SAN FRANCISCO – January 25, 2011 – Advent Software, Inc. (NASDAQ: ADVS), a leading provider of software and services for the global investment management industry, today released the results of the 2010 Asset Management Operations and Compensation Study, which tracks key industry trends in technology and operations, as well as employee compensation. The survey found that a majority of respondents increased their operations budgets in 2010 and expect further increases in the year ahead. Meanwhile, total compensation for executives, portfolio managers, traders and analysts was significantly down from 2008 levels.
The Advent Users Group (AUG), an independent forum of Advent product users, conducted the study with sponsorship by Advent and the Investment Adviser Association. The results are based on a survey of 136 investment firms that range in size from less than $100 million to more than $30 billion in assets under management. The compensation survey gathered data on more than 1,000 individuals, from CEOs to receptionists.
Anthony Sperling, Senior Vice President and General Manager of Advent’s Investment Management Group, commented, “The results of this survey bear out something that we have long maintained: operational efficiency gained through technology can be a firm’s greatest asset when markets are volatile and margins are squeezed. Asset managers continue to search out technology solutions that will help them address greater business complexity, increasing regulatory demands, and rising client expectations as they stabilize their operations in the wake of the financial crisis. And the fact that profit margins are stable while the IT investment is increasing suggests that firms are reaping the benefits of more streamlined operations.”
Market Turmoil Hits Financial Performance
In the AUG’s first full year survey since the beginning of the market crisis in Fall 2008, average revenue among respondents rose a modest 1.7% from 2008 to 2009 year-end, as asset levels recovered in tandem with rising markets. Not all firms have bounced back, and a quarter of all firms reported revenue declines of 15% or more. During the same period, overall fee realization slid from an average of 70 to 53 basis points. However, average profit margins for 2008 and 2009 were virtually identical at 23.7%, suggesting that many firms were successful in containing costs to offset falling revenues.
Technology and Operations Highlights
In the wake of the market turbulence, 63% of the survey respondents say their operations budgets increased in 2010, and a majority of firms of all sizes anticipate additional increases in 2011. Disaster recovery was the factor cited most often as a driver of budget increases, and also ranks high on the list of firms’ near-term priorities.
Portfolio accounting and trading continue to claim almost 40% of average IT and operations spending. Most respondents rely on outside solution providers for their core portfolio accounting, reporting and trade order management systems.
Survey respondents cited portfolio accounting and client reporting, disaster recovery, and client service contact management as the top priority IT initiatives for 2011.
Firms reported a variety of changes in their compensation plans in 2010, ranging from minor to substantial. The general trend has been toward more discretionary rewards and greater emphasis on long-term incentives. Compared to two years prior, a greater number of firms reported offering profit sharing plans, stock purchase plans, and equity grants.
Compensation levels for many positions were down from those reported in 2008, particularly among senior executives and investment professionals. Median chief executive officer pay fell 15% from 2008 to $383,000, with an average of $614,000. Chief investment officers (CIO), typically the second-highest paid executive, earned an average $442,000. Four out of ten CIOs saw their compensation fall during the past year. Median compensation paid to other investment professionals fell by double-digit percentages since 2008, but more than half reported compensation starting to rise over the past year. Senior operations staff saw median compensation rise slightly from two years earlier.
“Staffing levels and compensation are areas where adjustments obviously had to be made, and we’re seeing a return to stability,” Mr. Sperling noted. “Here again is where technology can help firms do more with less and derive more value from employees at all levels.”
The full study compares firms by AUM size, geography and other criteria, providing managers with detailed data for making IT, operational and compensation decisions.
About Advent Users Group
Advent Users Group (AUG) is an independent organization formed in 1998 by a group of investment professionals using Advent products. The group saw the benefits that a user group could have in sharing information and providing valuable feedback to Advent Software. Advent embraced the idea and now benefits from the collaborative working relationship with the group, which now boasts 330 member firms. AUG’s ongoing mission is to bring together a diverse group of investment advisors who utilize Advent products to share knowledge, define challenges, and advocate for a coherent vision of future technological solutions.
About the Investment Adviser Association
The Investment Adviser Association is a not-for-profit organization that represents the interests of SEC-registered investment advisory firms. Founded in 1937, its membership today consists of more than 500 firms that collectively manage in excess of $10 trillion for a wide variety of individual and institutional investors. For more information, please visit www.investmentadviser.org.
Advent Software, Inc., a global firm, has provided trusted solutions to the world’s financial professionals since 1983. Firms in more than 50 countries rely on Advent technology to run their mission-critical operations. Advent’s quality software, data, services and tools enable financial professionals to improve service and communication to their clients, allowing them to grow their business while controlling costs. Advent is the only financial services software company to be awarded the Service Capability and Performance certification for being a world-class support and services organization. For more information on Advent products visit http://www.advent.com/about/resources/demos/pr.
Advent, the Advent logo and Advent Software are registered trademarks of Advent Software, Inc. All other company names or marks mentioned herein are those of their respective owners.
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