Your May 31 issue on the largest money managers included an article on page 14, “Portfolio manager, analyst staffing rebounds from financial crisis.” It contained statistics showing that firms increased the number of people in those positions during 2009, just as they had decreased them during the crisis.
One source was quoted as saying, “A lot of this is dictated by what's going on in the market.” No kidding.
It has ever been thus. The playbook calls for managers to adjust head count in response to revenues, which in the aggregate are driven by the performance of the key investment markets. While the trends in asset classes may offset each other, in many years you could use one of two templates to write the staffing story.
The economic decisions to adjust expenses are understandable, but it would be interesting to hear more stories of managers that have resisted that urge by building (or paring) teams in advance of changes in the markets, rather than reacting to them.
More importantly, what firms are breaking out of the old model, in which there are “analysts” and “portfolio managers,” defined and aligned in the traditional fashion? We have witnessed enormous changes in the flow of information and the structure of markets, yet most investment organizations look remarkably like those of yesteryear. The asset managers that are adapting to a new environment by modifying outmoded approaches are the ones to watch going forward.