Incentive compensation, or bonuses, paid to asset management professionals are expected to be higher across the board in 2024 on a year-over-year basis, according to Johnson Associates, a New York-based compensation consulting firm.
At traditional asset management firms, bonuses are expected to rise by 5% to 10% by year-end, given that equity flows have stabilized and strong performance by equity markets will likely boost revenues and assets under management at these companies, the firm said in an Aug. 8 report.
These firms are also making a strategic initiative in exchange-traded funds despite declining fee rates, the report said.
Within alternative asset management firms, bonus payments are slated to be in a range — from flat to a 10% increase, Johnson’s report noted.
Professionals at hedge funds are expected to see their bonuses jump by 5% to 15%, reflecting strong performance across most strategies and solid inflows.
And private equity exits are increasing as limited partners keep pushing for higher capital returns, the report added, which will likely result in 5%-10% higher bonuses.
The largest alternatives firms — those with at least $50 billion in assets under management — have dominated fundraising, accounting for nearly one-half of all assets raised so far this year.
Johnson also indicated in the report that family offices and endowments are expected to build out their investment teams with a heavy emphasis on alternative assets — likely resulting in 5% to 10% higher bonuses.
The report also indicated that headcount at asset management firms is up 5.2% over 2021 levels, but is now trending downward. “Headcount peaked in early 2023 and asset management firms are now trying to arrive at the right headcount levels in changing markets,” said Alan Johnson, managing director and president of Johnson Associates.
