2018 FINANCIAL COMPENSATION SURVEY - CFA Institute

NOVEMBER 2018

2018 FINANCIAL COMPENSATION SURVEY

FINDINGS AND RESULTS

2018 FINANCIAL COMPENSATION REPORT

LETTER FROM SOCIETY LEADERSHIP

Dear Colleagues, As premier professional organizations for investment professionals, CFA Society Madison and CFA Society Milwaukee are dedicated to being reliable and trustworthy sources of information. Each Society strives to serve its members by providing them the resources to aid in their career development and advancement. We are excited to announce the highly anticipated findings of the 2018 Financial Compensation Survey. Our Societies are pleased once again to participate in this unique survey, which provides a region-specific analysis of compensation levels for investment and financial professionals. This whitepaper captures the findings of the survey, providing an overview of the survey-wide results. For those who participated in the survey, we thank you for your contribution to this important market resource. We are confident the information contained in this document will be of value to you. Our best regards, Brian Hellmer, CFA, CIPM President, CFA Society Madison Pete Speidel, CFA, CAIA President, CFA Society Milwaukee

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2018 FINANCIAL COMPENSATION REPORT

EXECUTIVE SUMMARY

Executive summary

Access to accurate and data-driven information plays a significant role in the ability of financial and investment professionals to effectively perform in their careers. The same is true to successfully advance one's career.

The 2018 CFA Societies Financial Compensation Survey seeks to provide access to this vital information. This report is a compilation of the results from a survey on compensation practices in Madison and Milwaukee conducted earlier this year; 227 professionals completed the survey.

Remaining true to the stated commitment to provide an accurate snapshot of the compensation levels for the entire financial and investment industry, the survey findings are presented to demonstrate compensation based on the most popular positions and other demographics.

The survey requested self-reported data on numerous aspects of compensation. In addition to covering base salary and total compensation, the survey addressed the respondent's CFA Charterholder status, level of education, and occupation. Information on the type and size of the firm as well as the amount of assets under management were included in the survey. The survey captured expected annual salary change data, plus the respondent's view on the adequacy of compensation and the desire to explore other job opportunities.

The 2018 Financial Compensation Survey data and exhibits are intended to provide general guidance for comparing compensation levels with overall values for key categories. Note that actual compensation potential may vary relative to the numbers generated by the survey given the use of relatively broad category definitions. Also, the estimation of compensation based on any single factor may not predict reasonably accurate estimates. Details surrounding actual job responsibilities and the confluence of multiple factors may result in higher or lower compensation levels.

98.1%

of respondents holding the CFA? Charter report that the designation

has helped their career.

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2018 FINANCIAL COMPENSATION REPORT

RESPONDENT PROFILES

Years of experience

< 2 years 2 ? 5 years 5 ?10 years 10 ? 20 years 20 + years

9.2% 12.6% 20.1% 34.3% 23.8%

Education

Associate degree Bachelor degree Graduate degree Doctorate

0.4% 54.0% 43.1%

2.5%

Feel valued by their company

Charterholder status

83.9% Yes

11.3% No

4.8% N/A

66.9% Yes

26.8% Candidate

6.3% No

Median total compensation*

Feel fairly compensated

Bachelor degree Graduate degree

$79,800 $162,500

$108,594 $237,357

67.4% Yes

32.6% No

Non-Charterholder CFA Charterholder

*Median total compensation figures listed do not control for other variables such as years of experience and job title.

Our data show that professionals who attain the CFA designation and/or a graduate degree tend to have higher compensation levels.

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2018 FINANCIAL COMPENSATION REPORT

RESPONDENT PROFILES

Employer size

< 50 50 to < 250 250 to < 500 500 to < 2,500 2,500 to < 5,000

> 5,000

AUM of firm

< $500 million $500 million to < $2 billion

$2 billion to < $50 billion > $50 billion

Not Applicable

23.4% 15.9%

6.3% 13.4% 15.9% 25.1%

9.2% 10.9% 26.8% 40.2% 13.0%

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2018 FINANCIAL COMPENSATION REPORT

RESPONDENT PROFILES

Fifteen most common occupations

Portfolio manager (equities) Buy-side research analyst (fixed income)

Buy-side research analyst (equity) Bank/trust/private client portfolio manager

Financial advisor/broker Other

Financial analyst (corporate) Chief investment officer Risk manager Consultant

Manager research (equity) Portfolio manager (fixed income)

Operations/reconciliation Client services

Manager of managers/director of investments

Organization type

Investment management firm Investment bank, commercial bank, brokerage firm, trust company

Insurance company Other

Government agency/department Consulting, accounting, law firm

Educational institution Endowment, foundation, other not-for-profit

Corporate plan sponsor Family office

Hedge fund or fund of hedge funds

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9.1% 9.1% 8.3% 7.9% 7.1% 5.4% 5.0% 5.0% 3.7% 3.7% 3.3% 3.3% 2.5% 2.5% 2.1%

36.4% 24.3% 14.2% 11.3%

5.0% 3.3% 1.7% 1.3% 1.3% 0.8% 0.4%

2018 FINANCIAL COMPENSATION REPORT

FINDINGS A ND RESULTS

Opportunity for advancement within company

4.3%

N/A

18.3%

Not sure

55.2% Yes

22.2%

No

Likelihood of looking for a new role in 2018

22.2%

Very unlikely

14.3%

Very likely

50.0% Unlikely

13.5%

Likely

Reason for looking for a new role

Better work/life balance Higher compensation More challenging work/career advancement Other Poor culture/lack of respect Recently completed degree/obtained certification

Very likely

0% 11% 22% 5% 14% 0%

Likely

5% 19% 19% 0% 5% 2%

The most commonly cited reasons for looking for a new role were pursuing more challenging work/ career advancement followed by higher compensation.

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2018 FINANCIAL COMPENSATION REPORT

FINDINGS A ND RESULTS

Types of compensation in addition to base salary

Cash/bonus performance Employer 401(k) contributions

Profit sharing Deferred /multi-year earnings Restricted stock awards/phantom shares

Commission/ a sales bonus Stock options

Primary Determinant of Bonus

Business unit/division performance Overall firm performance Discretionary

Individual investment performance Other factors related to individual performance

Individual financial contribution Commissions generated

Expected change in total compensation

53.5%

Increased 0?10%

Decline Stay the same Increased 10?20% Increased > 20%

2.2% 17.8% 17.0% 9.6%

78% 64% 32% 14% 11% 10%

5%

32.8% 23.1% 20.4% 11.3%

9.1% 2.2% 1.1%

Business unit/division performance and overall firm performance were the top two determinants of bonus.

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