New York (May 20, 2003) -- Apparently, investment professionals aren’t immune to effects of the bear market -- compensation for U.S. investment professionals hit a five-year low, according to a survey by the Association of Investment Management and Research and Russell Reynolds Associates.

Median total compensation for U.S.-based professionals in 2003 checked in at $148,000, off 22 percent from 2001 and down 10 percent from 1999, according to the 2003 Investment Management Compensation Survey.

Base salaries remained stable, but incentive compensation fell sharply, with median cash bonuses off 38 percent from $50,000 in 2001 to $30,800 in 2003. While the survey showed across-the-board declines among all investment sectors and job functions, investment professionals responsible for managing or analyzing assets on a global basis experienced the sharpest drop in compensation. Global equities securities analysts saw median compensation drop 33 percent, from $230,000 to $155,000, while global equities portfolio managers saw a 40 percent decline in earnings, the greatest single two-year drop among all job categories.

Results indicated a shift in the way bonuses are determined, with organizational profitability having a more significant impact on compensation than in prior years. Sixty-seven percent of respondents cited overall business performance as the most important factor in determining bonuses, up 5 percent from 2001, while the number of respondents citing individual business development and investment performance as key factors fell, by 5 percent and 4 percent, respectively.

Investment professionals with five or more years experience earned a median total compensation of $171,650, 16 percent more than the industry median. For those with 20-plus years experience, that figure rose to $205,000 - 39 percent more than aggregate totals. Other factors affecting compensation include employer type/size, type of assets managed, location, job function and CFA designation.

-- WebCPA staff

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