2024 Compensation Outlook

Key takeaways from the full report:

Based on Willow Hill’s proprietary survey of 95 distribution leaders ranging in responsibility levels from those managing small teams to Global Heads of Distribution to COOs.

• Sentiment for 2024 compensation is very positive overall. (p6)
• 60% of distribution leaders anticipate compensation for their teams will be up this year; by comparison 50% predicted an increase in 2023 and 34% in 2022. (p8)
• 35% anticipate compensation will remain flat.
• 5% predict 2024 will be down compared to last year.
• Multi-product alternative diversified (traditional and alts) and private credit managers offer the most positive predictions.
• The majority of team leaders predict compensation for investor relations, product specialists and consultant relations professionals will be flat to slightly up compared to last year (p9 - 13)
• Fundraising roles held the most volatility and the most upside; the median anticipated increase is 5% with a range of -20% to +50%. (p9&12)
• Most leaders feel their team’s compensation expectations are “moderately realistic” (58%). The remainder? “Highly realistic” (21%), “moderately unrealistic” (11%) and “unknown” (8%). Only one leader out of 92 described their team’s expectations as “highly unrealistic.” (p11)
• Anecdotally, there will be wide dispersion within teams based on individual performance and retention goals.
• In the absence of a compelling story at the firm or fund performance level, distribution professionals who are paid down for 2024 may understandably question if this is just a bad year or if they’re being quietly encouraged to explore other opportunities? AMA #13 - How do I know if it's time to move on?

With capital formation so challenging that many 20+ year vets describe 2024 as the hardest year of their careers, why the optimism on compensation, particularly for fundraising professionals?

Possible contributors:

• Robust recruiting (and retention) environment is driving up comp for fundraising talent as GPs continue to grow (or work hard to maintain) the strongest offense possible.
• Firm profitability and strong investment performance across a wide range of strategies are fueling a strong bonus pool for 2024.
• Emerging managers reaching a critical inflection point and moving off placement agents are adding even more competition for talent as they make their first dedicated marketing hires.
• Highly competitive pockets of the market are experiencing even higher compensation inflation (e.g. private credit, West Coast, insurance and private wealth).
• The aggressive compensation packages offered to attract talent during 2021 - 2023 drove up compensation levels and they remain elevated though hiring levels have stabilized.
• As this is a self-reported survey, team leaders may be consciously or subconsciously inflating their responses in an attempt to “go to bat” for their teams. I don’t believe this is the case, but I need to acknowledge the possibility.

Looking ahead to 2025, will the fundraising function be able to sustain such strong compensation levels?

Factors to keep an eye on:

• Individual capital raising performance compared to targets as capital continues flowing to the largest managers
• Increased merger and acquisition activity creating overlap on distribution teams
• A more stable hiring environment, with 2025 looking very similar to last year (compared to the frenzy of 2021 – 2023).

*More to come on hiring in a separate post.

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The 2024 Compensation and 2025 Hiring Trends Forecast is based on Willow Hill’s proprietary survey of 95 distribution leaders. ?

The resulting 25-page report compares compensation and hiring forecasts among different distribution roles and firm types.

While largely quantitative, the report also captures my qualitative “in the trenches” view.

Please find the full report here:

Willow Hill's 2024 Compensation & 2025 Hiring Forecast

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About Willow Hill Advisors

Laurie Thompson founded Willow Hill in September 2019. A seasoned executive recruiter, Laurie most recently spent 16 years in the financial services practice of Heidrick & Struggles where she served the investment management community as a thought leader and specialist in business development and investor relations recruiting. She continues this work today, predominantly focused on senior level hires for top-tier alternative investment managers.

Willow Hill is exclusively a retained firm and executes only a select number of mandates at a time, ensuring hiring firms receive the highest level of focus and attention. Through deep market knowledge, long term relationships and established trust, Willow Hill provides unconstrained access to top caliber talent.

[email protected]

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?Author’s note:

?Additional AMAs and reports can be found here: Ask Me Anything Series - Laurie Thompson

?From vetting talent, taking on a leadership role, differentiating your marketing efforts, dealing with headhunters, orchestrating a graceful exit, considering a counteroffer, mending professional relationships and headhunter-proofing your team, I've got you covered.

?As always, feedback, questions and topic suggestions are welcome and appreciated.

?Special thanks to contributors for so generously offering your time, insights and reflections.

~ Laurie