2007 Recruiting Trends

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					2007 Recruiting Trends
Asset and Wealth Management
Table of Contents

Section I      Overview

4     Global Executive Summary
6     Russell Reynolds Associates’ Asset and Wealth Management Practice
8     Russell Reynolds Associates’ Asset and Wealth Management Practice Members
9     Russell Reynolds Associates’ Global Presence


Section II     The Americas !

11    United States

              Asset and Wealth Management
      13      General Management
      14      Investment Management – Equities and Fixed Income
      16      Plan Sponsors, Endowments and Foundations
      17      Institutional Distribution
      18      Retail Distribution
      19      Wealth Management
      20      Risk Management, Legal and Compliance
      21      Technology and Operations

              Alternatives
      24      Hedge Funds/Fund of Funds
      27      Real Estate Investing
                Globalization
                Credit Disruptions
                Convergence
      33      Infrastructure
      35      Private Equity

36    Canada
39    Mexico


Section III    Europe !

43    United Kingdom

      44      General Management
      46      Investments and Investment Research
      48      Sales, Marketing and Distribution




                                                                                  2
Table of Contents !     continued



50    France
53    Germany
55    The Netherlands

Section IV Asia/Pacific !

59    Australia
62    China and Hong Kong
66    India
69    Japan
71    Singapore


Section V   Looking Ahead

73    Looking Ahead




                                    3
Global Executive Summary

From the Boardroom to the Back Office, the Bar Is Raised amid Uncertainty and
Flux

!   Wall Street “sell-side” hiring has come to a virtual standstill, but asset and wealth management
    firms continue to hire aggressively and are now driving the demand for talent. With capital still
    pouring into the sector, we expect aggressive hiring to continue well into 2008.

!   The past year has seen unprecedented turnover in the C suite, brought on by a senior cohort
    reaching retirement – a decision often accelerated by the enormity of future challenges and market
    dynamics. In addition, boards have never been more impatient with perceived underperformance
    by senior management. As a result, recruiting demand for leadership in both traditional and
    alternative investment businesses ran ahead of 2006 by more than 15 percent in every geographic
    market we serve.

!   Owners, shareholders and investors continue to place a high premium on the ability of senior
    management to control risk, both investment and operational in nature. Significantly increased
    market volatility in the second half of the year has put the entire industry on watch, and, although it
    has not significantly affected revenue growth and profitability at most firms, it has brought this
    leadership issue to the forefront in all our work.

!   The demand for chief investment officers in all segments of the industry is off the charts, escalating
    compensation and widening “move premiums.” The desire for talent with cross-asset class
    experience and knowledge of alternatives is leading to some earlier-than-expected promotions. All
    eyes will be on the performance of this new group to see whether or not they will prove to be short-
    or long-term solutions to the talent shortage.

!   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. A premium is
    placed on executives who can provide true strategic thought leadership to anticipate where this
    nascent market is headed and build firm capabilities accordingly. As a byproduct of this trend,
    demand for retail distribution, sub-advisory and wholesaling professionals returned.

!   There is a bifurcation in the demand for institutional distribution talent in the United States and
    Europe. Search work for traditional institutional clients has remained strong although
    compensation appears generally flat, moving in line with overall market and asset-gathering
    successes. The demand for professionals with skills in structured finance and alternatives,
    however, continues to grow aggressively and is one of the busiest areas of our practice, with
    compensation levels jumping 30 percent or more and often including significant revenue-sharing
    deals and second-year guarantees common.

!   Hiring for technology and operations (T&O) leadership has continued to be robust, with an
    emphasis on T&O leaders who can genuinely partner with the front-office business as well as with


                                                                                                      4
Global Executive Summary !            continued



    cross-functional peers. There is an increasing emphasis on candidates with firsthand
    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 that can help them transform the back-office functions into revenue generating businesses.

!   The institutionalization of the alternatives arena continues as evidenced by merger and acquisition
    activity and initial public offerings. Attention is now focused on the continued build-out of
    administrative and functional leadership teams. Searches for human resources, legal, and
    technology and operations (T&O) talent has kept up the rapid pace of recent years. In addition, we
    have seen and will continue to see more experienced chief executive officers being brought in to
    take the reins from entrepreneur-founders. These trends are particularly pronounced in Asia as new
    platforms emerge.

!   In real estate, borders have evaporated as the move to find investment opportunities outside the
    United States is fueling a rush to build out operations and capabilities in Latin America and Asia.
    Investment professionals with a track record of high performance in these markets – who
    understand the real estate aspects of a deal and can accurately underwrite the risk – are
    exceptionally scarce.

!   Across the alternatives spectrum, 2007 was the year of convergence, with hedge funds in real
    estate, real estate in private equity and private equity in hedge funds. As capital continued to pour
    in, few wanted to settle for their historical piece of the pie. As these platforms become increasingly
    global and diversified, the need for professional managers accelerates. Firms require intellectual
    and cultural leadership, process-oriented decision making, and the ability to manage the risks of a
    business moving at top speed.

!   Emerging markets that are being upgraded by rating agencies have put them within the risk
    tolerances of a greater number of investors. The private equity firms which can respond the
    quickest to this opportunity will enjoy lower competition and lower multiples allowing them to
    achieve returns that are not available in more mature markets.




                                                                                                     5
Russell Reynolds Associates’ Asset and Wealth Management Practice


The changing complexion of the asset and wealth management industry reflects pension reform and a heightened
regulatory environment, enormous intergenerational wealth transfer, growing sophistication among retail
investors and unprecedented demand for transparency on all levels. New players are continually altering the
landscape as clients seek sustainable sources of alpha and refuse to pay active management fees for market
returns. Traditional long-only investment firms, hedge funds, real estate investment managers, plan sponsors,
insurance companies and advisory firms are converging to offer new products, services and delivery platforms. As
the needs of asset and wealth management organizations grow increasingly complex, one pre-eminent, full-
service executive search firm is uniquely positioned to anticipate and satisfy their evolving requirements: Russell
Reynolds Associates. Structured as a global boutique, our Asset and Wealth Management Practice has an
established track record of success in partnering with institutional and retail investment firms, private wealth
managers and hedge funds, private equity and real estate clients to assess and recruit:

!    executive leadership team;

!    seasoned investors across all asset classes;

!    sales, marketing and client service professionals;

!    infrastructure, technology and systems managers;

!    risk management, legal and compliance, finance and human resources executives.


              ASSET                                 PRIVATE WEALTH                      ALTERNATIVES
            MANAGEMENT                               MANAGEMENT

            Institutional                              Private Banking                     Hedge Funds
               Retail                                   Family Offices                      Real Estate
    Plan Sponsors, Endowments                       Independent Financial                  Infrastructure
          and Foundations                                  Advisors                        Private Equity

                                  Investment, Distribution, Management,
                                  Legal / Compliance / Risk Management


Specialists, Seamless Coverage, Speed

We employ a matrix approach of industry coverage that includes product and geographic specialists. This matrix
of specialists provides clients with unrivaled industry coverage, enabling each region to identify and source
potential candidates quickly and effectively.




                                                                                                             6
Russell Reynolds Associates’ Asset and Wealth Management Practice ! continued


Relationship and Partnership

We work with a select number of organizations, seeking to build relationships only where we are likely to play a
key role in an organization’s success. This strategy provides our clients with a greater number of companies from
which to draw candidates.

About Russell Reynolds Associates

Russell Reynolds Associates is the most trusted name in global executive search and assessment. Through our 38
wholly owned offices, the firm’s more than 275 professionals conduct senior-level search and assessment
assignments in a range of industries for public and private organizations of all sizes. With its one-firm culture,
deep knowledge of major industries and unwavering commitment to client service, Russell Reynolds Associates is
uniquely qualified to help clients find the best leaders and to advise them on optimizing their talent. The firm’s
Web site is www.russellreynolds.com.




