2015 GLOBAL MID YEAR REVIEW

Transcription

1 COMMODITIES RATES FOREIGN EXCHANGE CREDIT SECURITIZED PRODUCTS EMERGING MARKETS CASH EQUITIES 2015 GLOBAL MID YEAR REVIEW COMPENSATION & HIRING TRENDS EQUITY DERIVATIVES PRIME SERVICES INVESTMENT BANKING RISK MANAGEMENT QUANT RESEARCH & ANALYTICS ELECTRONIC TRADING INFORMATION TECHNOLOGY PRIVATE WEALTH MANAGEMENT HEDGE FUNDS ASSET MANAGEMENT PRIVATE EQUITY AUGUST 2015

2 2015 Mid Year Review COMPENSATION DATA ANALYSIS METHODOLOGY The Options Group 2015 Mid Year Review is the culmination of five months of work contributed by over 120 global consultants and research professionals. It is intended to enable our clients to make informed compensation decisions in OGiQ has collected information on global business performance, key talent moves, recruitment trends and compensation practices through its extensive global database of over 500,000 industry professionals, interviews with senior executives across the industry, and various other data sources. Compensation figures in this report, unless otherwise noted, are in US dollars and represent total compensation. Total compensation is defined as base salary plus cash and noncash bonus. Our estimates represent recorded annual pay packages in 2014 for professionals based on our survey results and our proprietary candidate database, and exclude the top one percent of compensation ranges. The average change in compensation excludes professionals who reported receiving contractual bonus guarantees in The candidate survey was conducted from January 29 to March 9, This report provides an analysis of historical data and current trends collected through our discussions with candidates, consultants and clients and offers forward looking compensation projections by product and geographical region. Percentage changes in compensation are based on employees expectations and Options Group s perspectives on current trends. DATA CONTRIBUTORS ABS Alert, Alternative Investment News, Alpha Magazine, AsiaMoney, Bloomberg, Bond Week, The Boston Consulting Group, BusinessWeek, Credit Suisse, Dealogic, Derivatives Intelligence, Dow Jones, efinancial, EuroMoney, Financial News, Financial Times, Fortune, Investment Dealers Digest, The New York Times, PE Week, Risk, SEC filings, Thomson Reuters, The Wall Street Journal ABOUT OPTIONS GROUP Founded in 1992, the Options Group is a leading global executive search and strategic consulting firm for the financial services industry. Since 2000, we have maintained a local presence in five continents and have placed thousands of mid to senior level professionals in all areas of the financial services industry in a range of institutions. With over 120 consultants and market intelligence analysts worldwide, Options Group has a thorough knowledge of key competencies in the financial industry and is at the cutting edge of global hiring services and compensation trends for securities, investment banking, hedge funds, asset management, and information technology. Options Group possesses a track record of consistently providing expeditious and comprehensive executive search and market intelligence services to clients. For additional information, please contact Jessica Lee at jlee@optionsgroup.com ABOUT OGiQ OGiQ is the consulting division of Options Group. Its primary role is to provide unique, value added advice, products and human talent management solutions to our clients. OGiQ is responsible for developing the firm s intellectual capital and proprietary products, advanced analytical tools, and databases used to provide these solutions. Our mission is to enable clients to make more informed decisions by creating global research products that seamlessly combine the firm s proprietary tools, information and research capabilities.

