If you are a mutual fund sales person and you felt your wallet grow lighter last year, the confirmation is in that you were not alone. Kasina, a New York City consulting firm, published data this week that showed dips ranging from 10 percent to 30 percent of compensation for sales and national accounts executives in 2008. The report added that compensation has rebounded somewhat in 2009, but not enough to wipe away last year's decline.

The decline in pay was driven by the loss of assets due to outflows and depreciation in the fourth quarter. The survey is based on interviews with sales and national accounts executives at 18 asset managers.

National sales managers, as a group, saw their pay drop by 13.5 percent for the year. Not everyone who worked for them felt the same hit.

For wholesalers of the internal and hybrid stripe, the news was not quite as bad. Kasina's research showed that these two groups were mostly insulated from the decline and even saw increases on average. Internal wholesaler pay grew 8.8 percent in 2008 and hybrid wholesalers saw an average gain of 18.4 percent in pay.

The news was not so bright for external wholesalers. That well-traveled group saw their compensation take a 20.7 percent dip on average. Variable compensation for externals was off 22.3 percent.

So, how can mutual fund firms keep sales people happy and producing in the face of pressure to cut compensation?

Kasina's consultants recommend that fund firms ensure that they continue to pay their top producers enough to keep them happy -- even if that means eliminating other positions or expanding some employees' responsibilities.

They also recommend that firms look at how they pay variable compensation. The goal should be to incentivize sales people for performing productive activities, not just for the end result (which may not be readily forthcoming in a bear market).

Lastly, they recommend that fund firms tie sales to profitability rather than just the top line. To do this they need to formulate travel and expense budgets around profits, and influence redemptions, and cross-selling other products and areas of the company.

Of course, the market turnaround over the past four months may make these lessons seem like ancient history from a forgotten time; still they should be learned and remembered for next time. 

Edited by: Sean Hanna, Editor in Chief


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