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New pay rules could give asset managers a leg up over banks

May 18, 2016 11:12 AM ETBlackRock, Inc. (BLK) StockBAC, JPM, GS, MS, BLK, WFC, BEN, BXBy: Stephen Alpher, SA News Editor32 Comments
  • Sweeping new compensation rules released by six federal agencies last month would free up pay restrictions for the BlackRock's (NYSE:BLK) of the world, while tightening them for banks like JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), and Goldman Sachs (NYSE:GS).
  • Source: Bloomberg
  • The result is likely an even stronger flow of talent exodus from the big banks and to outfits like BlackRock, Vanguard, Pimco, and Fidelity, to name four.
  • “They keep making it more difficult to be a big bank,” says a D.C. attorney.
  • At those lenders with more than $250B in assets, top management would have 60% of their bonuses deferred for four years. Tough, but even tougher are clawback provisions allowing banks to take back money up to seven years after bonuses vest.
  • Though mammoth in size, the overwhelming majority of assets at BlackRock and the like are client, not proprietary assets. Thus, they aren't subject to the same restrictions. Franklin Resources (NYSE:BEN), for instance, has $743B in AUM, but only about $16B of its own assets. Blackstone (NYSE:BX) manages $344B, but only $22B of its own money.

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