After spending time with clients this fall, we came to the conclusion that many of the predictions made earlier in the year regarding rising compensation expectations were incorrect. We published our viewpoint convinced by our anecdotal survey that overall compensation expenses might rise slightly, but that senior executives would not participate meaningfully in those increases.

Strong equity values across the entire financial services sector on the back of the continuing bull market are certainly reason for cheer for equity owners in the asset and wealth management business. With the spread of equity ownership now much broader across the officer ranks than 15 years ago, a significantly larger portion of the senior management at many firms with public or synthetic equity ownership stakes are enjoying overall wealth gains, which certainly takes the sting off what we expect to be a flat compensation year.

Perhaps this positive trend on personal wealth had a spillover effect on senior management attitudes towards hiring. Our recruiting business has improved considerably from the doldrums of the summer of 2016, with multiple search demand in a number of interesting sectors, including ETFs, solutions based investment teams, investment team lift outs in less efficient asset classes such as emerging markets, and marketing. The pipeline of discussions with clients has grown steadily since September 2016, with particular strength in Q1 and Q4 2017.

Our most important observation for the year was the accelerating pace of succession appointments across the industry where a generation of managers was passed over and GenX professionals were vaulted into the C Suite.

Our hypothesis is that this is a governance shift where organizations are trying to accelerate the pace of change under duress. We were complimented by Institutional Investor’s writing about our blog in the November issue. Other important trends on which we published blogs were the continuing advancement of large ’40 Act firms building retail direct channels despite the potential for channel conflict issues, and the significant number of new CMO recruits across the entire industry.
Our ongoing work in technology and operations has been greatly complimented by our participation with asset and wealth management fintech venture capital firm Vestigo Ventures as a member of their Advisory Board. Working with both Ian Sheridan and Mark Casady on the recruitment of Mike Nugent as a Partner of the firm, as well as on a thought leadership series, has given us continued insights at the bleeding edge of what success will look like a few years into the future!

A highlight for us during the second half of the year was recognizing the success of an earlier recruit, Amy Raskin, CIO of Chevy Chase Trust. Her story and the organization’s continued success on many fronts are wonderful testimonials to the quality of work we aspire to on every search. CEO Peter Welber said, “Our partnership with George and his team was outstanding. He provided in-depth insights on the market, was frank with us about expectations, patient as we explored several avenues during the search, and was creative and persistent in challenging us to think out of the box. Amy’s continued success as a leader and a portfolio manager has been the best testimony to the quality of our partnership with George.”

We look forward to staying in touch and being helpful on recruiting or market intelligence matters. Please call or e-mail George with any questions.