                                                                                                            7
Russell Reynolds Associates’ Asset and Wealth Management Practice Members
  The Americas                Asia/Pacific         Europe

  Atlanta                     Hong Kong            Amsterdam
  Susan Boyd                  Gareth Stubbings     René de Zwaan
  Richard Perkey              May Tung
                                                   Brussels
  Boston                      New Delhi            Pascale Simon
  Stephen Fitzgibbons         Sanjay Kapoor
  Laura K. Pollock                                 Frankfurt
  Alexander G. Thomson        Shanghai             Mark Unger
  Lynn Tidd                   Joy M.E. Lim
                                                   London
  Chicago                     Singapore            Simon Black
  Thomas G. Putrim            Choon Soo Chew       Symon Elliott
  Lyndon A. Taylor                                 Lucia Ferreira
                              Sydney               Amanda Foster
  Los Angeles/San Francisco   Catherine Andersen   Simon Hearn
  Jeffrey Warren              Lynn Anderson
                              Heidi Mason          Madrid
  Mexico City                                      José López
  Eugenio Riquelme            Tokyo
                              Yukihiro Koshiishi   Paris
  New York                    Hiroyuki Koshino     Paul Jaeger
  Shawn Banerji                                    Nicolas Manset
  Hannah Brazier
  Debra Brown                                      Warsaw
  Heather Hammond                                  Dorota Czarnota
  James Houston
  Cornelia Kiley                                   Zürich
  Graham Michener                                  Taco van der Feltz
  Peter Reichman
  Charles Watson
  George Wilbanks

  São Paulo
  Renato Furtado
  Fátima Zorzato

  Toronto
  Shawn Cooper

  Washington, D.C.
  Denise Grant




                                                                        8
Russell Reynolds Associates’ Global Presence
                                 San Francisco                     Singapore                   Milan
The Americas                     101 California Street             2 Shenton Way               Via Mascheroni, 5
                                 Suite 2900                        #08-01 SGX Centre 1         20123 Milan
Atlanta                          San Francisco, CA 94111-5829      Singapore 068804            Italy
1180 Peachtree Street, NE        United States of America          Singapore                   Tel: +39-02-430-0151
Suite 2250                       Tel: +1-415-352-3300              Tel: +65-6225-1811
Atlanta, GA 30309-3521                                                                         Munich
United States of America         São Paulo                         Sydney                      Ludwigstraße 7
Tel: +1-404-577-3000             Av. Nações Unidas,                Level 41 Australia Square   80539 Munich
                                 11857 - 12º Andar                 264 - 278 George Street     Germany
Boston                           04578-000 São Paulo-SP            Sydney NSW 2000             Tel: +49-89-24-89-81-3
One Federal Street               Brazil                            Australia
25th Floor                       Tel: +55-11-3345-1414             Tel: +61-2-9258-3100        Paris
Boston, MA 02110-1007                                                                          7, Place Vendôme
United States of America         Stamford                          Tokyo                       75001 Paris
Tel: +1-617-523-1111             301 Tresser Boulevard             Izumi Garden Tower 14F      France
                                 Suite 1210                        1-6-1 Roppongi              Tel: +33-1-49-26-13-00
Buenos Aires                     Stamford, CT 06901-3250           Minato-ku, Tokyo 106-6014
Manuela Saenz 323 - 7º Piso      United States of America          Japan                       Stockholm
C1107BPA Buenos Aires            Tel: +1-203-905-3341              Tel: +81-3-5114-3700        Biblioteksgatan 6-8
Argentina                                                                                      SE-111 46 Stockholm
Tel: +54-11-4118-8900            Toronto                                                       Sweden
                                 Scotia Plaza, Suite 3410                                      Tel: +46-8-545-074-40
Chicago                          40 King Street West
                                                                   Europe
200 South Wacker Drive           M5H 3Y2 Toronto, ON                                           Warsaw
Suite 2900                       Canada                            Amsterdam                   Belvedere Plaza
Chicago, IL 60606-5802           Tel: +1-416-364-3355              World Trade Center          ul. Belwederska 23
United States of America                                           Tower H, 18th Floor         00-761 Warsaw
Tel: +1-312-993-9696             Washington, D.C.                  Zuidplein 148               Poland
                                 1701 Pennsylvania Avenue, NW      1077 XV Amsterdam           Tel: +48-22-851-68-38
Dallas                           Suite 400                         The Netherlands
8401 N. Central Expressway       Washington, D.C. 20006-5810       Tel: +31-20-305-7630
                                                                                               Zürich
Suite 650                        United States of America                                      Genferstrasse 21
Dallas, TX 75225-4404            Tel: +1-202-654-7800              Barcelona
                                                                   Edificio Prisma             8002 Zurich
United States of America                                                                       Switzerland
Tel: +1-214-220-2033                                               Avda. Diagonal, 613, 2˚A
                                                                   08028 Barcelona             Tel: +41-44-447-30-30
Houston
                                 Asia/Pacific                      Spain
600 Travis Street                                                  Tel: +34-93-494-9400
                                 Beijing
Suite 2200
                                 Suite 1320, China World Tower I   Brussels
Houston, TX 77002-2901
                                 No. 1 Jian Guo Men Wai Avenue     Boulevard St.-Michel 27
United States of America
                                 Beijing 100004                    B-1040 Brussels
Tel: +1-713-754-5995
                                 China                             Belgium
                                 Tel: +86-10-6505-2688             Tel: +32-2-743-12-20
Los Angeles
11100 Santa Monica Blvd.
                                 Hong Kong                         Copenhagen
Suite 350
                                 Room 1801, Alexandra House        Østergade 1, 1st Floor
Los Angeles, CA 90025-3384
                                 18 Chater Road Central            DK-1100 Copenhagen K
United States of America
                                 Hong Kong                         Denmark
Tel: +1-310-775-8940
                                 China                             Tel: +45-33-69-23-20
                                 Tel: +852-2523-9123
Menlo Park
2500 Sand Hill Road                                                Frankfurt
                                 Melbourne                         MesseTurm
Suite 105
                                 15th Floor                        60308 Frankfurt am Main
Menlo Park, CA 94025-7015
                                 Bourke Place                      Germany
United States of America
                                 600 Bourke Street                 Tel: +49-69-75-60-90-0
Tel: +1-650-233-2400
                                 Melbourne VIC 3000
                                 Australia                         Hamburg
Mexico City
                                 Tel: +61-3-9603-1300              Stadthausbrücke
Torre Reforma
Paseo de la Reforma 115 - 1502                                     1-3/Fleethof
                                 New Delhi                         20355 Hamburg
Lomas de Chapultepec
                                 A4, Tower A                       Germany
México 11000, D.F.
                                 The Qutab Hotel and Apartments    Tel: +49-40-48-06-61-0
México
                                 Shaheed Jeet Singh Marg
Tel: +52-55-5249-5130
                                 New Delhi 110 016                 London
                                 India                             24 St. James’s Square
Minneapolis/St. Paul
                                 Tel: +91-11- 4603 4600            London SW1Y 4HZ
225 South Sixth Street
Suite 2550                                                         United Kingdom
                                 Shanghai                          Tel: +44-20-7839-7788
Minneapolis, MN 55402-3900
                                 Room 4504, Jin Mao Tower
United States of America
                                 88 Century Avenue                 Madrid
Tel: +1-612-332-6966
                                 Pudong, Shanghai 200121           Calle Miguel Angel,11
                                 China                             Seventh Floor
New York
                                 Tel: +86-21-6163-0888             28010 Madrid
200 Park Avenue
Suite 2300                                                         Spain
New York, NY 10166-0002                                            Tel: +34-91-319-7100
United States of America
Tel: +1-212-351-2000




                                                                                                                        9
The Americas
United States
Asset and Wealth Management
U.S. General Management

The Pressure Is On – Markets Are More Challenging and Patience Is Short

2007 Trends

!   Despite the significant mid-year downturn in the U.S. capital markets and the global uncertainty
    brought on by the widespread liquidity crisis, the demand for C suite executives in the asset and
    wealth management arena remains robust. Recruiting demand for leadership at the top of virtually
    every sector in both traditional and alternative investment businesses is running ahead of 2006 by
    more than 15 percent in every geographic market we serve.

!   Leadership succession is a recurring theme at the largest global asset management franchises. There
    has been a significant surge in chief executive officer (CEO) recruiting assignments, both for
    independent public investment companies and the asset and wealth management divisions of
    diversified financial services firms.

!   The retirement market is emerging as a major theme guiding strategic thinking at a growing number
    of firms, particularly focusing on retaining or capturing a larger share of baby boomer post-
    retirement assets. The focus is widespread, ranging from investment-only defined-contribution
    sales programs at independent boutiques to guiding major organizational changes and recruiting at
    the top of the house at several of the largest firms.

!   New product initiatives including structured products and liability-driven investment (LDI)
    strategies continue to be major drivers for defining next-generation leadership at institutional money
    managers. This need is acute since plan sponsors and other investors are searching for pure alpha
    and are willing to pay a premium for this skill. The survival of institutional asset managers
    depends on distinct leadership and visible platform differentiation in the face of their clients’ frozen
    pension plans and the widespread availability of derivatives-based capital markets structures, which
    are rapidly encroaching.

