In 2004, there was a total of US$45.6 billion in the hands of China’s fund managers. Come the end of last year, this figure had risen to around US$450 billion, with assets under management growing 282% in 2007 alone. This has put companies under intense pressure to find people who can manage the money.
"It’s a very young industry and the massive growth means that all of the firms are are looking for talent," said Ed Legzdins, CEO of Bank of Montreal Retail Investments, which has a 28% stake in Fullgoal Asset Management. "There are just not enough people and so the salaries and compensation are rising dramatically."
According to state media, in the first quarter of 2007, some 72 fund managers switched jobs compared to 130 in the whole of the previous year. It is seen as inevitable that the best performing fund managers from 2007 will be poached.
In a PricewaterhouseCoopers survey of executives from foreign fund management companies operating in China, about half the respondents reported staff turnover levels of 15-30%. The total number of employees retained by the 19 companies interviewed was tipped to rise from the current level of 1,850 to more than 3,300 by 2010.
"It’s not just the other fund houses that we are competing with for staff but also banks, brokerages and insurance companies," said Peter Zhu, head of marketing at China International Fund Management.
The company expects staff numbers to reach 250 this year, up from 180 at the end of 2007. It has launched graduate trainee programs aimed at recruiting young people who can be brought up through the ranks. Zhu added that domestic salaries have risen so high they compare favorably with the pay grades in more developed markets like Taiwan, making it easier to recruit experienced staff from these places.
However, money is not everything. Peter Alexander, principal of fund management consultancy Z-Ben Advisors, believes staff retention is as much about capturing hearts as it is filling wallets. He advocates a strong corporate culture with career development strategies and opportunities for staff to travel overseas for training.
"Staff retention is a long term strategy – you have to start when people are research analysts and lay out what you have planned for each one of them," Alexander said. "At present it is an area that the firms are not really focusing on."