Recruiting work for Q4 2021 ahead of the pace for Q4 2019
A significant increase in C-Suite recruiting, combined with hidden executive compensation inflation, are most likely going to lead to 15+% increases in compensation for 2021. This will match the significant compensation inflation already observed for non-exempt staff in support roles, operations, technology, and client service. Much of this compensation increase will be anticipatory to counter rising turnover in leadership ranks, as well as what is necessary to close the rising number of open positions that firms are looking to fill.
We have seen a significant and steady increase in recruiting work since Q2 2021 in a wide variety of functions including C suite business leadership, RIAs, fintech, alternatives, technology, strategic and digital marketing, product management, ETFs, and investment roles in emerging markets and alternative credit. Flexibility with hybrid work environments in the future is an essential calling card for any ongoing recruitment. Firms that are expressing a “back to office” plan are seeing searches extend beyond six months and paying 20-30% total compensation premiums. Firms that have adopted a virtual first model are completing searches in 60+ days and often hiring candidates at below their former total compensation run rate.
The challenges of adopting hybrid work organizational structures are significant, including upskilling managers to lead effectively with less in-person office time available. This is the subject of our third blog, “Leadership in Hybrid Work.” The nature of which jobs and departments can effectively work on a hybrid basis, and to what extent (how many days remote will work, and on what schedule), requires a decentralized and interactive trial and error approach. The most effective guidance on adopting hybrid work cultures (not including the pandemic safety protocols still necessary) came from Vanguard: “[We] will pursue a working model that will blend increased flexibility with the known benefits of in-person collaboration.”
We are observing the first concerted compensation inflation since 2015-2016, reminiscent of the 2006-08 period.
Executive compensation in the asset & wealth management business is being driven by two important “hidden inflation” factors. The first is the dramatic increases in the value of equity-linked deferred compensation and ownership stakes that most C-Suite leaders in the industry enjoy. Financial services stocks, and particularly those of pure-play asset managers, financial advisors, and fintech firms, are at all-time highs, and a surge in M&A activity is driving further inflation of valuations across the board. The second aspect of “hidden inflation” comes from the lifestyle gains of C-Suite executives who found adapting to hybrid and remote work the easiest. Walking back from these benefits will be extremely difficult for many firms in 2022.
As a result, we predict that firms will adjust 2021 compensation up significantly in Q4 2021 as a defensive measure to counter rising turnover among senior leaders who are starting to attempt to lock in the benefits of this “hidden inflation.” Upward compensation adjustments are also being driven by the surge in ongoing recruiting work and the difficulty of filling open positions on an expedited basis as we cross into Q1 2022.
- President & CEO – $40 bil RIA
- President & COO – $5 bil RIA
- CEO – $4 bil Family Office
- Division Executive & Head of Investment Business – Post-Revenue, Mission-Driven Payment Services Fintech
- Managing Director & ETF Division Manager – $60 bil US Asset Manager
- COO Trust Services Business – Large Regional Law Firm
- Head of Retail Channel Marketing – Large Global Asset Management Firm
- Head of Channel Marketing – Mid-Sized Specialty Asset Management Firm
- Head of Digital Marketing – $1 trillion Global Asset Manager
- EVP & Chief Marketing Officer Retail – $1 trillion Global Asset Manager
- Partner & Chief Marketing Officer – $10 bil Global Institutional Asset Manager
- Chief Investment Officer – $3 bil Endowment
- Partner & CHRO – $40 bil US Asset Manager
- Board Member – $110 bil Global Asset Manager
- Board Member – $10 bil Mutual Fund Complex
- ETF Product Manager – $60 bil Asset Manager
- Managing Director & Head of Client Service – $40 bil RIA