!   Owners, shareholders and investors continue to place a high premium on the ability of senior
    management to control risk, both investment and operational in nature. Significantly increased
    market volatility in the second half of the year has put the entire industry on watch, and, although it
    has not significantly affected revenue growth and profitability at most firms, it has brought this
    leadership issue to the forefront in all our work.




                                                                                                     13
U.S. Investment Management – Equities and Fixed Income

Volatility Returns and the Quest for Alpha Continues

EQUITIES

2007 Trends

!   Despite the bumpy equity markets and the return of volatility mid-year, demand for equity investors
    remains strong in 2007.

!   International and emerging markets analysts and portfolio managers continue to dominate much of
    our equity search activity in the United States. Clients continue to pursue investors with intimate
    knowledge of non-U.S. regions and/or global sectors.

!   “Quants,” especially Ph.D.s with chartered financial analyst (CFA) designations are highly
    sought after by quantitative funds and structured products as well as by fundamental shops that
    value their modeling skills. Even with the dramatic performance downturn experienced by
    quantitative managers last summer, demand for these skills remains strong.

!   Value equity managers still prevail. Few of our clients actually launched searches for growth
    managers, though relative value and GARP (growth at a reasonable price) were more common than
    deep value.


2008 Expectations

!   We would not be surprised to see the market for U.S. public equity investors level off a bit,
    bringing with it an end to the now nearly standard guarantees and “make whole” payment
    provisions.

!   On the international front, in contrast, we see no slowdown in demand for international and
    emerging markets talent. The talent pool filters of language skills, local relationships and stringent
    immigration/visa laws will keep this segment of the market tight.




                                                                                                    14
U.S. Investment Management – Equities and Fixed Income ! continued


FIXED INCOME

2007 Trends

!   Overall, recruiting in fixed income has been slower this year than in 2006 and 2005. The first half
    of the year saw considerable activity in structured products and high yield, with very little work in
    investment grade.

!   Early 2007 was fairly quiet in the fixed income markets, bringing a correspondingly slower pace of
    recruiting fixed-income investors. Firms with exposure to subprime mortgages took a beating, but
    problems at these firms seemed contained. The month of August felt like a year unto itself.
    Subprime mortgage woes seeped into other parts of the market and the resulting liquidity and
    capacity constraints at some firms unleashed a wave of volatility. Many managers focused on little
    other than keeping their heads – and returns – above water. The spillover into the credit markets
    caught some firms by surprise, which in turn surprised their investors. Some observers saw it as
    triage; others as opportunity. While September brought calmer seas, few investors went so far as to
    announce a return to stability, particularly given that the carnage from the sell-side mortgage
    groups was still being absorbed.

!   Firms managing insurance assets battled for talent in order to seize near-term opportunities in the
    segment. Several firms have been actively building capabilities and strengthening leadership.

!   Early indications moving into the fourth quarter suggest increased interest in distressed debt
    professionals, although a substantial dislocation in the mortgage sector is resulting in significant
    retrenchment by several large players. An increase in transparency is likely to result from the
    market turbulence this year, as is a renewed focus in risk management. This push may result in
    increased hiring activity for risk management professionals, especially those with hedge fund
    experience.


2008 Expectations

!   Early indications moving into the fourth quarter indicate increased interest in distressed debt
    professionals while a substantial dislocation in the mortgage sector is resulting in significant
    retrenchment from several large players.

!   An increase in transparency in 2008 is likely to result from market turbulence in 2007, as is a
    renewed focus in risk management. This push may result in increased hiring activity for risk
    management professionals, especially those with hedge fund experience.




                                                                                                       15
U.S. Plan Sponsors, Endowments and Foundations

The “Move Premium” Widens

2007 Trends

!   Recruitment in this area has been at a frenzied pace for the last several years. This is a very tight
    market, with plan sponsors, endowments, foundations, family offices and even money management
    firms that serve institutions or private clients looking for investment professionals with knowledge
    of a broad array of asset classes, especially alternatives (hedge funds, real estate, private equity,
    derivatives strategies) and established relationships with managers of sought-after funds.

!   There is a further premium placed on senior talent that can provide strategic direction, manage the
    career development of more junior professionals and who can figure into succession plans
    themselves.

!   In many chief investment officer searches, the insatiable appetite for expertise in alternatives has
    resulted in some premature promotions. As a result, screening for quality becomes all the more
    important, given that few truly are qualified to make the leap to the top job.

!   To meet their talent requirements, organizations are cross-training or shifting internal team members
    as well as placing a new focus on internal professional development and on entry-level recruiting
    practices.


2008 Expectations

!   Next year will bring a continuation of 2007’s trends. Demand for asset allocation talent and
    manager selection specialists with strong relationships and deep knowledge should be as strong as
    in recent years.

!   A greater willingness to hire the “best available athlete” and invest in his or her training will likely
    alleviate some of the pressure on this market segment.




                                                                                                     16
U.S. Institutional Distribution

A Scramble to Solve the Retirement Puzzle

2007 Trends

   !   Investment and commercial banks, insurance companies, and traditional investment
       management firms continue their rush to provide liability-driven investment strategies to
       institutional clients facing the exceptional complexity of pension and retirement funding
       challenges. This convergence among products (derivative-based products, structured products
       and traditional solutions) is leading to the migration of capital markets professionals to senior
       leadership positions in institutional distribution.

   !   Numerous LDI teams in both distribution and product specialist areas have been staffed and
       launched, with talent coming from pension consulting, benefits consulting and plan sponsors.

   !   Alternative investment boutiques continue to successfully attract top-decile pension sales
       professionals away from larger traditional firms because of the perception of greater demand
       for their products and the revenue-sharing arrangements they offer, which appear more
       lucrative and are more directly aligned with firm success.

   !   We see an interesting bifurcation of the demand for talent. Search work for traditional
       institutional clients remains strong, while the demand for professionals with skills in structured
       finance and alternatives grows aggressively and has been one of the busiest areas of our
       practice.


2008 Expectations

   !   Alternatives firms will continue their efforts to raise assets and vie for top sales talent that
       bring deep relationships and product knowledge.

   !   As long as capital keeps flowing, firms will continue to add to their distribution ranks.




                                                                                                     17
U.S. Retail Distribution

The Boom in Post-retirement Advice Reshapes Retail Distribution

2007 Trends

!   Growth in the post-retirement advice and guidance business is driving significant reengineering,
    product development, branding and product sales reorganizations in every segment of retail
    financial services including banks, brokers, insurers and mutual fund firms. As a result, search
    assignments for chief marketing officers (CMO) and retail distribution executives have
    quadrupled over the previous year, reaching levels not seen since the surge in the early 1990s in
    401(k) bundled-provider build-outs.

!   Several major full-service defined contribution service providers are preparing for major multi-year
    reinvestment campaigns to “rebrand” their businesses in hopes of securing a larger share of the
    retirement rollover pie. Product development and product management executives are in demand,
    with a premium going to those with experience in underwritten annuity-type structures, as well as
    high-net-worth customized brokerage delivery channels. More than a dozen searches followed this
    theme in 2007, which was non-existent three years ago.

!   Competition in the subadvised channel, including investment-only defined contribution, insurance
    annuity, private label, and single- and multi-manager fund subadvice is growing, leading to
    significant recruiting volume. This is particularly the case for mid-sized investment advisory firms
    that can not afford to build large wholesaling teams to cover the bank, broker or independent
    channels. Even the cost to build national brands has become prohibitively expensive.

!   The largest investment advisory firms with the critical mass and brand presence necessary to
    command shelf space with the largest distribution powerhouses (such as national wirehouses and
    banks and the largest supermarkets) are beginning a reinvestment process to recruit a new breed of
    wholesaler. These sophisticated intermediaries need investment experience – and often a CFA
    designation – to gain the respect of the client advisor and to assist that advisor in developing
    sophisticated strategies for the mini-institutional and ultra-high-net-worth clients. New product
    initiatives such as risk-adjusted return strategies, tax-efficient investing, structured products for
    estate planning and lifetime income guarantees are driving the demand for more sophisticated
    wholesalers.


2008 Expectations

!   Given the recent resurgence of this segment, we expect recruiting for U.S. retail distribution
    professionals to continue to accelerate through 2008. Retail brokerage platforms will continue to
    consolidate and asset managers will continue to focus on expanding their share of the high-net-
    worth/mass affluent market.




