Daniel Behar / 22 June
May Newsletter – Salary & Bonus Trends
In our February edition, Mason Blake conducted a short survey to analyse the bonus and salary expectations of asset management professionals for the 2020/2021 financial year. This month, we conducted a follow-up survey using the same sample of candidates in order to validate our previous analysis given that bonuses have now been paid or communicated, and analyse the impact that issues of the past 12 months such as COVID-19 and Brexit have had on the industry. We asked the candidates six questions and have broken down our findings into the following areas: Investments, Distribution/Marketing, Product and Operations.
Just under three-quarters of candidates surveyed currently work at either large or medium-sized asset managers, and the majority of these work within the investment or distribution department of their firms.
In February’s survey, we found that over 80% of candidates surveyed were expecting to receive either a higher or the same bonus as they received in 19/20. As you can see from the graph above, the reality was very different. This time round we asked applicants to tell us if their bonuses were more, less, or the same as what they expected. Almost half (43%) of those surveyed received a bonus that was less than what they had expected, with only 19% receiving more than they thought they would. This shows either that performance wasn’t as strong at certain firms due to the pandemic, or that candidates thought the work they produced during the pandemic warranted more than they received.
Interestingly enough, when it came to salary increases, there wasn’t too much difference in expectations vs. reality. In the previous survey, 71% expected a pay rise this year. From the chart above, 65% still did receive an increase in their salary, although of those, the vast majority received between just 1-9%.
Questions 5 & 6 centred around the impacts of their bonus/salary increases. We asked candidates if they thought their final bonus and salary reviews were impacted by key issues of the past year. Unsurprisingly, 49% of those surveyed thought that Covid-19 had a negative impact on bonuses and pay increases, with 6% believing it had a positive impact and a further 45% believing it had no impact at all.
On Brexit, just 17% of candidates thought their bonus and salary levels had been negatively impacted by the UK’s official withdrawal from the EU, with an overwhelming majority (81%) saying it hadn’t impacted at all.
In the next section we will look at all of these results within each individual department.
36% of investment professionals received a lower bonus than they expected this year, which is almost triple the amount who expected to receive less back in February. Those working at large asset managers were left least surprised, with just over 30% of candidates receiving a lower bonus than expected, however over 60% of front office candidates at smaller firms received less than they had hoped for – which shows that, at least in this area, larger companies were better equipped to succeed in spite of the pandemic.
Furthermore, just 62% of those surveyed at larger firms received a salary increase, down from 95% that expected to. On the other hand, whilst bonuses were not as high at mid-sized asset managers, 80% of candidates surveyed from these firms received a pay increase, which was the same as expected back in February.
There were also discrepancies between expectation and reality within the distribution/marketing arena. Back in February, 48% of surveyed applicants expected bonus to remain the same, however 55% said their bonus was lower than they expected when asked this time around.
Similarly, previously a vast majority of candidates in this area were expecting a pay rise, but in reality, just over half of those surveyed received one. Again, when broken down further, larger firms seemed most inclined to give salary increases, with just 40% of those at smaller asset managers receiving one.
The data with regards to product is a little more optimistic when it comes to bonuses. The majority of candidates surveyed – over 80% – work in either large or medium-sized corporations. Only a third of candidates received a bonus which was lower than they expected, and a similar amount in fact received more than they thought they would.
On the other hand, on pay-rises, the belief amongst those working in product was that they would receive one. Over 75% of candidates at large asset managers were expecting a pay-rise, but only 60% received one. This drops to just a third of applicants who work at mid-sized firms.
Our data from candidates in the operations space was fairly consistent with our previous results. Not one applicant surveyed in this area received a higher bonus than they expected and rather, 44% received less than what they had initially expected at the start of the year. Our data shows however, that over 75% in these teams did in fact receive a salary increase.
Overall, it is fair to say that the expectations of the hundreds of asset management professionals we surveyed for this newsletter were not met and that Covid-19 was the most prominent reason for that. Larger firms seemed to be more inclined to hand out higher bonuses and salary increases – largely due to being better equipped to deal with the volatility – whereas small-mid sized firms tended to give either one or the other, or none at all.
We also gave our respondents an opportunity to comment on their thoughts on the matter. The overriding consensus was that many felt aggrieved that their hard work during the pandemic has not been rewarded despite strong performance from many asset managers. Some even went as far as saying that Covid had been used as an excuse and a smokescreen in order to withhold from dishing out bonus and salary increases to staff.
With the WFH trend set to continue for the foreseeable within the sector, it will be interesting to see if remuneration packages are further affected as a result of the new of working brought about by the pandemic.