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Navigating Talent Management Challenges in Europe's Alternative Asset Management Sector

By Paige C. Scott and Steven Unzicker

Compensation plans can be quite diverse, particularly among alternative asset management firms that are often more likely than traditional asset management organizations to march to the beat of their own drummers. While approaches to remuneration may vary substantially from firm to firm, there can also be considerable commonality when it comes to describing changes and challenges in the business environment.

This whitepaper furnishes a strategic management tool that transcends mere compensation data, providing market intelligence and insights conducive to effective talent management.

In-depth interviews and surveys were conducted with a dozen alternative managers between October and November 2016.

The report delves into macro business themes impacting fee revenue, bonus pools, and sales activity, along with exploring recruiting and retention trends and challenges. Additionally, it scrutinizes the influence of the evolving regulatory landscape on compensation structures and levels, while also delving into compensation plan design, including team structure and key performance indicators.

Key
Insights
Recruiting
Challenges and
Strategies
Expertise in alternative products is crucial for recruiting distribution professionals, emphasizing nuanced investment capabilities.
Talent Pools
and Recruitment
Sources
Internal recruitment is valued for cultural alignment, while external talent sourcing from investment banks and competitors brings marketplace insights.
Role of
Product
Specialists
Product specialists are vital in facilitating effective communication with prospective investors, bridging the gap between investment teams and clients.
Diversity
Initiatives and
Challenges
Two-thirds of surveyed firms are actively fostering a more inclusive workforce, focusing on gender diversity and recognizing the broader benefits of diverse teams.
Growing Fee
Pressure
The vast majority of survey respondents said fee pressure actually makes it more difficult to recruit and hire talent.
Approach to Incentive
Compensation Key
Alternative managers have been somewhat restricted in using formulaic compensation models due to regulations applying specifically to them.
Key Performance
Indicators
Most firms reward sales professionals with a blend of individual, team, and firm performance measures, but key performance indicators (KPIs) vary widely.
Long-Term
Incentive Plans
Incentive compensation accounts for only part of the compensation of sales professionals at 60% of the alternatives firms in the survey.
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