3 2015 Mid Year Review MANAGING PARTNERS Michael Karp New York Bob Reed New York Carlos Mejia New York Simon Satanovsky New York David Korn London Raveen Shah London Vinicius Bolotnicki Sao Paulo DISCLAIMER All material presented in this report, unless indicated otherwise, is under copyright to Options Group. None of the material or its content, or any copy of it, may be altered in any way, transmitted to, copied, or distributed to any other party, without the prior written permission of Options Group. The materials presented in this report are provided for information purposes only. Moreover, the information and opinions presented in this report have been obtained or derived from sources believed to be reliable by Options Group; however, Options Group makes no representation regarding their accuracy or completeness. Options Group accepts no liability for loss arising from the use of the material presented in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Options Group. This report is not to be relied upon in substitution for the exercise of independent judgment. UNDERSTANDING COMPENSATION TABLES IN THIS REPORT INFORMATION TECHNOLOGY MIDDLE OFFICE/OPERATIONS MANAGING DIRECTOR BANKS HEDGE FUNDS ASSET MGMT TECHNOLOGY FIRMS Top 10% $850K $1,100K $900K $1,400K $640K $960K $560K $880K Average $660K $740K $600K $720K $520K $580K $400K $480K Bottom 25% $430K $520K $400K $460K $350K $400K $280K $360K Corporate Titles Managing Director (MD) Managerial or non managerial role, typically over fifteen years of experience Director Managerial or non managerial role, typically between nine and fourteen years of experience Vice President (VP) Non managerial role, typically between six and nine years of experience Associate Non managerial role, typically between three and six years of experience Top 10% The highest top 10% compensation ranges, not the compensation paid at the top firms Average The Average of all compensation for a particular title and firm type Bottom 25% Does not represent the bottom 25% of individual performers. Compensation ranges represent pay levels at smaller firms or firms that rank below the top 15 by market share or revenue. The lower quartile of compensation for a particular title and firm type can be used to bridge in between titles. For example, the compensation range for the Senior Vice President is the bottom 25% range for Directors.

4 2015 Mid Year Review TABLE OF CONTENTS Introduction... 4 FICC Commodities Rates Foreign Exchange Credit Securitized Products Emerging Markets Equities Cash Equities Equity Derivatives Prime Finance Investment Banking Risk, Quant, & Analytics Risk Management Quantitative Research & Analytics Electronic Trading Technology Private Wealth Management Hedge Funds Asset Management Private Equity Spring 2015 Candidate Survey Summary

5 2015 Mid Year Review INTRODUCTION I did not recruit extraordinary people. I recruited people who had extraordinary potential and then I trained them. There are no good people waiting to be hired. All of the good people already have good jobs. Admiral Hyman G. Rickover Father of the Nuclear Navy In general, hiring demand appears to be weighted towards junior professionals. For senior professionals, hiring will be mostly opportunistic to fill in gaps in coverage or as replacements. Additionally, as approval to hire senior professionals has become a lengthy process, firms attempt to ensure a perfect fit with candidates before moving to the offer stage. Legal, regulatory, and compliance costs continue to be weighted on the financial services industry, not just banks. Global financial services messaging provider, SWIFT, published a report earlier this year highlighting the challenges of the investment management industry. In the report, the following line summarizes some of the largest issues affecting the entire industry: The sheer number and diversity of regulatory obligations, and the frequent lack of clarity over implementation requirements, combined with fixed deadlines and the fear of incurring financial penalties for non compliance, are impacting investment managers organizational structures, investment budgets, recruitment and data management priorities. 1 In addition to these compounded issues, growing concerns over market instability due to illiquidity and implementation OTC derivatives reform have created new risks for all parties. In an Oppenheimer equity research report published in March, the analyst estimates that dealer corporate bond inventories as a percentage of the total outstanding dropped from 2.49% in 2007 to 0.49% in The average between 2001 and 2003 was 1.25%. Although there has yet to be any known optimum level, under CCAR, broker dealers will be forced to maintain higher capital ratios or further reduce inventories it is a similar story in Europe. According to estimates by the Royal Bank of Scotland, liquidity in credit markets in Europe has declined by 90% since The negative effects are not only impacting banks, but hedge funds are also voicing their concerns. In May, BlueMountain Capital senior partner Jes Staley warned that the contraction in credit default swaps trading has created potential systemic threats to the financial system. 3 In light of these changes, those that are more trading oriented have opted for highly liquid products. Apparently, some are cautious regarding this as well. Howard Marks, co founder of Oaktree Capital, warned clients regarding liquidalternative vehicles and ETFs. He suggests that the source of increased liquidity is usually illusory, fleeting and unreliable, and it works (like a Ponzi scheme) until markets freeze up. 4 To further explore these concerns, Options Group conducted a flash poll in early May and received over 600 responses. 1 ustry_2015.pdf /bond dealers face brain drain in london as analysts go to funds 3 fewer derivatives could pose a threat to the financial system/

