Show Me the Money

Reported by: Judi Malter, CFA - Career Management Advisory Group Chair

Over 100 IASC members and guests took a summertime schedule break to attend the sold-out June 23rd Career Management event, "Show Me the Money." Alvin Spector, of Russell Reynolds Investment Management practice in Chicago, shared key findings of the recent investment industry compensation report prepared in conjunction with the CFA Institute. Relying on his experience working closely with CIOs, CFOs, portfolio managers, economists, credit analysts and other financial service specialists, he elaborated on investment management executive recruiting with tips on keeping your compensation aligned with new trends.

The event format provided time both for networking with other CFA Society Chicago members and for asking Alvin individual questions. While the vast majority of audience participants felt they were underpaid (perhaps a surefire, if sacrificial, job retention strategy!), the survey showed that investment professionals tend to have a fairly realistic view of how they are compensated relative to their peers.

The report is based on the more than 16,000 questionnaires returned from CFA Institute members, reflecting a 24% response rate. Accessible at www.cfainstitute.org, it offered the following interesting findings per Alvin's presentation:

"Compensation is on the rebound, but has not yet revisited its 2001 peak. CFA Institute members with 10+ years of experience reported 2005 median total compensation of $240,000, comprised of $147,000 median base salary, $54,000 median cash bonus and $10,000 median non-cash compensation.

"Chicago median compensation, at $269,000, is above the U.S. average but below New York City ($400,000) and Boston ($315,000).

"Across levels of experience, women still earn less than men, though the gender gap has narrowed from 18% in 1999 to 13% in 2005.

"By type of assets, investment professionals who manage mutual fund assets continue to earn the highest compensation.

"By type of organization, hedge funds continue to pay the most, with significantly greater incentive compensation potential.

"Fixed income portfolio managers and analysts 'out earned' their equity colleagues for the first time ever in 2003. That gap accelerated into 2005, reversing historical trends.

"Currently, the most in demand positions are in sales and marketing across all asset classes."

How does it all stack up?

  • Compensation is on the rebound, but has not yet revisited its 2001 peak.
  • Chicago median compensation, at $269,000, is above the U.S. average
  • By type of assets, investment professionals who manage mutual fund assets continue to earn the highest compensation.
  • By type of organization, hedge funds continue to pay the most.