Outlook of investment managers for compensation trend mixed

December 04, 2020 08:19
Photo: Reuters

Findings from the seventh edition of Heidrick & Struggles’ 2020 Asia Pacific Private Capital Investment Professional Compensation Survey, conducted in the summer of 2020, indicates a mixed outlook, with some investment professionals more optimistic about the future despite the effects of the pandemic.

“There’s no doubt the pandemic has pushed firms to prepare for economic uncertainty. APAC investment professionals are echoing this sentiment -- foreseeing conservative compensation budgets in 2021,” said Steven Greenberg, Regional Managing Partner of Heidrick & Struggles, Financial Services Practice, Asia Pacific & Middle East. “However, some positive trends do stand out with key sectors reporting an optimistic industry outlook and the continuation of their current compensation structures.”

Coupled with the global economy readjusting to the shock of COVID-19 and other macroeconomic risks, industry sentiment is shifting. The share of respondents expecting an increase in base or bonus salary in 2020 was smaller than the share who received an increase in base or bonus in 2019.

But looking closer, respondents across all levels except managing partners (CAGR -0.37%) reported a steady increase in cash compensation from 2018 to 2020. Associates and senior associates are leading the way with the greatest percentage increase, 15.18% CAGR, between 2018-2020, followed by the vice president level.

In contrast to last year’s findings, however, investment professionals at global funds reported a higher median cash compensation in 2020 as compared to those at regional funds at almost all levels of seniority. Venture capital firms have the greatest variability in median compensation at all five levels. For instance, the total cash compensation for a managing director at the 25th percentile is USD287.50k and that of the 75th percentile is USD650.00k.

This year’s findings reflect a trend that the Greater China premium is indeed diminishing, in line with last year’s observations. Compensation in other markets such as Japan and Korea are now higher -- at the VP, principal and managing partner levels. However, this trend is not as consistent across all levels in 2020, as seen in 2019.

While 46.8% of investment professionals expect no change in their base salary in the coming 12 months, the overall future market outlook was highly varied according to sector and geography. Those in the credit and special situations segment were most optimistic, and 44% of the respondents in Australia expect positive changes in the market landscape. Japan, Korea and Southeast Asia (excluding Singapore) are most doubtful about market improvement, while respondents from India, Greater China and Singapore have somewhat of a mixed outlook.

“Looking ahead, with a broad set of unprecedented hurdles on the horizon, talent plays a more critical role than ever before as firms must step up to the challenge,” added Todd Monti, Heidrick & Struggles’ Global Managing Partner, Private Equity Practice. “Firms not only have to effectively ride out the changing investment outlook, but also manage their employees’ growing expectations and concerns.”

The 2020 Asia Pacific Private Capital Investment Professional Compensation Survey includes self-reported online survey data from 242 private capital investment professionals who provided their compensation data from 2018, 2019, and 2020, as well as their expectations for changes in market sentiment and compensation in 2020.

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