The staff retention issues dogging large investment houses are less of an issue for boutiques, which usually provide fund managers and other executives a stake in the business and greater decision-making power, according to industry participants.
Pengana Capital founder and chief executive Russel Pillemer said a sense of ownership and a team culture are vital to retaining executives.
“I think that’s the problem with large institution,” Pillemer said.
“You don’t really feel like you’re a partner in the business because you’re not; you’re an employee. You get paid a yearly bonus but you don’t own equity in the business,” he said.
“The soft issues in fund management are so important – how the manager feels when they get up in the morning, whether they feel like an owner or an employee. Those things are fundamental to how your funds perform. We’re very firm believers in that.”
Pengana has about $1.5 billion in funds under management.
Hyperion Asset Management founder and chief executive Manny Pohl said staff retention is vital for any fund manager.
“If one starts losing staff, it could be the kiss of death,” he said.
Hyperion has about $3 billion under management.
“One has to have a proper structure where the executives feel like they own and contribute to the business,” Pohl said.
“You can’t have the traditional employee roles because I don’t believe people will stay.”
However, he said keeping staff for the long term was often less an issue for boutiques than large organisations.
“In a boutique, you usually have three or four key investment people who have decided they want to create the business and work together. They usually have material wealth in the business and are therefore totally committed to the business – so I think it’s less of a problem than with the big investment houses.”
