2007 CFA Compensation Survey
Conducted by the CFA Institute

Summary Report

USA Country Report

The 2007 CFA Institute Member Compensation Survey reports that while U.S. investment professionals’ compensation varies by occupation and years of experience, bonuses generally account for more than 25 percent of total compensation for investment executives and buy-side professionals and more than half for sell-side research analysts, traders, and sales positions. Respondents also reported that a majority (72 percent) saw their total compensation increase from 2005 to 2006 and that their cash bonuses were largely determined by individual performance.

 

The study examined compensation levels of CFA Institute members who are portfolio managers, research analysts, investment consultants, and other executives at an array of investment management and financial organizations worldwide. The results were based on survey responses from more than 13,500 CFA Institute members from 11 countries.

 

“CFA Institute members place high value in this survey. It is a tool that helps our members, other investment professionals, and employers worldwide assess and plan career strategies,” said Peggy Eisen, CFA, managing director of CFA Institute Marketing and Communications department. “Thus, we thoroughly reviewed the survey, our methodology, and reporting practices to improve the precision of the 2007 results. Our two partners, Harris Interactive and AON Corporation, created a global team to support our commitment to members’ career needs.”

 

Eisen added that “we believe the depth of detailed information provided by this survey, which is available across many different countries, will be a benefit for our members worldwide. One-third of our membership and more than half of the CFA candidates for the June 2007 exam came from outside North America.”

 

Incentive Bonus Compensation

Ninety percent of U.S. respondents were eligible for a cash bonus in 2006.

  • 46 percent said their bonus is primarily tied to their individual performance while 27 percent said overall firm performance is most important, and 22 percent said bonus is driven by business unit/division performance.
  • While most respondents were eligible for a cash bonus in 2006, less than half (42 percent) were awarded long-term incentives.
  • Globally, 91 percent of respondents, on average, were eligible for a bonus in 2006. A significant majority (86 percent to 96 percent) of members from all 11 countries surveyed were eligible for a bonus in 2006.

 

Years of Experience

At all levels of experience, U.S. portfolio managers (equities) reported a considerably higher median total compensation ($456,000) than the other occupations. 

  • In the U.S., the three highest compensated positions at all levels of experience are portfolio managers (equities) ($456,000), followed by investment bankers ($275,000) and then sell-side research analysts ($195,000). Buy-side research analysts (equity and fixed income) fall in the middle of the pack at all levels of experience.
  • The pattern for cash bonus is also affected by years of experience. There is little variability in median cash bonus for those with less than five years of experience. However, the gap widens at five to 10 years of experience. At all levels of experience, portfolio managers (equities) ($200,000) and investment bankers ($185,000) reported cash bonuses that are more than double that for most other occupations.

 

Occupation and Employer Type

As with occupations in general, median total compensation is correlated with years of experience within organizations.

  • The size of the gap in median total compensation by years of experience, though, varies considerably. For example, at investment management firms, median total compensation for U.S. buy-side research analysts (fixed income) is $128,000 for those with less than five years of experience, versus $220,000 for those analysts with five to 10 years of experience, and $285,000 for the same group of analysts with more than 10 years of experience.
  • Median total compensation by occupation also varies by type of organization at which the respondent is employed. At 10 or more years of experience, U.S. respondents in all occupations included in this survey earned more at investment management firms than investment banks, commercial banks, and brokerage firms. The one exception is portfolio managers (indexed/other), for whom median total compensation at 10 or more years of experience is comparable across the two types of organizations.

 

Major Metropolitan Areas

Median compensation is also correlated with years of experience within metro areas.

  • Among U.S. portfolio managers in the sample, the gap in median total compensation by metropolitan area increases with years of experience. At less than five years of experience, $85,000 separate the lowest and highest median total compensation by metro area. The gap jumps to $105,000 at five to 10 years of experience, and to $249,000 at 10 or more years of experience.
  • Among U.S. respondents, those from New York City reported the highest levels in total compensation across most levels of experience and occupations.

 

Survey Methodology

CFA Institute commissioned Harris Interactive, an independent global market research firm, to conduct the 2007 survey. Also, AON Corporation contributed to the design of the survey instrument and to the design and interpretation of the data reports. The 2007 survey was conducted among the 11 countries with the greatest concentration of CFA Institute members: Australia, Canada, China, Germany, Hong Kong, Japan, Singapore, South Africa, Switzerland, the United Kingdom and the United States. CFA Institute received a total of 13,562 usable responses, representing 18 percent of the CFA Institute membership in these countries.