Can pension funds attract investment talent?

By | July 7, 2010

Pension funds are increasingly bolstering their in-house investment teams, and (rather obviously) are looking to tap asset managers for talent. But with remuneration typically smaller, why would anyone make the switch?

Recruitment spree for investment professionals range from the small – Lothian Pension Fund is looking for two investment professionals – to the large (Universities Superannuation Scheme, which says it intends to add nearly 50 investment professionals over the next three years).

The benefits to the pension scheme are obvious – they can create more tailored investment strategies and it’s a cheaper option than using a third-party. But how can they convince investment professionals to switch from mainstream asset managers?

USS’s trio of hires earlier in the year suggest this is where they will look for new recruits.

“Historically, pension funds simply haven’t paid enough to attract top professionals, and any that do move go for reasons other than money,” says Richard Parkhouse, chief executive of asset management remuneration specialist PRPi Consulting. “On the other hand, compensation within asset management houses has been going down, and continues to do so, so this may present an opportunity to the pension funds.”

Salaries can be fairly miserly – Lothian was offering £45-52k for its investment roles, for instance – but the highest paid position at USS was paid £480k last year, according to the scheme’s accounts, which compares relatively favourably with asset managers.

David Crum, who previously worked for Lothian Pension Fund and Strathclyde Pension Fund before moving to investment consulting, believes the range of opportunities and work-life balance are big selling points.

“Compared to a larger asset manager, there’s a lot more freedom in the role and you tend not to get pigeon-holed in the same way,” he says. “In my role, for instance, I started in UK equity passive management, but was able to do some UK active equity management as well as performance measurement, corporate governance, reporting and analysis and other areas. It’s a very stimulating role.”

One asset management headhunter adds that as most larger firms are not indulging in a great deal of recruitment currently, any investment roles within pension funds are likely to attract higher calibre candidates than would have been the case in a more buoyant market.

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