GLOBAL - The fee structures of asset management firms are a threat to their own survival, claimed an article in Watson Wyatt's Global Investment Review 2007.
The article suggested asset managers take steps to change their remuneration structures, which “tend to favour” themselves rather than their clients.
The four steps recommended included: aligning interests with both their clients and their employees; incentivising employees through “appropriately structured compensation”, preferably equity; co-investing alongside clients; and putting in place a “well-designed” performance fee.
Roger Urwin, global head of Investment Consulting at Watson Wyatt, commented: “In the new investment services marketplace, with mainstream firms adapting and competing with absolute return firms, organisational and compensation alignments to motivate people in the pursuit of value have become paramount.
“Increasing specialisation by risk, style and asset class should push such alignment considerations to the top of the investment agenda.
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