Industry employees hit hard by poor performance

You have seen the advertisements from fund managers and dealt with them over the phone, at conferences and in your office, and afterwards you may have pondered over one key question.

It is one of the most sensitive of questions that can be asked today but one which remains at the forefront of many people’s minds — how much are they worth and how much do they get?

Each year Hays Personnel Services surveys the financial services industry and compiles the results of those salaried staff, providing insights into how much the industry is worth at the hip pocket.

And it seems that this year the industry is worth pretty much the same with average salaries locked in at the same levels they were at this time last year.

This means that a general manager working in the area of portfolio administration in Sydney still receives an average salary of $130,000, which has remained fairly static for about three years. However, the range of salaries in this area does vary widely, with Hays finding the variance stretching between $100,000 and $150,000.

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The fund managers in other capital cities also returned similar findings, with salaries for the same position static within a wide salary range. But it is not just senior positions that have plateaued.

Those in the roles of trainee, administrator and senior administrator has also platued. Despite the fact that these rose across the board in all cities by about $2,000 to $3,000 last year.

This pattern was also repeated in the area of client services, where last year most rises were in the vicinity of $2,000, except senior positions in Melbourne and Sydney, which rose by around $5,000.

According to Hays Personnel Services business director for financial services Edmund Gill, the reason for this lack of movement in salaries is tied to fund manager performance.

“Most Australian and offshore managers have not had the performance to justify pay rises as they have been heavily geared towards equity investments, which have fallen heavily. However fixed interest is also at a 30-year low so the poor returns have been hard to avoid for many managers,” Gill says.

“There has to be lateral exposure for good returns and it has been a hard year. In this type of environment it is hard to reward staff.”

Other factors have also put pressure on wage rises. According to Peter Dawson executive director of recruitment consulting company Financial Recruitment Group, the aftermath of September 11 and the recent levels of mergers and amalgamations of financial services groups has created a glut of qualified people now looking for new employers.

“There is a breadth of talent on the streets at the moment and managers are waiting for the good times to return, so both of these place pressure on the remuneration of those already in a role,” Dawson says.

This excess of staff has also been driven by a return to core functions by many managers, Gill says, with a number of special projects either shelved altogether or put on hold releasing a number of contract workers into the job pool as well.

Even though official salary figures remain static, Dawson says that senior figures in funds management groups are being rewarded for high levels of performance through a variety of methods, which are not picked up by conventional surveys.

“Many are not rewarded with a salary component but instead are given equity in the company, bonuses when certain targets are reached and sign on fees as part of their contracts,” Dawson says.

Gill says these figures are hard to pick up despite the efforts of groups like Hays to track them mainly because fund managers are reluctant to reveal that type of information.

“It is hard to quantify the value added by those on the portfolio management side, especially in those groups based offshore, because in most cases they will not reveal it or their contract restricts it,” Gill says.

For those in the industry looking forward to the next pay rise, Dawson says in many cases this is dependent on two factors — a consistent positive economic picture and a shift to team performance and rewards.

“The old ways of paying people based on inflows is pretty much over with the shift to considering the group’s outflows and team performance as well, Dawson says.

“But until we see some indication of a consistent upturn, there is unlikely to be any growth ahead with only key people being rewarded in exceptional events.

Both Gill and Dawson state that there have been no actual pay cuts so far, but the pressure on pay increases going forward is related to margin squeeze, with managers reluctant to hand out pay increases while profits slump and returns to investors stay low.

“There is squeezing of the margins, but we have yet to hear of anyone being forced to take a backward step. Some managers have indicated that pay rises have been frozen and when compared with CPI this is a loss,” Dawson says. For the average employee this falling back due to CPI growth is akin to receiving a four per cent pay cut.

Gill says there is one area of growth that should come through in the next 12 to 18 months and that is in the area of compliance. Changes to legislation and the implementation of new regimes will all take time and expertsie and those staff who have a legal or technical background will benefit with increased job opportunities and pay levels, according to Gill.

“This area is largely undertstaffed at present but will grow. We know this will occur because it has happened in similar markets overseas such as the UK and it is highly likely we will see that type of employment expanding here,” Gill says.