The buyside trader is better off these days compared to his sellside counterpart – both financially and qualitatively.
Compensation for buysiders – both portfolio managers and traders-has increased 15 percent during the last year, according to a new report from two consultancies. The report, “Buy-Side Bliss: Compensation Up in 2013,” from equity market consultancy Greenwich Associates and executive compensation firm Johnson Associates, also noted that sellside compensation is up only between 5 and 10 percent during the same time period.
Greenwich Associates and Johnson Associates projected this trend to continue with buyside incentives projected to increase 10 to 15 percent this year versus 5 to 10 percent sellside growth.
Since the financial crisis, many broker-dealers have been aggressively cutting back on expenses with a large part of those cuts coming in staff. While the buyside too has not been immune to falling commissions and profits, layoffs there have been fewer.
According to the report’s authors, buyside firms have largely escaped the regulatory pressure and public scrutiny with regards to compensation that has fallen on the broad banking industry, leading to higher levels of job satisfaction and morale.
Kevin Kozlowski, an analyst at Greenwich, said that equity traders and portfolio managers have seen their pay fall slightly in the year, with the average pay coming in at $660,000 in 2012. This is down from $752,400 in 2011.
Looking ahead, the report said that asset management firms will likely continue to keep a close eye on costs and headcount moving forward.
“Some firms expect turnover to increase from the current historically low levels as job opportunities become more plentiful and gradually returning stability quells the risk of moving,” said Johnson Associates Managing Director Francine McKenzie. “Firms need to continue to monitor the balance of business need and attrition levels against headcount as they proceed with leaner teams into 2014.”
