Investment managers’ earnings decline as bonuses dry up, survey concludes

(May 20, 2003) Canadian investment managers are earning an average 30% less than they did two years, and nearly 50% less than their American counterparts, according to data compiled by the Association for Investment Management Research (AIMR).

Median compensation in Canada for investment professionals was $75,805 US in 2003, compared to $108,000 US in 2001, says the survey, conducted by AIMR and Russell Reynolds. Compensation figures include base salaries, bonuses and stock options.

The study found that while base salaries have changed little since 2001, bonuses have taken a significant hit.

The average Canadian base salary in 2003 was $59,065 US and the average bonus was $13,125. Two years ago, base salaries hovered around $65,000 US and bonuses were about $30,000 US.

In 2003, U.S. base salaries averaged $109,550 US and bonuses averaged $30,800 US. The U.S. median in 2003 was $148,000 US. Average American compensation has fallen 22% since 2001.

“AIMR members are seeing the realities of a market downturn reflect significantly in their levels of compensation,” said AIMR senior vice president Raymond DeAngelo.

Compensation rises dramatically with experience, the survey found. Canadians with more than 10 years on the job earned a median $124,700 US this year.

“The results demonstrate that investment managers are well paid overall, especially those with more than 10 years of experience employed by large organizations,” the study concludes. “But compensation, and cash bonuses in particular, have been impacted by a declining global economy.”

The study found that professionals who manage mutual fund assets, insurance portfolios and pension funds earn more than the median, while those who manage individual and family assets were not as highly compensated.

Investment professionals employed by mutual fund companies earned 20% more than average, while hedge fund professionals made the most, averaging 76% above the median.

Women earn an average of 14% less than their male counterparts, regardless of experience. The study states that while there is no simple explanation for the gender imbalance, more men have senior roles in the industry and hold the Chartered Financial Analyst designation. CFAs with more than 10 years experience earn about 21% more than those without the designation.

The study covers a number of investment occupations, including portfolio manager, securities analyst, pension officer and chief executive officer.

AIMR, which administers the CFA designation, and Russell Reynolds, surveyed 16,500 investment professionals in the U.S., Canada, Britain, Hong Kong, Singapore, Japan and Switzerland. More than 2,000 Canadians responded.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca