As the credit turmoil continues to bite, global asset managers are cutting costs through restructuring top management and culling some highly paid senior executive roles. PDF

"We are seeing heads of businesses or asset classes being replaced as performance and costs come under greater scrutiny. There are now more senior people ñ at managing director level ñ in the marketplace than at any time since 2002-03," says Philip Darling, client partner in the asset and wealth management practice at Korn/Ferry International in London.

Most asset managers are filling top jobs internally but some are looking externally for professionals who can manage money in an uncertain financial climate, he says.

"In the US, we are seeing cuts at top management level as a result of huge impatience on the part of boards to get better results," says Cornelia Kiley, co-head of the asset and wealth management business in the Americas at Russell Reynolds, an executive search firm.

In the case of larger international asset managers that have traditionally employed three or four managing directors, one or two of those roles may be cut, say headhunters. Other roles where redundancies are being made include heads of sectors such as risk, compliance, internal audit and chief finance officers. Those that are hiring are focusing largely on senior strategic hires while scaling back on other levels, say headhunters. "There is a great deal of opportunistic hiring going on [at senior level], picking up good people externally," says Mr Darling.

It is this pattern of hiring that is now driving recruitment. "Traditional fund management has probably seen activity up by about 10-15 per cent over last year. In alternatives such as hedge funds, private equity, real estate and infrastructure it is up more than 25 per cent, while in investment banking and capital markets, the [recruitment] market is far weaker than last year," says Ms Kiley.

Asset managers have taken out higher paid senior managers in traditional fixed income and equity strategies but are hiring instead in growth areas such as emerging markets, quantitative strategies and distribution, she adds.

It is also a good time for smaller players to recruit senior managers. "It is a real opportunity for some second tier asset managers to hire senior talent from first tier groups, " says Mr Darling. There is an openness now from senior talent to join mid-sized or smaller companies with ambition that are not part of a US financial services group significantly affected by the credit crunch, he adds.

New job opportunities are increasing in regions where asset management is growing, such as the Middle East, Asia, Latin America and central Europe, although much of the hiring in these areas is not at senior level, say industry observers. A few years ago regions such as the Gulf may not have been a first choice for asset managers but now they are increasingly seen as an interesting challenge.

"Now there is a global talent pool which is multi-cultural and multi-lingual rather than a specialised regional one," says Ms Kiley.

In the past six to eight months recruitment specialists also report an increase in senior institutional sales people moving to hedge funds and funds of hedge funds. This is driven by hedge funds and funds of hedge funds striving to gain greater share of the institutional wallet, says Mr Darling. "Seventy-five per cent of our hiring in hedge funds and funds of hedge funds is at now at senior institutional distribution level."

Another significant change seen by some recruitment groups this year is the length of time taken to fill a job. Employers and employees have become more cautious in the current financial climate and people are wary of moving to a new job from an established one. Despite the growing number of redundant professionals in the marketplace, it is difficult to find suitable people, says Marianne Montgomery, director at Montgomery Partnership, an asset management recruitment specialist.

"The market is awash with the wrong people as asset managers have used the [uncertain] financial environment as an excuse for redundancy," she says. Whereas last year it took about eight to 10 weeks to fill a senior job, now it can take 12 weeks, she says.

Debra Brown, managing director in the asset and wealth management practice at Russell Reynolds, agrees the situation is the same in the US. "There are a large number of chief executives in the doghouse and it is difficult to find talent in the market."

When it comes to remuneration, headhunters mostly say senior level packages remain steady. "No big bonus guarantees are being thrown around," says Mr Darling.

Industry observers expect to see more job cuts at chief executive and front office level this year. "Market volatility leads to uncertainty in the asset management world and close scrutiny of the top people. It can lead to shedding of jobs. People are battening down the hatches and cutting costs," says Pars Purewal, investment management and alternatives leader in the UK at PwC.

"The credit crunch is biting more this year in asset management as it has taken time to filter through," says Mr Darling. Although it is taking its toll on hiring it is "nowhere as near as severe as in the investment banking industry," he adds.

Headhunters are seeing increasing job flows from Wall Street's sell side to the buy side, particularly analysts and research experts either made redundant by the big US investment banks or lured by lucrative offers from hedge funds or the more stable but less well paid environment of traditional asset managers.