                                                                                                    18
U.S. Wealth Management

Money in Motion

2007 Trends

!   Merger activity in the United States, including combinations such as Bank of America with U.S.
    Trust and Mellon with the Bank of New York, has unleashed some volatility in the private wealth
    management talent market. While many portfolio managers and client service professionals find
    these mega-platforms attractive because of their resources and the wide range of products and
    services that can be offered to clients, others prefer a smaller, more intimate and, perhaps more
    nimble environment where they can offer their clients a greater degree of customization. As a result
    there is money in motion as portfolio managers, relationship managers and clients vote with their
    feet.

!   Recruitment of CIOs for family offices and private wealth platforms remains strong in 2007.
    Portfolio strategists and asset allocators who can deliver unbiased, holistic, customized advice for
    the wealthiest clients continue to be in short supply in this competitive market.


2008 Expectations

!   The wealth market will likely remain competitive and highly segmented.

!   Platforms that allow investors to service their clients in a customized and holistic fashion will find
    themselves with an advantage in the talent marketplace.




                                                                                                    19
U.S. Risk Management, Legal and Compliance

Alternative Investments Define a New Frontier

2007 Trends

!   The return of volatility and implosion of the structured investment vehicles market has escalated
    the need for risk management professionals at the investment and firm-wide levels. Many firms are
    examining how compliance programs could have helped prevent such issues.

!   Product and business line expansion, domestically and cross-border, has resulted in attempts to
    unify the approach to compliance, especially by the largest firms. Our Legal, Governance and
    Compliance Practice has witnessed continued demand for compliance officers with broad product
    experience and the ability to create an integrated approach – though at a slower pace than in
    previous years. Most of the comprehensive compliance build-outs are largely completed and leaders
    are grooming internal staffers and are promoting from within.

!   The need for independent chief compliance officers who report directly into the board at major
    mutual fund firms also continues, though many candidates find the role limiting and somewhat
    removed from their peers who reside in the business units.

!   The push into alternative products – hedge funds, real estate, infrastructure and private equity – is a
    greenfield in legal and compliance. Many in the talent pool is made up of young, smart,
    quantitative “hot shots,” often with law degrees and lots of potential but little practical experience.
    No one is quite sure where the U.S. Securities and Exchange Commission and other regulators will
    come down on issues; but nevertheless, searches for legal and compliance professionals who have
    dealt with side-by-side with management (of long-only and long/short products) continue at a
    brisk pace.

!   Leadership and supervisory experience continue to be in great demand




                                                                                                    20
U.S. Technology and Operations

After Gaining Prominence, Contributing to the Bottom Line

2007 Trends

!   Hiring for technology and operations (T&O) leadership has been robust through the first three
    quarters of 2007. In keeping with 2006 trends, there continues to be an emphasis on T&O leaders
    who can genuinely partner with the front-office business as well as with cross-functional peers. This
    has manifested itself in an increasing emphasis on candidates with firsthand understanding of
    investment management business processes, ranging from risk management and financial reporting
    to specific product strategies and portfolio management. A proven record of successful
    collaboration with constituents whose own roles are being heavily affected by technology, such as
    traders undertaking the rapid adoption of electronic trading, also is highly sought after in the
    marketplace. Corresponding product knowledge – for example, the different requirements to support
    equity and credit derivatives – is critical as well.

!   Many firms are focused on attracting strategic T&O executives who can anticipate the changing
    regulatory and compliance landscape and serve as proactive leaders within the organization on the
    subject. This is a direct reflection of the desire of growing firms, particularly those that are private
    partnerships, to create “compliant,” transparent operating environments – but not at the price of
    becoming “institutional” or bureaucratic.

!   As in 2006, larger firms, where the T&O budget typically constitutes a significant line item, are
    rethinking the “out of sight, out of mind” attitude that was historically directed toward these
    functions. Running T&O “like a business” is an increasingly common mantra, especially in large
    firms that can leverage the resources of a global institution. As a result, many of these firms are in
    the process of transforming the back-office functions into revenue-generating businesses. Areas
    such as trust and custody, fund accounting, transaction processing, and infrastructure hosting now
    are contributing to top-line growth and firm-wide profitability.

!   Privately held firms and firms targeting the “middle market” have been especially active in 2007.
    Historically these firms have recognized the inherent value of information technology and
    operations in their operating models but have been hesitant to invest in these functions like they
    have in finance or marketing. The potential for regulation is presenting an impending business
    challenge in areas such as disclosure and taxation and is causing these firms to play a bit of catch-
    up regarding T&O investment.

!   Hedge funds are emerging as competitors for talent and are offering compensation programs that are
    hard for divisional or line T&O leaders to ignore. The majority of these firms are not recognized for
    their T&O capabilities and accordingly, most hiring efforts for these shops are targeted to larger,
    best-in-class institutions and specifically at individuals who are “hands on” and entrepreneurial.
    But hedge funds’ high turnover, combined with recent market volatility, has put them at a
    disadvantage in attracting truly top-tier institutional talent. Even so, there are approximately a half


                                                                                                      21
U.S. Technology and Operations ! continued


    dozen large, established hedge funds that have been successful in aligning technology and
    operations with their business interests. These firms consistently find themselves targeted by larger
    institutions as well as by other hedge funds.


2008 Expectations

!   Technology and Operations will maintain its position of prominence and will be called upon to
    serve as a vital contributor to the creation of business value as organizations take on the increasing
    challenges of optimization and improved efficiencies in an increasingly complex, global context.
    This will manifest itself in a continued trend toward global shared services that transcend business
    lines, functions and geography.

!   T&O executives with cross-functional expertise combined with direct business line and product
    knowledge will continue to command a premium. As a result, a number of T&O roles will likely be
    filled by internal candidates who come from outside the T&O function but from within the
    organization. They will bring the necessary internal relationships necessary advance a shared-
    services agenda.




                                                                                                  22
Alternatives
Hedge Funds/Fund of Funds

Confidence Shaken, but the War for Talent Continues

2007 Trends

2007 hedge fund trends can be viewed along a distinct, divided timeline: pre- and post-summer market
tumult. While the depth and extent of the ongoing subprime mortgage problems, liquidity questions, fear
of higher cost of capital and credit constraints have yet to be fully realized, what remains constant in the
hedge fund industry is the continued search for market inefficiencies, mispriced securities, cross-market
arbitrage opportunities and the war for talent.

In last year’s report, we commented on the themes of convergence, consolidation and diversification.
Much of this continued into 2007, both before and after the summer storm, marked by a few distinctions:

!    There were fewer mega-launches of $1 billion+ hedge fund start-ups.

!    Many of the larger firms continued to focus on adding operational talent, especially in the areas of
     technology development and support, middle-office operations, and legal and compliance and
     financial reporting functions, in the quest to better institutionalize their platforms. There was
     markedly lower search activity for risk management professionals in 2007, likely due to the great
     number of 2006 openings that were successfully fulfilled.

!    This year saw increased merger and acquisition and initial public offering (IPO) activity,
     resulting in demand for functional expertise required by larger and/or public entities, including
     corporate tax and audit, public relations/external communications, investor relations and more
     expanded human resources departments (i.e., recruiting, employee relations/performance
     measurement, compensation and benefits, and leadership development).

!    There was continued growth of activist and private capital strategies by hedge funds seeking less
     liquid, longer-term investments with notable interest for mezzanine and middle-market finance
     experts who had prior buy-side experience and/or those who focus on energy, financial and
     consumer industry sectors. Firms with dedicated private equity funds drew higher candidate
     interest than the balance sheet hedge fund investors, who were perceived to be “dabbling” and less
     serious about developing private equity as a diversification strategy.

!    Long-only players continued to develop long/short or market neutral strategies, including 130/30
     funds, resulting in an increased demand for professionals with prior shorting experience. However,
     in a move to retain existing talent, some firms took a bet on their long-only analysts and portfolio
     managers with no previous short experience, often requiring them to first incubate their strategy in
     a “paper portfolio lab” to demonstrate positive performance prior to launch.

!    Lines between the traditional and alternative players continued to blur as hedge fund managers
     further developed long-only and 130/30 strategies or offered bank loans and insurance solutions.


                                                                                                      24
Hedge Funds/Fund of Funds! continued


!    Hedge funds moved further into fund of funds waters, launching strategies focused on external
     managers, either seeded from a captive pool of proprietary capital or from third-party investors.
     Multi-family offices, consultants and fund of funds were targeted by hedge funds seeking talent to
     manage these investments in external funds.

