Senior execs staying put while waiting for big 2021 bonuses

Senior money management executives are reluctant to leave their current employers before collecting lucrative 2021 bonuses early next year, but money managers are beefing up recruiting with a focus on hiring diverse candidates as well as senior ESG specialists.

Sources said most money management executives don't have a compelling incentive to change jobs right now, given strong 2021 performance and asset growth that will boost incentive compensation.

An exception to the trend is the moderate movement by women and minorities to senior executive roles at new firms, Pensions & Investments reporting so far this year showed.

"For the top five to 10 largest money management firms, 2021 has been a really good year and it's unlikely that there will be a lot of changes among senior executives aside from normal retirements going forward," said Alan Johnson, managing director at New York-based compensation specialist Johnson Associates Inc.

The firm's estimate for 2021 incentive compensation for traditional and hedge fund money managers is an increase between 10% and 15%, while private equity incentive funding for megadeals likely will range from 15% and 20%, based on second-quarter earnings results of 10 managers.

Even as senior money management executives mostly are staying where they are, at least for now, their firms are "extremely active in recruiting people at non-executive levels, especially for investment management, distribution, client service and technology roles," said David Barrett, managing partner at executive recruiting firm David Barrett Partners LLC, New York, in an email.

Mr. Barrett stressed that money managers are approaching recruitment with "a huge diversity priority."

However, a big part of the incentive for money managers to try to increase the diversity of their senior ranks quickly is demand from "consultants and their investment management clients who want to see managers doing something different about creating a diverse workforce," said Nimisha Srivastava, Charlotte, N.C.-based senior director and global head of credit at Willis Towers Watson PLC.

In October, private equity manager Apollo Global Management Inc., New York, hired Roger W. Ferguson Jr. and William M. Lewis Jr. as vice chairman and senior partner, respectively. Both positions are new and both men are Black.

Mr. Ferguson serves as an adviser to the firm's senior leaders on asset management and retirement services initiatives. Mr. Lewis will make private equity investments and serve on the executive committee when he joins Apollo on Nov. 15.

Mr. Ferguson was president and CEO of TIAA-CREF, New York. TIAA managed $1.3 trillion as of Sept. 30 through its Nuveen affiliates and TIAA-CREF investment teams.

Mr. Lewis was managing director and head of investment banking at Lazard Ltd., New York.

Apollo managed $472 billion as of June 30.

Thasunda Brown Duckett, a Black woman, succeeded Mr. Ferguson in his roles of president and CEO of TIAA-CREF on May 1. She previously was CEO of Chase Bank Consumer Banking, a division of J.P. Morgan Chase & Co.

Given investors' growing demand for ESG and sustainable investment strategies, money managers have been aggressively recruiting senior executives for these assignments, said Scott T. Gockowski, senior director based in the New York office of Casey Quirk, a practice of Deloitte Consulting LLP.

"Managers are looking to develop new capabilities because they are investing in anything right now that will make money, including ESG. Managers are working to incorporate ESG throughout all of their investment strategies," Mr. Gockowski said in an interview.

The willingness of senior executives to move into ESG strategies may be part of a sea change in the investment industry.

"We've been talking to money managers about their culture as part of our due diligence process for years. We've found that people in the investment industry are re-evaluating what they want to do," Willis Towers Watson's Ms. Srivastava said.

"There used to be such a black mark about doing something different, but that may be changing now," she added.

Three large money managers recently recruited women to help build out their ESG and impact investing units.

In September, TCW Group Inc., Los Angeles, named Olivia Albrecht global head of ESG, a new position. She is tasked with integrating ESG principles across the firm's investment strategies.

Previously, Ms. Albrecht headed ESG business strategies at Pacific Investment Management Co., Newport Beach, Calif.

TCW managed $265.8 billion as of Sept. 30. PIMCO managed $2.2 trillion as of June 30.

In October, Fidelity Investments Inc., Boston, hired Kathleen Bochman as managing director and head of ESG research. She works closely with Fidelity's chief sustainability officer, Rina Kupferschmid-Rojas, to ensure consistency and alignment with Fidelity's corporate sustainability strategy.

Ms. Bochman previously was vice president and director of ESG at Loomis Sayles & Co. LP, Boston.

Fidelity managed $4.2 trillion as of June 30 and Loomis Sayles managed $358 billion as of the same date.

BlackRock Inc., New York, hired Kristen Weldon in October as a London-based managing director and global head of sustainable investing in its alternative investment unit. She replaced Teresa O'Flynn, who moved to the new role of founding member of Decarbonization Partners, a partnership between BlackRock and Temasek Holdings, Singapore's S$381 billion ($282.3 billion) state investment arm.

BlackRock managed $9.46 trillion as of Sept. 30.

Among P&I's list of executive moves into other roles in 2021 was PIMCO's October appointment of Ayman Hindy as managing director, overseeing the firm's portfolio management re-engineering and infrastructure.

The role is new and in it, Mr. Hindy will work closely with Dan Ivascyn, managing director and PIMCO's group CIO, as well as with the company's risk, quantitative and analytics teams on a variety of initiatives including artificial intelligence. Previously, Mr. Hindy was an operating partner at Safar Partners LLC, Cambridge, Mass, a venture capital fund.

Angelo Manioudakis was named executive vice president and CIO by Northern Trust Asset Management, Chicago, effective Sept. 27, replacing Robert P. Browne, who left the firm in June.

Mr. Manioudakis was a partner at Lantern Harbor Investment Management, Boston.

Northern Trust managed $1.53 trillion as of Sept. 30.

In July, Franklin Templeton, San Mateo, Calif., hired Yu "Ben" Meng as executive vice president and chairman of Asia-Pacific. The role is new and tasks Mr. Meng with expanding the firm's investment offerings in the region, particularly private equity, venture capital and other alternative strategies. Franklin Resources Inc., Franklin Templeton's parent company, managed a total of $1.55 trillion as of June 30.

Mr. Meng was the CIO of the $481.2 billion California Public Employees' Retirement System, Sacramento, until August 2020 when he resigned after regulatory filings showed that he invested in shares of private equity companies in which the defined benefit plan also had invested money.

By way of comparison, few money management firms have been as active in mass hiring as Fidelity. The firm announced earlier this year that it intends to hire 15,600 new employees in 2021.

"These record increases in hiring come on the heels of record growth across all of Fidelity's businesses, including in assets under administration, daily trades, and advisory assets. Fidelity is hiring across all job functions, particularly client-facing positions (44%) and technology (9%), helping to create new products," said Nabil Ashour, a Fidelity spokesman, in an email.