Investment management professionals in insurance companies averaged $168,000 in total compensation in 2003. This was below the averages for those in mutual fund management firms ($185,500) but above similar professionals in investment counseling firms ($162,500), securities broker/dealers ($155,000) and banks ($130,000), according to a survey by the Association for Investment Management and Research, Charlottesville, Va., and the recruiting firm Russell Reynolds Associates, New York.
Insurance companies paid a median salary of $124,200 to their investment management professionals, plus $40,000 in bonuses and $10,000 in noncash compensation, says AIMR in its 2003 Investment Management Compensation Survey. (Totaling these medians do not match figures for total compensation because the components of the data are different.)
Across all industries, investment professionals said their pay has shrunk considerably over the past few years, which AIMR says reflects the long slump in the stock market. A decline in cash bonuses accounted for most of the shrinkage, although average salaries were down for many positions as well.
Investment professionals working for insurance companies fared better than most, as their compensation fell only 9% between 2001 and 2003, compared to declines of 38% at securities broker/dealers, 29% at mutual fund companies, 26% at investment counseling firms and 16% at banks during the same period, says AIMR.
Almost 11,800 U.S. professionals participated in the 2003 survey, representing a broad variety of investment management positions in financial services, ranging from chief executive, financial and operating officers to portfolio managers, securities analysts and marketing/sales executives.
With median noncash compensation remaining at $10,000 since 1999, median total compensation for investment professionals in all industries in 2003 stood at $148,000, down 22% from $190,000 in 2001 and 10% from $165,000 in 1999.
The median salary component of compensation stood at $109,550 for all industries, down from $115,000 in 2001 but up from $100,000 in 1999. The bonus portion slumped to a median of $30,800, from $50,000 in 2001 and $40,000 in 1999.
The most common basis for bonuses reported was the employers overall business performance, reported by 67% of those surveyed. Next was the companys investment performance (42%), the individuals business development performance (39%) and the individuals investment performance (38%). Most firms used a combination of factors in determining bonuses.
Looking only at companies with more than $5 billion in assets (or over $5 billion in annual revenues in the case of broker/dealers), professionals in investment management firms came out on top, at a median of $219,000 in total compensation compared to $178,000 for insurers.
Looking at just the top 10% of investment managers in terms of pay, median total compensation, including noncash, was $450,000.
Compensation varied widely by location. For instance, the median investment professional salary in New York was $125,000, compared to $120,000 in Boston. The median bonus in New York was $75,000, while in Boston it was $40,000.
But New York investment managers didnt fare quite as well in noncash compensation, earning a median of $10,000 vs. $12,500 for those in Boston.
Looking at just the top 10% of investment managers in terms of income, those in New York earned an average of $650,000, while top managers in Boston averaged $579,000, AIMR reports.
The study also found a gender gap in the compensation of men and women investment professionals. Median compensation for women investment advisors in the U.S. was $131,000, 13% less than mens median of $150,000, AIMR reports. All told, 17% of the survey participants were women.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 11, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.