As the industry consolidates into bigger funds overseeing hundreds of billions of dollars, the average remuneration packages could also climb.
Just 10 people in the non-for-profit sector today, which includes industry and government funds, take home more than $1 million, according to Investment Magazine’s 2020 annual pay survey. The average REM packages for chief executives and investment chiefs across the sector is much lower at between $500,000 to $600,000.
Graeme Bricknell, head of global financial services Australasia for executive search firm Korn Ferry, said remuneration was already moving higher to keep pace with the broader market. He also said that the job of senior executives of the large funds today were more complex than 10 years ago because they oversaw more assets, more members and had a higher public profile.
“The CEO or CIO of a $100 billion fund has got a lot more to cover than someone overseeing $12 billion,” Bricknell said in an interview. “The salaries are reasonably competitive but there is a wider range from the top to the bottom, which is different to the major banks because of the variance in the funds.”
Even so, the highest paid executive in the survey, UniSuper’s CIO John Pearce, earned almost $1.73 million in the last financial year and the best paid CEO, the Future Fund’s outgoing chief David Neal, received just shy of $1.5 million, well short of the banks and the retail funds.
ANZ Bank boss Shayne Elliott, for example, took home $4.09 million last year, while the remuneration package for AMP’s new CEO Francesco De Ferrari, who also oversees investment management and an advice business, could see the former banker earn up to $8.3 million in his first year. He joined December, 2018
“Even though the performance of the super funds is in many cases superior, the mean salary at the bonus level is lower,” said Bricknell, “That is just a function of the superannuation market in Australia.”
The industry funds also fall short of their peers in the northern hemisphere even compared to countries like Canada and the UK that have broadly comparable pension systems, according to Bricknell. He added that there were very few local roles that could compete with overseas salaries, particularly in the US.
And despite the regulatory pressure on trustees to boost investment performance and manage member’s outcomes, boards are also not prepared to pay whatever it takes to secure or retain a top executive. Bricknell said appointments were more culturally driven and less about money, which made the industry less likely to attract the “investment-banker types”.
“The fact is that the board have their rules around REM,” he said. “But given the competition in the global market for talent, from time-to-time funds will miss out on hiring good people because the pay is lower.”
As for the impact on salaries from the flurry of deal making amongst the funds, Bricknell said if by the end of 2020 five or six funds have emerged overseeing more than $100 billion each, average pay packets could potentially head higher.
“Will it be materially higher? I’m not sure but you’ve got to keep an eye on what the market is paying,” he said.