6 2015 Mid Year Review Introduction Professionals at Banks in the US Professionals at Alternative Investment Firms in the US Reduce costs associated with market making activities 51% Reduce costs associated with market making activities 31% Less regulations 1% More regulations/ oversight of nonbanks 8% Rise in US interest rates 18% More regulations/ oversight of nonbanks 10% Other 8% Rise in US interest rates 28% Other 15% Allow proprietary trading 12% Break up/reduce banks 1% Allow proprietary trading 14% Break up/reduce banks 3% Professionals at Banks in the UK and EU Professionals at Alternative Investment Firms in the UK and EU More regulations/ oversight of nonbanks 12% More regulations/ oversight of nonbanks 30% Reduce costs associated with market making activities 50% Other 9% Breakup/reduce banks 1% Reduce costs associated with market making activities 15% Allow proprietary trading 12% Other 25% Rise in US interest rates 25% Rise in US interest rates 17% Allow proprietary trading 5% Professionals at Asset Management Firms Professionals at Banks in Countries Other Than US, UK, and EU Less regulations 8% More regulations/ oversight of nonbanks 20% More regulations/ oversight of nonbanks 18% Reduce costs associated with market making activities 31% Other 12% Reduce costs associated with market making activities 41% Other 12% Allow proprietary trading 6% Rise in US interest rates 14% Allow proprietary trading 12% Break up/reduce banks 2% Rise in US interest rates 24% 6

7 2015 Mid Year Review Introduction ❶ = High Activity ❷ = Moderate Activity ❸ = Low Activity, Mostly Replacement Hires US EMEA ASIA* JAPAN BRAZIL INDIA ANDEAN Commodi es ❸ ❸ ❹ ❹ ❷ Credit ❸ ❷ ❶ ❹ ❶ ❸ ❸ 1 Rates ❸ ❹ ❸ ❺ ❸ ❸ ❹ Foreign Exchange ❸ ❸ ❷ ❺ ❸ ❸ ❹ Securitized Products ❸ ❸ ❹ Emerging Markets ❷ ❸ ❷ Cash Equities ❷ ❸ ❷ ❸ ❹ ❷ ❸ Equity Derivatives ❷ ❸ ❸ ❹ ❹ ❷ Prime Services ❸ ❸ ❸ ❹ Investment Banking ❷ ❷ ❷ ❷ ❺ ❶ ❷ Private Wealth Management ❶ ❷ ❷ ❶ Information Technology ❶ ❶ ❷ ❸ Electronic Trading ❹ ❷ ❷ ❶ Quantitative Research & Analytics ❸ ❸ ❷ ❸ Risk Management ❸ ❸ ❷ ❹ ❶ ❷ Operations ❶ ❶ ❷ ❸ ❶ ❷ ❸ 2 US EMEA ASIA* JAPAN BRAZIL INDIA ANDEAN Investment ❷ ❷ ❷ ❷ ❷ ❸ ❷ Distribution ❸ ❷ ❶ ❶ ❶ ❷ Operations ❶ ❷ ❷ ❶ ❸ Information Technology ❸ ❷ ❷ ❷ ❷ * Asia = Hong Kong and Singapore Commodi es hiring ac vity includes physical trading and energy firms. 1 Andean Region Fixed Income 2 Andean Region Compliance 1H15 GLOBAL HIRING ACTIVITY HEATMAP BY REGION ❹ = No Activity ❺ = Headcount Reductions Likely SELL SIDE BANKS, BROKER DEALERS & BOUTIQUES BUY SIDE HEDGE FUNDS, ASSET MANAGEMENT FIRMS, PRIVATE EQUITY & PROPRIETARY TRADING FIRMS 10

