, energy and excitement

Combines strong strategic ability with tactical skills in approaching the market Straight shooter; communicates without spin, evasiveness or excessive storytelling

Proactive and transparent communication during periods of fund underperformance or key-person changes


Emerging Trends for 2014 and Beyond Survey participants shared more than 200 responses to the question “What Key Themes Do You See Emerging in 2014 and Beyond?” The most common themes were: • Redefinition of the role of alternatives within a portfolio; discussions about solutions, not just products; greater flexibility and creativity. • Negative impact of rising interest rates. • Further convergence of traditional and alternative investments. • Further convergence of institutional and high-net-worth investors. • Pressure on transparency, fees, compliance, liquidity. • Further industry consolidation and M&A activity. • Increased competitive advantage of larger firms. • Increased attention on individuals with technical skills over generalists for sales professionals. • Continued rise of OCIO. • Continued growth of influence by consultants and corresponding rise of consultant-relations specialist roles. Other themes that emerged include: • Greater emphasis on disciplined investment process vs. black box model. • More stable but equally competitive environment for fundraising. • The rise of product specialist and client-facing investment roles. • Talent retention issues at the largest firms, fund of funds and single-strategy hedge funds. • Continued use of liquid alternatives. • Continued growth of managed accounts and customization. • Continued move to LDI. • Fund closures due to underperformance and/or increased cost of doing business. • Ongoing debate around emerging markets. • Continued movement from formulaic to discretionary compensation models. • More sales professionals familiar with multi-asset portfolio construction.


Topics for Further Exploration At the close of our survey we asked participants to offer suggestions for potential future thought leadership reports. We received more than 100 suggestions covering a variety of ideas. The most common themes were: • Talent cultivation, retention and compensation • Succession planning and firm leadership • Convergence of traditional and alternative investments—how are firms navigating? • Evolution of the business overall • Product Specialist role Other themes that emerged include: • Client retention • How to expand a distribution effort globally • Career management (differentiation, skills, networking) • Compensation (more granular view overall, alignment of interests, commission vs. discretionary, equity participation) • Components of a successful asset management firm • Innovation within the asset management industry overall and within distribution teams specifically • How can small firms scale? • Impact of regulation on the industry (managers and investors) • Solutions vs. product-centric sales approach

We will endeavor to share our views on these topics through future reports and roundtable breakfasts. In addition, Heidrick & Struggles’ search consultants partner closely with our Leadership Advisory colleagues and those at our culture-shaping subsidiary, Senn Delaney. Please reach out if you wish to discuss a customized consulting project.


Survey Methodology Heidrick & Struggles sent an online questionnaire to 2,394 asset management distribution professionals. A total of 495 recipients participated in the survey, a 20.8% response rate. However, the number of participants who answered a given question varied widely from question to question, as noted throughout the report. Below is a summary of demographic information about our survey population. What is your current job title? Answer Options Associate

Response Percent

Response Count

0.4%

2

Senior Associate

0.7%

3

Vice President

14.4%

65


13.3%

60

Director/Principal

23.9%

108


16.2%

73


19.3%

87

Partner

8.2%

37


3.5%

16


53

answered question

451


Response Percent

Response Count

5 - 10

5.1%

25

11 - 15

21.0%

103

16 - 20

24.0%

118

21 - 25

27.5%

135

26+

22.4%

answered question

110 491

How many years of asset management distribution experience do you have? Answer Options 5 - 10

Response Percent

Response Count

30.8%

150

11 - 15

28.1%

137

16 - 20

22.2%

108

21 - 25

13.3%

65

26+

5.5%

27

answered question

487


Where do you work? Answer Options New York

Response Percent

Response Count

53.3%

233

Connecticut

7.1%

31

Boston

9.6%

42

Chicago

12.1%

53

San Francisco

7.1%

31

Los Angeles

5.3%

23

Minneapolis

0.7%

3

Philadelphia

3.0%

13

Miami

0.2%

1

Houston

0.0%

0

Dallas

0.9%

4

Washington, D.C.