!    Smaller funds, despite strong performance, struggled to catch the attention of the larger,
     institutional investors. As one endowment allocator explained, “Several years ago, the larger, well-
     performing, brand funds were closed for capacity. We had no choice but to seek out emerging
     managers. Now, everyone is open, often with multiple product offerings. Even if we had the
     resources to diligence the smaller funds, we might not have the risk appetite or the relationship
     management breadth to cover a larger portfolio.”

!    Large asset allocators and gatekeepers (for example, public and corporate pensions, fund of funds,
     consultants’ endowments and foundations) were busy adding headcount in the areas of
     operational due diligence, analysis and portfolio management as they increased capital to fund of
     funds and/or hedge funds.

!    Not surprisingly, the greatest functional search demand continues to be for distribution
     professionals (sales, service, relationship management and product specialists) as funds of all sizes
     and strategies continue to compete for client retention or an increased share of institutional capital.

!    This year saw a continued focus and demand for analysts and portfolio managers specializing in
     emerging markets and in distressed debt.

!    There was continued fear of compression on management and incentive fees, particularly for fund
     of funds. However, fund of funds still are the preferred route for pension funds into alternative
     investments. Indeed, 2007 marked an unprecedented number of inquiries from fund of funds players
     seeking experienced sales executives with established relationships in the Public Plan and Taft-
     Hartley communities.

Post-summer 2007 and 2008 Expectations

The current market complications have produced a rise in investor reticence, and witnessed some hedge
fund managers fleeing to the safety sidelines. The future outlook is uncertain. But as Ralph Waldo
Emerson noted, “when it is darkest, men see the stars.” Indeed, many view the recent turbulence as a
chance to move ahead opportunistically, taking advantage of market dislocations and pushing the throttle
forward to recruit talent that previously had not answered the phone but are now humbled, less
complacent and more actively seeking to understand their career options. Our predictions for 2008
include:

!    The battle will continue for distribution professionals with proven track records raising significant
     capital from larger, institutional investors. They also must demonstrate a depth and breadth of
     product understanding to manage existing relationships and cross-sell new strategies.




                                                                                                      25
Hedge Funds/Fund of Funds! continued


!   There will be a growing need for general management talent (CEO, COO or president) as hedge
    fund founder/owners take on more external roles as investor-facing, non-executive chairpersons
    (particularly at publicly traded hedge funds) or, focus on steering portfolio management efforts
    through uncertain markets.

!   Talented distressed debt analysts and portfolio managers will remain at the top of everyone’s wish
    list.

!   Managers exposed to subprime market and structured finance deals suffered disappointing
    returns. So, too, did those managers – most notably in managed futures shops – with strategies
    which relied on quantitative modeling that could not predict the huge swings in market conditions.
    Many of these managers are understandably holding steady rather than recruiting additional
    headcount, and we expect this to continue into the first half of 2008.

!   As hedge fund service providers (including legal, accounting, administration, consulting) continue
    to see their professionals picked off by their clients, they will continue to fill these gaps among their
    personnel. Prime brokers actually are adding headcount in the areas of collateral management,
    hedge fund sales and client service, risk management and technology/risk support.

!   There will be increased demand from retail and private wealth management groups for product
    specialists as well as sales and service professionals, as individual investors continue to show
    interest in broadening their asset allocation to alternative investments.

!   We expect to see continued demand for larger or public company expertise in the areas of tax,
    audit, human resources and investor relations.

!   Both hedge fund portfolios and the hedge fund workforce will continue to globalize, with U.S.-
    based funds extending their presence into London, Hong Kong, Singapore, Tokyo and other
    emerging markets.

!   There is likely to be more consolidation, due to acquisitions by large institutions that see acquiring
    a hedge fund as an attractive way to broaden their offerings in alternative investments. There also
    will be increased IPO activity from those funds seeking to secure so-called “permanent capital.”

!   Professionals at all levels of experience, across an array of functional disciplines, and from both
    sell- and buy-side shops of varying sizes will continue to be much more open to exploring the
    opportunity landscape as a result of these less confident and more complicated times. This will
    accelerate after the distribution of year-end bonuses.




                                                                                                  26
Real Estate Investing

The (Real Estate) World Is Flat

Three major trends in 2007 defined hiring priorities and drove compensation:

                             –   Continued globalization of real estate
                             –   Credit disruptions
                             –   Convergence among hedge funds, real estate and private
                                 equity

GLOBALIZATION

2007 Trends

Just as Tom Friedman provided evidence for a “flat” global economy in his 2005 blockbuster, anyone
who was involved in the real estate market in 2007 discovered the same flat world. As capital continued
to flow into real estate like water from a fire hose, and cap rates in the United States continued to decline,
investors began running for the border. Capital raises for funds with exposure to anything outside the
United States – India, Latin America, Asia or Central Europe and Europe – had aggressive targets, closing
ahead of schedule with more equity than initially sought.



!    Whether in India, Latin America, Asia or Central Europe, it is increasingly difficult to identify – and
     increasingly expensive to retain – local talent that can both understand the real estate in a deal and
     accurately underwrite the risk involved.

!    Although real estate investment funds in the emerging markets were looking for the ex-pat who had
     spent time in the United States or the United Kingdom and was ready to return home, those
     individuals were similar to hen’s teeth – often discussed but never seen.

!    With international capital flowing into Latin America for the fifth year, the talent market in Mexico
     is more challenging and sought-after executives are more likely to be locked in with aggressive
     multi-year cash compensation packages and significant carried interest. In the South American
     markets, the talent pool is simply not as deep. The recent influx of capital in Brazil has resulted in a
     ferocious bidding war for talent and a rash of recent IPOs has created long-tailed contracts.

!    Funds in Asia are highly active, investing in property development as well as existing assets –
     especially in the residential and retail sectors, which are among the strongest growth opportunities
     in this region.

!    During the first half of 2007, direct real estate investment in the Asia/Pacific region was up 12
     percent, to U.S. $55 billion, with a significant proportion of the increase coming from additional




                                                                                                       27
Real Estate Investing! continued


!   cross-border investment. Mainland China, Japan and Singapore are among the region's strongest
    real estate markets.

!   The pipeline of funds to be launched in 2008 will put an added emphasis on capital raising and
    client servicing/relations in the region, and we expect demand for talent will reach unprecedented
    levels.

!   A number of investment banks and funds also have been active in real estate development.
    Deutsche Bank entered a joint venture with the Hilton Group in China to build a series of four-star
    hotels and JPMorgan is making its first foray into Shanghai to develop a Grade-A commercial
    building in partnership with the domestic giant China Overseas Land & Investment.

!   The real estate market in India has been very active. Development activity has gained rapid
    momentum across the major metropolitan areas as well as in smaller areas and across
    residential, commercial and retail segments. Foreign direct investment has been allowed by the
    government, leading to the rapid establishment in India by global real estate funds. As a control on
    the speculation and hoarding of land and properties, the Reserve Bank of India has imposed some
    very strict controls on bank lending to the real estate sector. This has driven developers to private
    equity and real estate funds, and in some cases to the capital markets (in the form of IPOs).

!   Historically, the real estate investment business in India was controlled by small, regional players
    with all critical decisions being made by promoters/owners of development companies. As a result,
    the sector had not attracted professional talent in the past, and that has led to a severe talent
    shortage during a period of growth.

!   The drive for talent in real estate fund of funds has escalated in the last 12 months, across large and
    small firms: bulge bracket, advisors and smaller independents. The most desired skill is the ability
    to both raise money and perform due diligence on real estate managers, especially for emerging
    managers with less than $1 billion in assets. A global perspective with fluency regarding funds in
    Europe and Asia, as well as in the United States, is also top of mind.


2008 Expectations

!   Interest in global real estate opportunities will only increase in 2008, but the pool of talent that can
    deploy capital across regions and realize returns for investors through a variety of strategies and
    vehicles will not – so the supply-demand disequilibrium will worsen, driving compensation levels
    for existing talent even higher.

!   In India, the market is expected to correct somewhat in certain areas, though strong demand in the
    metropolitan regions continues to drive capital costs as well as rentals. Most development projects
    underway are experiencing delays due to a lack of leadership talent, contractor capacity and the
    necessary support infrastructure and equipment. This is likely to create more supply bottlenecks and
    continue to drive higher prices/rentals.



                                                                                                      28
Real Estate Investing! continued



!   The accelerated drive of real estate funds being launched in Asia is expected to continue well into
    2008.




