Incentive compensation in the money management industry is expected to increase 10% to 15% in 2013, sparked by gains in assets under management and positive net flows, according to projections from compensation consultant Johnson Associates.
For hedge funds, a similar increase is forecast, while private equity is expected to see an increase of 5% to 10%.
Such gains in compensation are expected to outpace those in investment and commercial banking, where results are forecast to increase moderately, in the zero to 10% range because of weak advisory activity, underperforming investment banking in Europe, and moderate commercial and retail deposits and loan growth.
“Johnson Associates projects increases in incentive compensation across financial services … (but) incentive compensation for the asset management industry is projected to increase meaningfully” according to a report on the company's projections.
However, compensation at individual firms will vary above and below Johnson's projections based on their performance, the report said, with “substantial inflows expected for superior investment performance while average or subpar performers continue to struggle.”
The projections are based on first-quarter trends in the financial services industry, according to the report.