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2013 Business Expense Benchmark Survey
with $100 million AUM firms registering costs 200%
greater and $500 million AUM firms continuing to
show marketing expenses 152% higher. For smaller
firms, much of that differential can be attributed
to compensation.
In Europe, $100 million AUM firms spent 32 basis
points on compensation for 1.07 heads, or the
equivalent of $299,065 per head. This differs from
the U.S., where total marketing compensation
amounted to 10 basis points on 0.92 heads—
the equivalent of $108,696 per head. This cost
differential continued to be evident at $500
million AUM firms. European firms had an average
compensation level of 7 basis points across their
1.32 heads ($265,151 per head) while U.S. firms had
spent an average of 4 basis points across 1.21 heads
($165,289 per head) on marketing compensation.
By the time these firms reached $5.0 billion AUM, the
compensation differential narrowed, however, with
the average compensation in Europe for marketing
personnel rising to $545,898, and U.S. counterparts
rising to $528,247. Average compensation levels
were also similar at the $10.0 billion AUM threshold
($631,500 in Europe versus $597,700 in the U.S.).
This shows that although the U.S. adds its marketing
personnel later in its development cycle, there is not
as much of a compensation differential for larger
firms, as both U.S. and European firms look to have
senior resources in these roles by the time they are
into their institutional phase of development.
Differences in the number of marketing personnel
account for much of the variance at higher AUM
bands, however. European funds with $5.0 billion AUM
had an average of 7.33 heads assigned to marketing
versus 6.04 heads in the U.S. At $10.0 billion AUM, the
difference was even more pronounced, with European
firms registering 20.5 heads versus only 6.6 heads in
the U.S.
Chart 25 shows that, on average, marketing costs
account for significantly more of the management
company’s total expenses in Europe than in the U.S.
at nearly all major AUM levels.
The other area of expenditures where there was a
noticeable European premium was operations and
technology. The level of spend on these functions
in Europe was larger than in the U.S., but by much
smaller margins than were noted in marketing. This is
illustrated in Chart 26.
The greatest differentials in operations and
technology spend was at our lowest and highest levels
of AUM: $100 million and greater than $10.0 billion.
Firms in the mid-AUM range were more in line, falling
within a -1% to +9% differential.
Small European firms with $100 million AUM registered
expenses 30% higher than their U.S. counterparts.
The difference in operations and technology spend can
be attributed to sharply higher third-party expenses.
European firms of this size cited 40 basis points of
third-party spend versus only 15 basis points for
similarly sized U.S. firms. Much of this difference can
be attributed to data costs, as there is a substantially
more fragmented set of markets to monitor in the
European landscape.
Chart 24: European vs. U.S. Management Company Expenses: Marketing
(Excluding Investment Management)
Source: Citi Prime Finance. EMEA dataset reflects 35 firms with total AUM of $168.5 billion. U.S. dataset reflects 68 with total AUM of $288 billion
0%
50%
100%
150%
200%
250%
+200%
+152%
+8%
+12%
+105%
+51%
$100M
$500M
$1.5B
$5.0B
$10.0B
>$10.0B
EUROPEAN COSTS RELATIVE TO U.S. COSTS