                                                                                                   29
Real Estate Investing! continued


CREDIT DISRUPTIONS

2007 Trends

In August, the failure of real estate-backed structured credit vehicles sent shock waves through the
balance sheets of large bulge-bracket firms with significant structured finance exposure. The fallout has
been widespread, with major tightening in lending criteria and an absence of cheap debt to finance real
estate and private equity deals. Several players have stepped into the morass eager to make the most of a
bad situation. Included among them are hedge funds seeking to pick off leveraged loans from the balance
sheets of banks at low prices where they can arbitrage the difference between the strong underlying credit
of the debt and its current discounted value. The mezzanine debt players are also emerging as winners as
the repricing of senior debt tranches has made the mezzanine pieces far more attractive. So talent that
grew up during the debt years in real estate and are comfortable deep into the capital stack will be getting
a lot of attention.



!    The impact of the “Black Friday of the credit markets” will be felt for several months to come.
     Resumes of credit-related talent are on the streets in abundance.

!    Professionals with expert credit skills or individuals from large, structured finance platforms will
     be sought after by new players such as hedge funds or private equity players.


2008 Expectations

!    Mezzanine debt providers will take advantage of the repricing of certain tranches in the capital
     stack. More funds will be raised to take advantage of the dislocation in pricing of credit pointing
     investors into mezzanine.

!    Hedge funds will step into the financing gap for leverage buy-out activity created by tighter credit
     policies. Funds will be raised to take advantage of the leveraged loan inventory now on the books
     of large banking institutions.




                                                                                                     30
Real Estate Investing! continued


CONVERGENCE

2007 Trends

This was the year of convergence: hedge funds in real estate, real estate in private equity, private equity in
hedge funds. As capital continued to pour into the alternatives arena, few wanted to settle for their
traditional piece of the pie. With the need to put large slugs of capital to work, large public REITs became
very attractive, although entity-level valuation creation also became very appealing – particularly when
the parts are far more valuable than the whole, as in the Blackstone/Equity Office Properties Trust
acquisition. For hedge funds, real estate became another alpha generator in the never-ending search for
absolute return.



!    The talent shortage for senior managers, which has its roots in the early 90s in real estate, has been
     further exaggerated by heavy capital flows of the last three years. The most vulnerable platforms
     are those that have not locked in key employees with long-term wealth creation vehicles. Key
     employees at these shops are being targeted by hedge fund and private equity platforms which can
     provide very attractive future earnings streams.

!    The more diversified and the more global platforms become, the more they need professional
     managers who can provide intellectual and cultural leadership, process-oriented decision making
     and the ability to manage the risks of a business that is moving at top speed. The execution risk
     associated with warp-speed growth is the single biggest challenge facing an industry that has been
     historically dominated by entrepreneurial management styles.

!    Outside the C suite, we have seen continued demand for acquisition professionals who cannot only
     source deals in a demand-driven market but have the ability to execute the deal.

!    Asset managers also are in high demand as generating return comes more from repositioning
     properties than turning them over.

!    Capital-raising professionals continue to be in high demand this year, as they were last year. With
     the amount of investor capital flowing into this asset class, everyone wants to get their fair share.


2008 Expectations

!    The management talent supply-demand disequilibrium in real estate will continue as platforms
     diversify and become more complex. Retention strategies will become a primary concern of human
     resource professionals, particularly at large platforms. Firms that have not adopted compensation
     plans with some component of carry will continue to have key employees poached. When all other
     strategies are considered, carry and other long-term wealth creation compensation plans are the
     most effective retention tools for key contributors. A popular alternative to carry among larger
     financial institutions is a plan that invests a portion of cash compensation on a matching basis in a



                                                                                                     31
Real Estate Investing! continued


!   basket of funds. It is a plan that can be offered not only to investment professionals but to
    significant contributors as well.




                                                                                                    32
Infrastructure
Wanna Buy a Bridge?

2007 Trends

Infrastructure has all the components today’s institutional investors look for: strong returns, capacity to
absorb significant amounts of capital and global investment possibilities. So it is no surprise that 2007
was in many respects infrastructure’s global debut? Long time a favorite investment allocation in
Australia, infrastructure became a popular investment in the United Kingdom and in Europe in the late
‘80s and ‘90s. But not until the Chicago Skyway deal was completed in 2005 did the idea of privatization
of public assets take hold in the United States. But take hold it did: In the last few years, U.S. pension
funds have allocated more than $50 billion to infrastructure investment. At least 50 percent of these
deals were done by private equity investors. In fact, mature infrastructure is the ultimate convergence
between private equity and real estate, mixing the returns of opportunistic equity investments with the low
earnings volatility of real estate.


!    The talent demands are widespread and varied. Search work has been extensive for individuals at
     real estate firms, investment banking, capital markets and private equity firms with expertise in
     property, transportation, energy and telecommunications.


!    Candidates are increasingly scrutinizing potential employers. Firms that are viewed as being more
     opportunistic across a wide variety of sectors (rather than specializing) and those that are willing to
     provide funding (debt and/or equity) in projects/companies that are in different stages of
     development are seen as the most desirable.


!    International deals (Latin America, Africa, the Middle East and Eastern Europe) also have been
     active over the last several years so experienced professionals who have put together a successful
     track record not just in closing deals but in navigating across complex cultures and political
     environments are at a premium.


!    With the German Landesbanks losing its credit rating advantage, we also have seen some migration
     of talent from the public finance sector, becoming attracted by higher compensation and responding
     to the opportunity presented by the lack of professionals with technical skills and experience with
     public finance platforms.


2008 Expectations

!    With the dramatic allocations to infrastructure by pension funds, the surge in demand for talent
     will continue as more funds are created and will put to work significant amounts of equity. The
     overhang of capital in the market is extreme so the demand will continue to outstrip supply, forcing
     fund managers into broader, more global hunting grounds.



                                                                                                     33
Private Equity

Transactions Are Slowing, but Strategic Hires Continue at a Healthy Pace

2007 Trends


!   Recent turmoil in the credit markets has moderated the torrid deal pace seen earlier in the year. New
    deal announcements have slowed, transactions are taking longer to close and some deals are
    repricing or failing to close. Firms are slowing the hiring of investment professionals aimed at
    adding deal execution capacity. However, strategic hires in an effort to enter a new business or
    build a new function continue in earnest.

!   The private equity industry has raised record amounts of capital in the last year. As funds grow
    larger and in some cases are more complex, firms are building internal fundraising and client
    service capabilities. Middle-market focused firms are increasingly adding a seasoned professional
    to focus on investor relations, and larger funds are consistently adding talented people to already
    established marketing groups.

!   Prices and valuation multiples of buyout transactions have continued to increase during the last
    year. More and more firms are looking to build value in portfolio companies through operational
    enhancements and prudent M&A strategy. Many firms have either initiated or further built internal
    operational enhancement groups and/or senior advisors to help with operational issues within
    portfolio companies. In addition, firms are continuing to add human capital professionals to
    optimize the recruitment of talent into the firm and, in some cases, into portfolio companies.

!   U.S. firms, especially the larger ones, continue to increasingly deploy capital and launch new funds
    in overseas markets. Private equity in the emerging markets, such as China and India, remains a
    hotbed of activity. The hiring of investment professionals to support this activity remains strong.

!   The private equity fund of funds business is increasingly competitive, with winners relying on a
    clear advantage, such as access to attractive investments, fundraising advantages and long and
    successful track records.


2008 Expectations

!   With recapitalization dividends and liquidity events from financial engineering or outright sales
    increasingly limited, firms will focus more on driving returns through operational enhancements
    to portfolio companies.

!   Larger funds, in an effort to seek stability in the face of a potential U.S. economic downturn, will
    continue to expand globally and diversify their product mix. Distressed funds will continue to be a
    focus area for investor capital.

!   Increased debt costs and tighter lending standards have reduced investment gains through quick
    recapitalizations and will have a dampening effect on buyers’ bidding capacity. As a result, quick


                                                                                                  34
Private Equity! continued


    investment gains that have yielded significant carried interest distributions, at all levels of private
    equity firms, will be more difficult to come by in 2008.

!   The industry’s record-breaking capital raising has led to management fee revenue increases at many
    private equity firms. Heightened buying and selling has increased transaction fees. While that has
    yielded modest, firm-wide compensation (base and bonus) increases at many firms, the increases
    often remain concentrated within the founding partner ranks, or used for other purposes. In many
    cases, increased management fee revenue is used to hire new investment talent or otherwise grow
    the firm.

