Alternative investment firms (hedge funds and funds of funds) are the main drivers behind the high averages in asset management compensation in 2005. Compensation for senior-level positions at these firms often exceeds $1 million USD, propped up by substantial bonuses. Alternative investment firms are offering more attractive compensation packages than traditional asset management firms across the board.
Michael Woodrow, President of Risk Talent Associates, stated, "The survey confirms what we see in the marketplace â top firms value seasoned risk professionals. Asset managers, particularly in the alternative asset management space, desire top tier talent, and they are willing to pay for it. The entry point for a seasoned, but hands-on risk manager at an asset manager often hits $500,000 or more, which is markedly up from a few years ago."
The survey also notes that one-third of the respondents reported changing jobs within the last two years â and almost 70% of them entered new jobs in alternative investments or companies providing both traditional asset management and alternative investments.
Woodrow agreed, "We have seen particularly heavy activity in the first quarter of 2005 with our hedge fund and fund of funds clients. It appears that the coveted hedge fund investors â institutions â are critically reviewing alternative asset managersâ risk management capabilities prior to making a decision on a mandate. In order to attract the institutional investors, some hedge funds and funds of funds are setting the bar quite high by implementing sophisticated risk management programs, and hiring the staff capable to run and oversee them. We expect this trend to continue throughout 2005."
"We have seen growth in each of the segments identified in the survey â alternative asset management, traditional asset management, and insurance," Woodrow continued. "Currently, we are working on projects in each of these areas as firms realize that sound risk management is both a business continuity requirement as well as a marketing tool."
This is the second of four compensation surveys Risk Talent is scheduled to complete before the end of the year. In January, Risk Talent completed a survey of risk professionals in the capital markets and will conduct similar surveys covering risk professionals in financial compliance as well as in energy, consulting, software and corporate segments of the market.