Report: Compensation cost rises at asset managers unsustainable

|By:, SA News Editor

Yes, asset-management execs are seeing nice gains in compensation, but the real issue for the asset managers, according to consultancy kasina, are the fast-rising costs of their wholesaler arrangements.

Compensation and benefits costs at 17 studied publicly traded asset managers rose at twice the rate of fee revenues, says the report. The "plans are not healthy," says kasina's Jeffrey Strange, speaking about external wholesaler compensation.

The report notes compensation and benefits have grown to 36% of asset-based fees from 31% three years ago. "Long-term industry trends argue strongly for asset managers to evolve their plans or risk seeing diminished wholesaling efficiency and firm margins."

Among those studied: BlackRock (BLK +0.3%), T. Rowe Price (TROW +0.3%), Eaton Vance (EV -0.2%), Franklin Templeton (BEN -0.3%), and Gamco (GBL +0.3%).