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PE bonuses outstrip other asset managers

Johnson Associates expects PE incentive compensation to increase 10 to 15% this year.

New York-based research compensation consulting firm Johnson Associates predicts private equity incentive compensation to increase by as much as 15 percent this year compared to 2014, according to its “Financial Services Compensation” report.

The rise is driven by realisations and fundraisings.

Investment banking advisers are the only financial services professionals that are expected to see a larger increase in their bonuses, rising 10 to 20 percent. In contrast, bonuses across financial services are expected to remain flat, with traditional asset manager incentive compensation rising to a ceiling of 5 percent.

The report is based on second quarter trends and year-end projections.

The key determinants for incentive compensation this year will be a mix of business and market activity and ongoing uncertainty in world, the report said.

Additionally large funds will gain a greater proportion of new assets this year while traditional managers are including alternative product offerings to meet demand from investors seeking returns in a low interest rate environment and portfolio diversity.

Key compensation trends for the year include a structured pay typically found in alternative firms through carried interest allocations and individual and team deals, and earning pay over longer time intervals through vesting and longer-term vehicles, the report said.