!   In the middle market, firms with flexible capital and who are able to invest across the right side of
    the balance sheet, will be best equipped to put capital to work in today's uncertain environment.

!   In the larger-cap buyout world, those firms with global, diversified investment strategies will be
    able to attract, pay and retain the best talent.

!   Strong credit skills will be more highly valued in this next cycle, as workouts and value investing
    replace growth capital as the flavor of the day.




                                                                                                      35
Canada
Canada

Reaching beyond Borders

2007 Trends

!   Whether it be pension plans, insurers, banks, or independent money managers, Canadian firms have
    increasingly been directing their attention outside North America. This manifests itself differently
    among the financial services pillars and the functions concerned.

!   For many years, along with their banking counterparts, Canadian insurers have managed money for
    their own business, as well as for clients. This year, they made greater strides in marketing to both
    retail and institutional investors. Internationally, like their bank counterparts, attention continues to
    turn to the United States, Europe, India and China for future asset growth.

!   After the lifting of foreign content rules in 2006, numerous international money managers entered
    the Canadian market. This year, they have been developing their relationships with consultants
    and institutional investors. Both foreign players and Canadian independents have faced steeper
    competition from large Canadian banks and insurers that have made considerable product and
    distribution inroads.

!   As the Canadian market opened to international investments, some domestic money managers have
    adapted by developing and offering more international products. This has increased demand for
    portfolio managers with sector and industry expertise across geographies – not only into the
    United States but also into Europe and Asia/Pacific.

!   After a record two years of recruiting and absorbing private equity talent, plan sponsors and
    independent money managers have focused their efforts to investing at home and abroad. In
    particular, plan sponsors have made significant direct investments in infrastructure and private
    equity within Canada and internationally.

!   While smaller plan sponsors have continued to outsource investment management to third-party
    money managers, large plan sponsors have grown in assets under management and size of
    operations. This increased complexity in the scale and scope of operations and the introduction of
    risk budgeting methodology has resulted in lasting demand for investment professionals with
    international, quantitative and asset allocation experience.

!   In retail distribution, regulatory change resulted in the creation of Independent Review Committees
    (IRCs) by mutual fund companies. Once established, these committees function independently of
    the parent company. Members with investment, legal and financial skills and an appreciation for the
    firm’s operating environment are in demand.

!   There was continued activity in risk and compliance, with particular movement in the mutual fund
    industry. As insurers focused more on third-party wealth management, this resulted in greater



                                                                                                      37
Canada! continued


    demand for talent in technology and operations to support asset administration and client
    reporting.


2008 Expectations

!   Most employers are anticipating continued hiring growth into 2008, and we expect a continuation
    of several of the above-mentioned trends. However, the repercussions of recent industry
    developments remain to be seen, including the potential for constriction or consolidation in some
    segments.




                                                                                                38
Mexico
Mexico

Competition and Consolidation Increase

2007 Trends

!   The private pension industry in Mexico was ripe for change, prompting authorities to rewrite the
    rules of competition in order to focus more on returns. These regulations now will concentrate on
    fee generation from assets under management, thereby raising the bar as clients shift and jostle for
    the retirement funds (Afores) providing the best returns.

!   The tightened competitive environment casts a gloom over small Afores that recently entered the
    market. These players will not be able to generate the necessary asset volume to survive, forcing a
    wave of consolidations with larger Afores. In this environment, even mid-sized players with
    sufficient assets under management may seek to merge with competitors to lower costs.

!   Private equity and real estate funds continue to be hot areas in the Mexican financial sector as
    foreign investors perceive ample opportunity from economic stability and markets still in
    developmental stages. Opportunistic buyout and real estate funds that have been eagerly recruiting
    talent with local knowledge and networks now are almost fully staffed. Other stakeholders will take
    center stage, further straining an already scarce talent pool.

!   Investment funds – an increasingly mature industry in Mexico – continue to consolidate in an effort
    to cope with lower margins by leveraging operational costs.

!   With the implementation of new rules for private pension systems, the largest and most
    advantageous Afores will seek to improve their competitiveness by offering better returns and by
    lowering operational costs. Consequently, executives with global investment capabilities are
    increasingly sought, while financial professionals with sales and marketing experience, although
    still in demand, will see their appeal weaken.

!   On the private equity front, core fund infrastructure already is in place so demand is shifting from
    investment executives to operational professionals who can provide value-added execution of
    strategies for portfolio companies. In particular, clients seek CEOs and CFOs with sector- and
    industry-specific experience.

!   In real estate, core fund infrastructure also is well established. Senior fund management now is
    shifting its focus to talent downstream in project management and asset management functions.
    Pressure to attract talented project and asset managers is further heightened by the Mexican
    government’s emphasis on developing large infrastructure projects. As key investment players
    within the market bid for new and already operating government concessions, demand for quality
    project and asset management will continue to grow.




                                                                                                   40
Mexico ! continued


2008 Expectations

!   After Afores change their commission schedules in response to regulatory changes, there will be a
    shift in demand toward managers who can exploit the new flexibility of the investment scheme
    (five siefores). Those with experience in global markets and with more sophisticated financial
    instruments will be particularly prized.

!   Talent in asset and wealth management will remain scarce through 2008 on all fronts, thus
    continuing the upward pressure on compensation seen throughout 2007.

!   Consolidation within pension and investment funds will continue unabated.

!   The shift of emphasis from the sales to the investment function is here to stay. Those entities with
    the best distribution and marketing capabilities as well as those able to leverage operations will be
    the winners in this new environment. In private equity, talent will be needed to supervise and
    participate in the operation of invested companies. Real estate also will need operators. The market
    will have to pay a premium for talent with infrastructure/project management experience.

!   Industry- and sector-specific corporate officers will continue to be highly sought by private equity
    and real estate funds.

!   There are no hedge funds operating in Mexico, but market rumors circulate about investors who
    want to launch initiatives. 2008 will probably be the year in which hedge funds make their debut.




                                                                                                   41
Europe
United Kingdom
U.K. General Management

Continuing Strength in the Hiring Market

2007 Trends

!   Notable corporate developments within the U.K. investment management arena in 2007 include the
    proposed merger of Resolution and Friends Provident, in which Resolution Asset Management
    would be potentially consolidated into F&C Asset Management and the management buyout of
    Jupiter Asset Management. High-profile IPOs within the investment management industry have
    continued, including the flotation of Polar Capital Partners, although market instability in the
    second half of 2007 reportedly caused several firms to defer listing until 2008. Nonetheless the
    listings that have occurred have led to increased corporate officer recruitment.

!   Volatility prompts increased focus on risk management. The temporary closure of funds after the
    August squeeze in liquidity left a lasting impression on the risk management community. During the
    past five years, there have been only a few times when the role of risk manager has been as
    important as it was during this past summer, when both bond and equity markets experienced
    significant swings. Furthermore, investment performance of more esoteric fixed income products,
    including mortgage-backed securities, asset-based securities and collateralized debt obligations
    reinforced the need for stringent risk management.

!   European pension funds’ appetite for diversification has increased demand for currency
    management, as it steps up from a tactical asset allocation strategy to an asset class in its own right.

!   Sustainable and responsible investment and climate-change themed products grew in popularity,
    with numerous product launches catering predominantly to the wholesale market. These products
    are perceived to be a safe haven in times of turmoil and are expected to enjoy long-term growth.

!   The appetite for real estate, which saw several REIT product launches in early 2007, dropped in the
    latter half of the year, and consensus predictions are for more challenging times in the near term as
    2007’s credit crunch dampens growth in the sector.

!   Emerging markets equities – particularly in Brazil, Russia, India and China – have survived market
    instability relatively well and continue to attract institutional appetite.

!   The Middle East continues to be a region of interest when hiring specialist distribution capability.


2008 Expectations

!   While economic indicators remain mixed, there is an expectation of some cooling off following the
    bullish markets of the last three years, with a potential dampening on 2008 compensation,
    particularly in some areas of fixed income.



                                                                                                     44
U.K. General Management!continued


!   Alternatives, commodities and ethical investments are expected to continue to grow and continue
    to be an area of heated recruiting as investors diversify their portfolio holdings. Real estate markets,
    which saw strong performance over the last two years, remain volatile and 2008 hiring is expected
    to be more subdued.

!   Demographic trends and impressive wealth creation by Russian and Middle Eastern investors will
    continue to fuel interest in investment managers and asset gatherers with experience in these
    regions. Demand is coming from family offices, endowments and mass affluent channels.




