Asset and wealth management firms are now driving the demand for talent as they bulk up to meet expected growth opportunities posed by baby-boomer retirement and the globalisation of markets, says a new report by Russell Reynolds Associates, the New York-headquartered global executive search and assessment firm. "This has been an historic year in the asset and wealth management industry," said Cornelia Kiley, a managing director in RRA's Asset and Wealth Management practice. "The mid-year market turbulence was not a signal to retrench, but rather, to set the performance bar even higher. The relentless pursuit of alpha has led to upgrades from the C-suite to portfolio management to the back office." The eleventh annual Asset and Wealth Management Recruiting Trends report examines hiring and compensation trends within both traditional asset and wealth management firms and those focusing on alternative investments, including hedge funds, real estate, infrastructure and private equity, in the Americas, Asia and Europe. It found that turnover in the C-suite was more than 15 per cent higher than 2006, prompted by both a cohort of leaders reaching retirement age and a high level of pressure from boards, impatient with perceived underperformance. Typical compensation rose by 20 per cent, driven primarily by gains in equity and phantom equity valuations. But demand for chief investment officers in all segments of the industry is enormous, leading to increased compensation and widening "move premiums". In the alternatives area, 2007 was the year of convergence with hedge funds in real estate, real estate in private equity and private equity in hedge funds. As these platforms become increasingly global and diversified, the need for professional managers accelerates, said RRA. Emerging markets that have been upgraded by rating agencies are now within the risk tolerances of a greater number of investors, but investment professionals with a track record of high performance in these markets are exceptionally scarce. As the retirement of the baby boomers accelerates, both institutional and retail sides of the industry are gearing up to put together advice platforms tailored to these customers. And firms which respond the quickest to the investment opportunities presented by emerging markets will enjoy lower competition, pay lower multiples and accrue higher returns than available in established markets, placing a premium on investment professionals with knowledge of these markets. The demand for professionals with skills in structured finance and alternatives, continues to grow aggressively, with compensation levels jumping 30 per cent or more and often include significant revenue-sharing deals and second-year guarantees. Hiring for technology and operations leadership has also continued to be robust, with an increasing emphasis on candidates with first-hand understanding of investment management business processes, ranging from risk management and financial reporting to specific product strategies and portfolio management. Larger firms are seeking talent who can help them transform the back-office functions into revenue-generating businesses. The institutionalisation of the alternatives arena is evidenced by the merger and acquisition activity and initial public offerings. Searches for human resources, legal and technology and operations talent has maintained the rapid pace of recent years and, in addition, more experienced chief executive officers are being brought in to take the reins from entrepreneur-founders. "As the current senior cohort of C-suite executives makes way for the next wave of business and investment leaders, the focus will be on talent with cross-asset class experience and knowledge of alternatives coupled with the ability to control risk," said Deb Brown, a managing director of RRA. "This combination of skills and experience is scarce, making top-level recruitment that much more difficult and competitive. As a result, compensation has increased as has a focus on talent development to alleviate the shortage."