0.7%

3


63

answered question

437

How would you characterize your current firm? Answer Options Traditional Asset Manager (independent)

Response Percent

Response Count

15.2%

69

Traditional Asset Manager (bank-owned)

5.9%

27

Multi-Product Asset Manager (independent)

22.0%

100

Multi-Product Asset Manager (bank-owned)

11.5%

52

Hedge Fund

20.9%

95

Private Equity

6.4%

29

Hedge Fund of Funds

3.3%

15


1.5%

7

Real Estate

5.1%

23

Placement Agent

5.9%

27

OCIO

2.2%

10


47

answered question

501



Response Percent

Response Count

Long-Only Equity

51.1%

242

Long-Only Fixed Income

44.5%

211

Hedge Funds

54.6%

259

Private Equity

33.3%

158

Hedge Fund of Funds

22.8%

108


17.3%

82

Real Estate

36.7%

174

Commodities

21.3%

101

Infrastructure

18.8%

89


60

answered question

474

If your firm is a hedge fund, what is its primary investment strategy? Answer Options

Response Percent

Response Count

Long-short equity

27.0%

44

Long bias

3.7%

6

Credit

23.9%

39

Event-driven

9.2%

15

Arbitrage

1.8%

3

Global macro

11.0%

18

Relative Value

1.8%

3

CTA/Managed futures

3.7%

6

Multi-strategy

17.8%

29


26

answered question

163


What are the total assets under management of your current firm? Answer Options

Response Percent

Response Count

<$200mln

4.4%

20

$200mln - $500mln

5.9%

27

$500mln - $1bln

3.7%

17

$1bln

5.5%

25

$2bln

4.1%

19

$3bln

3.7%

17

$4bln

2.8%

13

$5bln

2.0%

9

$6bln

1.3%

6

$7bln

2.8%

13

$8bln

0.9%

4

$9bln

1.5%

7

$10bln

2.4%

11

$11bln

1.3%

6

$12bln

2.2%

10

$13bln

0.4%

2

$14bln

0.7%

3

$15bln

0.9%

4

$16bln

0.7%

3

$17bln

0.2%

1

$18bln

1.1%

5

$19bln

0.4%

2

$20bln - $29bln

7.9%

36

$30bln - $39bln

2.4%

11

$40bln - $49bln

3.7%

17

$50bln - $59bln

2.4%

11

$60bln+

34.9%

160


16

answered question

458



Response Percent

Response Count

Sales / Fundraising

53.4%

243

Investor Relations / Client Service (client-facing)

9.2%

42

Investor Relations / Client Service (non-client-facing / support)

0.9%

4

Hybrid Sales and Investor Relations

17.8%

81

Product Specialist

4.6%

21


14.1%

64


55

answered question

455


Response Percent

Response Count

Yes

50.1%

190

No

49.9%

answered question

189 379


Our Global Team Our Expertise:

Our Clients:

• Senior leadership

• Hedge funds

Americas David Morris Houston

Carla Ormsbee Mexico City

Chad Astmann New York

Elisabetta Bartoloni New York

Jeannie Finkel Los Angeles

Paul Gibson New York

Amy Goldfinger New York

Jonathan Goldstein New York

Renee Neri New York

Liz Simpson New York

Laurie Thompson New York

Paul Charles San Francisco

Lee Hanson San Francisco

Rose Baker Toronto

Daniel Edwards Washington, D.C.

Jean Allen New York

• Investment professionals • Private Equity • Fundraising

• Real Estate

• Risk

• Traditional Asset Managers

• Compliance

• Insurance

• Technology & operations • Endowments • Investor relations

• Foundations

• Communications

• Pension Funds

• Human resources

• OCIO

• Legal • Emerging Markets

EMEA

APAC

David Harms London

Charlie Kershaw London

Alexandra Goodfellow Sydney

Anthony Bi Beijing

Andy Smith London

Tom Bucket London

Keir Macintosh Hong Kong

Steven McCrindle Hong Kong

Richard Thackray London

Pilar Santiago Madrid

Lisa Wong Hong Kong

Puneet Singh Mumbai / New Delhi

Raed Sater Dubai

Shadi El Farr Dubai

Jaeho Kim Korea

Linda Zhang Shanghai

Lawrence Trefi Paris

Sophie Landale Paris

Michael Di Cicco Singapore

Christoffer Black Tokyo

Aya Iinuma Tokyo

Fergus Kiel Sydney

Viviana Landoni Milan


Heidrick & Struggles is the premier provider of seniorlevel Executive Search, Culture Shaping and Leadership Consulting services. For 60 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles’ leadership experts operate from principal business centers globally. www.heidrick.com

Copyright ©2013 Heidrick & Struggles International, Inc. All rights reserved. Reproduction without permission is prohibited. Trademarks and logos are copyrights of their respective owners. 3070230

Talent and Compensation Trends in Asset Management

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