Johnson contends that the same trends—that bigger won’t necessarily be better—are likely to continue next year:

Here are some other highlights of the report in looking ahead to next year.

  • In 2020, incentives will be down moderately (around 5%) at the mega fund. Why? Competition, product shifting, fee levels. There will be a continued squeeze on average/good performers, the report said.
  • Downsizing will continue at a gradual pace. The trend will occur among operations people, low/mid-level technology staffers and middle management.
  • There will be a “bubble” in pay in high-end technology and analytics jobs. Some firms are finding it difficult to create value.
  • Effective base salary increases will continue at 4% to 5%.
  • There will be accelerated movement out of New York City, San Francisco and Boston. These trends, Johnson says, are fueled by the high business costs, individual tax rates and high housing costs in those cities.
  • Megafirms will face a “changing calculus” and find difficulty trying to create increases for average performers. Business changes will complicate comparisons and norms. This will trigger questions about the cost of great talent and accompanying challenges.
  • There will be an increasing importance of brokers and personal relationships. Clients will pay more for advice.

The personal relationships show the market that the small independent advisory firm will continue to offer valuable and unique services, Johnson says.

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