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Top Fund Sales Execs Take Biggest Heat in Market Slump

Beating the pavement, as in being out of work looking for a job, has become almost as difficult as beating the Street.

Mutual fund executives fortunate enough to find new employment in the fund industry during the protracted downturn of the past three years have had to face vigorous screening processes and lower wages than their predecessors.

National sales managers and divisional sales managers have taken the hardest hits to the wallet, according to executive search and consulting firm DGL Consultants of Richford, Vt.

In 1999, at the height of the bull market, national sales and divisional sales managers earned a weighted average of $185,600 a year, with the high end of the scale reaching $390,000 and the basement standing at $100,000.

By 2001, those paychecks had dropped dramatically, with the average plummeting 17.8%, from 1999's highs. Even more dramatic was the 23.1% drop among the biggest earners, whose salaries fell to an average $300,000, while those on the low end of the totem pole saw their paychecks drop 20% to $80,000.

Inside salespeople and wholesalers didn't have much to cheer about, either, as they saw their weighted average salary dwindle by 2.5% following the market collapse. The ones on the lower end of the pay scale were hurt the most, as they saw their salaries decline 12.5%, from $24,000 to $21,000 from 1999 to 2001.

The ceiling was also lowered, dropping 7.7% to $60,000, from $65,000 during the same time span.

Robin Hood

However, it was not all bad news, as wholesalers managed to hold their ground, gaining a mere 0.16% in weighted average salary. While scant, their average salaries increased by $100, crawling up to $64,100 in 2001. This category seemed to be a Robin Hood of sorts, taking from the rich and giving to the poor; basement salaries increased by 16.7% to $35,000, while the ceiling fell 16.7% to $125,000 in 2001.

For those out of work seeking jobs, the picture isn't any prettier. DGL recently conducted a random poll of 26 mutual fund distributors and found that 42% were not hiring, while 58% said they were currently seeking new workers. The participants included companies managing a full spectrum of fixed income, equity and other asset classes, as well as styles both in and out of favor and size of assets under management not relevant.

Nearly two out of every three companies, or 65%, said they were not hiring sales or marketing personnel, while a mere 35% said they would be tacking on staff in those areas.

"Instability and uncertainty of the financial markets has had the most profound effect on hiring," said Don Lariviere, president of DGL.

"Dismal investment performance has resulted in the loss of assets under management, the net effect of which is loss of revenue. As a result, to cut costs, many companies have either imposed hiring freezes, let people go, or, in some cases, cut compensation," Lariviere said.

Throughout 2002, financial firms retrenched time and time again, some cutting staffing levels to the bone. Many in the financial sector continued to try to align their books by downsizing, rightsizing, eliminating perks and reducing salaries.

Fidelity cut nearly 5% of its workforce when it eliminated about 1,700 workers in October. JP Morgan Chase, Merrill Lynch, State Street Corp., Janus, Deutsche Asset Management, Putnam Investments, FleetBoston Financial, Charles Schwab and many others, all sliced and diced in the year 2002.

While the latest national unemployment figures from the Treasury Dept. put it at 5.7%, executives in the mutual fund industry have been harder hit; according to Chicago outplacement firm Challenger, Gray & Christmas, unemployment among professionals is 16.6%.

Resume X-Rays

Those seeking a job may be subjected to a vigorous screening process. Lariviere said the hiring practices of mutual fund companies typically promote careful screening of potential candidates, including thorough background and reference checks; even social style can be a determining factor. Furthermore, references of superiors, peers, subordinates and individuals representing the distribution channel, such as brokers, agents and consultants, can all be considerations.