Pay is a thorny issue, especially on the sell-side, where it is down significantly from pre-crisis levels and continuing to trend lower, according to a speaker at Thursday's Asia Pacific Trading Summit, held in Hong Kong.
In the past, Asia was sometimes seen as being a special case, with firms willing to protect the pay levels of employees here, while the local markets matured. That is no longer the case. Asia is perceived as having grown up and maintaining the pay of Asian staff is not sacrosanct, the remuneration expert explained, speaking under Chatham House rules at the event, organised by the FIX Protocol Limited, the message standards organisation.
The worst-hit pay packets are for those working in equities, which was down 5% to 10% in 2012. Investment banking was next worst, down 5% to 8%. Fixed income was more balanced, in a range from -5% to +15%.
Sell-side headcounts were down 10%, with vice presidents and junior staff particularly vulnerable.
On the buy-side, research found that asset management headcount is increasing, with pay levels holding steady, and in some cases rising, thanks to revenues up by 5%. It has been a good first quarter for the buy-side, but given that the first quarter has been high-performing for the last few years, this hasn't prompted firms to boost hiring, as they suspect that the remainder of the year might not be so good, in line with recent years.
Apparently, a senior equity portfolio manager in the US gets paid almost double than his equivalents in Asia, but that gap is closing - very slowly. That US portfolio manager is now paid more than his sell-side equivalent, a managing director in an equities department.
The tactics going forward are for the sell-side to "manage out" performers who consistently rank as average, and focus incentive pools on top talent and those that managers need to retain.
Another observation by the speaker was that on the buy-side, the work/life balance is better in alternative investment firms and boutiques. Anyone who has witnessed hedge fund managers obsessively-compulsively checking their marked-to-market positions every 20 minutes over dinner might disagree with that assertion.