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12 2015 Mid Year Review Spring 2015 Candidate Survey Summary There is a high correlation between one s job satisfaction and one s satisfaction with their group, except for in wealth management, which is typically a less team oriented role. CORRELATIONS BY SELECT FIRM TYPE, NON FRONT OFFICE* ROLES AND ALL REGIONS Comp Expectations & Paid Fairly Job Satisfaction & Satisfaction with Group Firm Satisfaction & Considering Switching Firms Turnover Increasing & Switching Firms Considering Switching Firms & Paid Fairly Turnover Increasing & Firm Satisfaction Physical Trading/Energy Firm Regional/Local Bank (0.57) (0.02) (0.51) 0.32 Asset Mgmt Firm (0.43) 0.27 (0.41) (0.01) Broker Dealer (0.61) 0.46 (0.27) (0.53) Global Bank (0.47) 0.19 (0.40) 0.05 Proprietary Trading Firm (0.17) 0.17 (0.26) Insurance Firm (0.22) 0.00 (0.30) 0.32 Hedge Fund (0.42) (0.09) Private Equity/Real Estate (0.50) 1.00 (0.87) * Non front office is defined as operations professionals, compliance officers, risk managers, human resource professionals, middle and back office technology professionals and corporate professionals. Excludes those who received a contractual bonus guarantee for PERCENTAGE CHANGE IN TOTAL COMPENSATION (TC) IN 2014 FROM 2013 Q1. What was the percentage change in your total compensation (base + bonus) for 2014 from 2013? Increased more than 30% Increased between 10% and 29% Between +10% and 10% Decreased between 10% and 29% Decreased more than 30% Q2. Was your bonus guaranteed in 2014? Yes, verbal Yes, contractual No, my bonus was not guaranteed My position does not qualify for a bonus Firm Type* % of Population that Reported TC Average Change in TC With Decreased 30%+ Increased 30%+ Bonus Guarantee No Guarantee Asset Management Firm 2% 12% 11% 12% Global Bank 4% 12% 23% 9% Boutique 4% 21% 16% 25% Broker Dealer 6% 18% 30% 5% Hedge Fund 9% 21% 19% 13% Insurance Company 3% 10% 5% 6% Private Equity/Real Estate Firm 3% 20% 8% 17% Physical Trading/Energy Firm 3% 18% 16% 14% Proprietary Trading Firm 4% 15% 28% 7% Wealth Management 0% 13% 8% 8% Regional Bank 4% 9% 32% 4% Technology Firm 3% 7% 6% 6% * Excluding promotions & guarantees Excluding promo ons 75

13 2015 Mid Year Review Spring 2015 Candidate Survey Summary EXPECTED HEADCOUNT CHANGES Q3. What is your best guess as to how the overall headcount of your group will look a year from now? Increase by 5% or more Increase by less than 5% No Change Decrease by less than 5% Decrease by 5% or more BY FIRM TYPE Expected Headcount Change in 2015* Decrease by 5% or more Decrease by less than 5% No change Increase by less than 5% Increase by 5% or more 20% 22% 33% 33% 13% 52% 47% 28% 20% 37% 8% 28% 31% 20% 20% 23% 17% 32% 4% 17% 13% 23% 12% 12% 4% 4% 6% 13% 2% 4% Global Bank Regional Bank Broker Dealer Physical/Energy Firm Wealth Management Boutique Expected Headcount Change in 2015* Decrease by 5% or more Decrease by less than 5% No change Increase by less than 5% Increase by 5% or more 28% 38% 26% 31% 35% 19% 42% 17% 41% 6% 9% 17% 13% 11% 1% 3% 8% 3% Asset Mgmt Firm Hedge Fund Insurance Firm Private Equity/Real Prop Firm Technology Firm Estate * Responses are from professionals with managerial responsibilities only. 21% 21% 21% 22% 17% 33% 30% 61% 3% 19% 76

14 New York 121 East 18th Street New York, NY London 3 CopthallAvenue, 5th Floor London, EC2R 7BH Hong Kong 902 Dina House, 11 Duddell Street Central Hong Kong São Paulo RuaDo Rocio, th Floor São Paulo SP Tokyo NEWS KyobashiSuite1101, Kyobashi, Chuo ku Tokyo , Japan Zürich 106 Bahnhofstrasse, 8001 Zürich, Switzerland Bogotá Av. Chili Carrera 7A. NO Torre a Piso 5 Bogota, Colombia Delhi Executive Center, Level 18, Building 5, Tower A, DLF Cyber City, DLF Phase 3 Gurgaon Frankfurt Hochstrasse Frankfurt, Germany Mumbai 231 Trade Centre, 2nd Floor, BandraCurla Complex Bandra (East) Mumbai Singapore Level 18, City House, 36 Robinson Road Singapore Sydney Level 20, Tower 2, Darling Park 201 Sussex St, NSW Sydney, Australia