Administration July 6, 2001

Survey Highlights Investment Industry Pay Gaps

June 7, 2001 (PLANSPONSOR.com) - Investment managers' compensation varies significantly by gender, job function and location, according to a recent survey.
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The study by Association for Investment Management and Research (AIMR) and Russell Reynolds Associates also shows that the median annual remuneration of US investment professionals has risen by 15% since 1999 from $165,000 to $190,000

Experience Matters

Compensation levels vary in line with years of experience. The survey found that, among US-based investment professionals:

  • for those with less than five years of experience, median total compensation is $125,000 per year
  • for those with 20 or more years of experience under their belts, median compensation is $253,000.

The survey, conducted during the first quarter of 2001, examines compensation levels of more than 8,000 AIMR members in the US. In addition, 2,020 AIMR members in Canada, the United Kingdom, Hong Kong and Singapore were also polled, allowing for cross border comparisons.

Plan Sponsors Scrooged

The most highly compensated respondents were investment managers at mutual fund organizations, earning 37% more than the 2001 median. Securities broker, dealers and investment counselors were at the upper end of the spectrum while those working for banks, plan sponsors, endowments, foundations, and pension consulting firms earned less.

Incentive compensation is most significant at large organizations and at securities brokers or dealers and mutual fund companies, accounting for half or more of median total compensation. In addition, these organizations pay the highest compensation packages, with the top 10% at these organizations expecting to earn approximately $1 million or more.

Findings also indicate that the performance of an organization is the greatest determinant of an investment management professional’s bonus. In the case of portfolio managers however, bonuses are closely tied to individual investment performance.

Asset Class

The type of assets managed is also indicative of compensation levels, the survey found that:

  • investment professionals involved in managing mutual fund assets earn the highest compensation, with a median total compensation of $270,500, 42% higher than the industry median
  • managers of pension, endowment and foundation assets earn more than those managing insurance assets.

Women Short-Changed

The survey found women earn 14% less than their male counterparts across all levels of experience. The inequity, to some extent may be attributed to the larger proportion of men in more senior and higher paying positions and the greater concentration of men employed by securities firms.

The gender gap is least significant at the junior and senior-most levels of experience. At these levels men earn 6% to 8% more on average than their female peers.

The survey also found regional differentiation consistent with the 1999 data in that professionals working in the Northeast are among the highest paid, with a median total compensation of $225,000 and earning 45% more than their counterparts in the South.

– Camilla Klein                        editors@plansponsor.com

See: 2001 Investment Management Compensation Survey (in PDF format)

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