One of the maddening things about the state of corporate Britain has long been the pay packets of our fund managers.
Daniel Godfrey and I spoke about this at length in our interview here. There are two key points. The first is that fund managers make too much because they charge too much: super pay can only come from super profits. And the second is that it is really hard for fund managers to make a fuss about how much the CEOs of big listed companies are paid when they are raking in many millions themselves.
So while we have long wanted the costs of investment to fall just for the sake of it (the less our investing costs the more wealth we are able to build for ourselves rather than our managers) we also want them to fall so that fund managers get paid less – and find their houses less glass-like when they have a go at executive pay.
So I bring you good news. Last year was the least profitable for the global asset management industry since the financial crisis, thanks to rising sales of cheap passive investments (sales have doubled in the UK in ten years), price competition, and a fall in the volume of their assets under management.
The result is that asset management employees’ median pay, including bonuses, fell 17% last year (to £83,000), says the FT. Things were worse in the US, where senior and mid ranking employees saw their bonuses cut in half.
Bad news for those employees. But perhaps a reflection of some good news for investors?