Asset managers and pay transparency: It’s not too late

Pay in the asset management industry is individualized, highly variable and often scrutinized — not just by regulators, but by clients, employees and the market at large. Layer in rapidly expanding pay transparency laws and firms are facing real legal and reputational risks if their pay practices don’t stand up to public and legal scrutiny.

Roughly 25 U.S. jurisdictions already enforce pay transparency requirements, and the EU Pay Transparency Directive is poised to dramatically raise the bar for global firms. Beyond the U.S. and Europe, rules are inconsistent but trending in one direction: more disclosure, more reporting, more accountability.

For HR and rewards leaders in asset management — where pay decisions are often individualized and defensibility is non-negotiable — delaying action isn’t just risky, it’s a potential liability. For multinationals — especially those with a significant European headcount — the good news is that it’s not too late to comply. But the window to act is closing quickly.

Why this is important for asset managers

Portfolio managers, analysts, distribution and other teams often have idiosyncratic pay deals tied to book size, alpha generation or distribution success. This makes explaining “equal work” or “work of equal value” particularly challenging.

Without a coherent compensation framework, asset managers risk pockets of unexplained differences between male and female portfolio managers, analysts or sales directors who do similar work — and these gaps will be exposed by required pay reporting and employee information rights. For asset managers competing for front-office and distribution talent, having these discrepancies without a clear narrative is, again, both a reputational and regulatory (which can result in significant fines) risk.

Factors that are driving HR and rewards professionals in asset management firms to act now include:

• You are firmly in scope. If you have a scaled EU-based business including management companies, subsidiaries or distribution entities, the Directive may apply to your investment, distribution and support staff in those locations — regardless of a U.S. headquarters.
• Legacy “deal culture” clashes with transparency. Ad hoc packages for star portfolio managers, legacy guarantees and opaque business formulas and approaches are hard to reconcile with gender-neutral criteria and explainable ranges. You need to translate this reality into a structured, defensible model.
• Talent and client expectations are converging. Institutional clients, consultants and employees increasingly expect evidence of fair, well-governed pay — especially in a sector that charges active fees for its skill and judgment. Transparency should be part of your value proposition.
• Time is short, but sufficient. There’s still time to design a thoughtful approach before relevant enforcement bites, but only if you focus on the levers that matter most in asset management context: job architecture, incentive structures and equal-value definitions.

How to get started

Investment and pay distribution are unique to the asset management industry, but you can build transparency into your employee pay plans without flattening your competitive edge.

1. 01

   Clarify investment and distribution job architecture

   Start by defining your job families and levels for portfolio managers, analysts, traders, sales and product roles and so on. These job families should reflect real differences in mandate size, complexity and commercial impact while remaining gender-neutral (and consistent across EU entities).

2. 02

   Redesign pay structures without losing your performance focus

   Frame your base pay, bonuses and long-term incentive opportunities by level and role, making explicit which performance, risk and commercial metrics drive differentiation. This way, you can show that pay gaps are rooted in objective criteria (including skills and responsibilities).

3. 03

   Run targeted pay-equity diagnostics on critical roles

   Focus first on high-risk, high-visibility populations — portfolio managers, senior analysts, sales directors — and identify unexplained gaps. Then, design remediation plans that respect both cost constraints and team dynamics.

4. 04

   Equip leaders to talk about pay

   Develop a strong communications playbook and tools that help people managers explain ranges, criteria and outcomes credibly to sophisticated, data-literate investment professionals.

5. 05

   Embed transparency into your value proposition

   Use pay transparency to support your broader narrative with employees and clients: a disciplined, well-governed investment business that rewards performance fairly and sustainably across cycles.

It’s not too late to act. HR and rewards leaders who move now, with a partner that understands investment and distribution economics, can turn a difficult regulatory requirement into a stronger franchise story about fairness, discipline and long-term value creation.

Author

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Michael Deeks

Managing Director, Head of Asset Management

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