                                                                                                     45
U.K. Investments and Investment Research

Equities and Multi-manager Offerings Have Led the Way in Hiring Activity

2007 Trends

!   On the equities front, the past year has witnessed several senior U.K. and European equity
    portfolio manager moves as firms seek demonstrable track records in these asset classes.

!   Emerging markets equities – particularly in Brazil, Russia, India and China – have survived market
    instability relatively well and continue to attract institutional appetite.

!   The trend for multi-manager offerings continues strongly, as open architecture platforms are built
    alongside direct investment businesses.

!   The U.K. market also witnessed a proliferation of socially responsible investing (SRI) and
    environmental equity-themed products issued by both boutique and bulge-bracket investment
    managers, designed as a long-term portfolio diversification tool.

!   Within both traditional fixed income and equity environments, the first half of the year saw
    investment managers prioritize higher risk strategies with a move away from benchmarked/core
    products to more absolute return and structured products. Recent market uncertainty may result in
    some pulling back from these fixed income strategies, and in the short term we anticipate downward
    pressure on bonuses and some layoffs in the mortgage-backed securities/collateralized debt
    obligation arena.

!   Given the volatility in credit markets during the second half of 2007, hiring within the distressed
    debt and leveraged loan arena remains tentative at best. Interestingly, the current market turmoil
    may provide opportunities for buy-side firms to consider sell-side talent in 2008. Emerging markets
    debt and currencies, both hard currency and local, continue to be key areas of expansion in 2007.

!   130/30 funds have been presented as the new hot product for 2007 but are yet to be tested for
    performance. Many 130/30 funds have underperformed in the short term, calling into question their
    appeal for institutional asset managers. Furthermore, 130/30 will continue to challenge the skill of
    long-only portfolio managers to successfully manage multiple portfolios, especially during periods
    of market volatility.

!   Buy-side sector research analyst opportunities continue to attract candidates from both buy-side
    and sell-side, with the latter principally favoring a move to hedge funds.




                                                                                                 46
U.K. Investments and Investment Research!continued


2008 Expectations

!   Global and emerging markets equities are expected to continue their momentum from a hiring
    perspective in 2008.

!   U.K. institutional and retail appetite for SRI-themed/renewable energy investments is expected to
    remain strong, with further investment managers expected to launch new products in 2008.

!   130/30 products, which aim to bridge the gap between traditional long-only products and hedge
    fund products, also are expected to gain traction.




                                                                                                47
U.K. Sales, Marketing and Distribution

Institutional Sales Talent a Continuing Priority

2007 Trends

!   As in 2006, seasoned institutional distribution professionals are still in high demand. This is true
    for traditional asset management firms, investment management boutiques, managers of managers,
    hedge funds and funds of hedge funds. As a result there is a shortage of experienced and proven
    sales talent and compensation expectations have gone up commensurably.

!   Traditional asset management firms are taking a more segmented client-focus and product
    approach, building sales teams that work closely with product specialists and consultant relations
    professionals. At smaller investment management boutiques, founders often still play an important
    role in raising assets.

!   Multi-managers have seen an increase in demand for their products from local governments and
    mid-sized pension funds that wish to have a diversified product range. As a result, and to reduce the
    cost of outsourcing multi-manager and fund of funds products, many asset management firms are
    hiring their own internal multi-manager teams.

!   Increasingly hedge funds and funds of hedge funds are focusing on institutional clients and
    consequently, they have turned to the traditional asset management firms to find salespeople with
    the appropriate client network and necessary gravitas.

!   Several new U.S. asset management entrants into the U.K. and European markets have begun
    hiring teams to cover these regions from London. As a result, demand for talented self-starters in
    distribution has increased.

!   There is a continued increase in demand for product specialists to complement generalist sales
    teams, and in many of the larger firms, heads of product specialists and heads of consultant relations
    teams increasingly serve on Distribution Committees.


2008 Expectations

!   Demand for successful consultant relations professionals will continue. Consultants are
    increasingly becoming important also in the alternatives arena as well, as they are growing their
    presence in the institutional market.

!   Single-strategy, fund of funds and traditional asset management firms from the United States
    continue to set up distribution offices in London to cover U.K. and European institutional clients
    hence demand for proven asset gatherers is anticipated to remain strong.




                                                                                                   48
U.K. Sales, Marketing and Distribution!continued


!   As emerging markets begin to mature and appetite for international asset management products
    increases in these markets, demand for business development professionals who know the
    emerging markets region will grow.




                                                                                              49
France
France

Talent War Still Rages despite Stock Market Glitch of August-September

2007 Trends

!   Asset management hiring remains unusually active at the senior level in equities, emerging
    markets, infrastructure/financial technology and alternatives (particularly in funds of hedge funds,
    private equity and real estate, the market darling for the past year).

!   The long-only world has been disproportionately troubled by the credit/subprime crisis. However,
    money markets, traditional bonds and structured credit activities have seen a slowdown in hiring,
    except at very senior levels (CEO, CIO and product specialists), where the need to maintain morale
    and strategic direction in uncertain times is critical.

!   Both emerging-markets and European equities are a hot recruiting segment that has seen numerous
    senior-level hires.

!   The flight to boutiques is still continuing due to their attractive reward structure and greater sense
    of ownership and autonomy. They are riskier environments, however, and, in the current
    environment, a reverse migration is expected, especially in alternatives.

!   Bulge-bracket firms have realigned or redesigned their organizational strategies away from
    centralized models and toward multi-boutiques. But this will demand a strong sense of common
    brand, values and vision.

!   Leadership and management issues are top of mind for CEOs as they seek to inspire, motivate and
    provide vision to teams of increasingly specialized technicians with varied backgrounds.

!   CIOs with vision, human resources leaders with broad strategic impact (and a seat on their current
    management board) compensation and benefits specialists, and risk/compliance and infrastructure
    professionals are highly sought after and at increasingly senior levels. For the three latter categories,
    a talent shortage is forcing firms to look beyond their competitors. Similarly, firms are going
    outside their field and comfort zone when seeking CEOs and board members.

!   On the distribution side, institutional marketers, more than retail/wholesale, are in demand at the
    most senior level and with the broadest possible geographical remits. Firms are turning to Benelux,
    Scandinavia, Eastern Europe and southern Europe as well as, increasingly, the Middle East for
    managers to serve pension funds, banks and insurance clients.

!   Alternatives are still able to draw talent but not unquestioningly. Last summer’s events have made
    specialists nervous and while senior marketers and analysts still command significant premiums to
    move to single-strategy hedge funds or fund of funds, candidates are exercising more caution
    when contemplating departure from investment banks or the long-only world.



                                                                                                      51
France! continued


!   Interestingly, new Swiss and U.S. entrants and established midsized players are still looking to
    invest in France, and high-quality firms are successfully attracting senior talent despite their limited
    local presence.

!   On the wealth management side, the talent war rages more than ever, with musical chairs on both
    the team and individual levels as people are poached from consulting, mid-cap advisory and law
    firms. This has been accelerated by the emergence of a new breed of advisors and private bankers,
    often within newly formed boutiques, who are looking to gain market share and differentiate their
    “trusted advisor” approach in the eyes of the owners/leaders of mid-sized and family businesses.

!   Confident of the path ahead, CEOs of wealth advisory businesses are taking time to readjust their
    human resources, hiring and retention policies and to refine their understanding of client-centric
    models (for example, building a broader, more holistic dialogue for family issues). Information
    technology systems and processes and risk management tools also are being upgraded significantly,
    pulling talent from other “best of breed” industries/sectors.




                                                                                                     52
Germany
Germany

A Growing Market Intensifies Demand for Sales Professionals and Credit Portfolio
Managers

2007 Trends

!   The year 2007 has seen a very active talent market within Germany’s investment community.
    Demand has been consistently high for both and sales and marketing and product specialists. Senior
    asset managers on the equity as well as the fixed income side (particularly credit and structured
    credit portfolio managers) have been in high demand. Recruiting activity has been high across the
    entire range of firms, from niche shops to alternative boutiques to established and well-known
    players in the German market.

!   There is strong demand for socially responsible investing products and for incorporating
    sustainability funds into investment portfolios. This is mostly driven by international players.

!   The German wealth management market is still in a growth mode and thus is both very challenging
    and highly competitive. International organizations such as ABN's Delbrück Bethman Maffei, UBS,
    Credit Suisse Asset Management, Sarasin, Pictet and Lombard Odier are increasing their reach into
    the local German market. These international players are fighting hard for market share against big
    local firms such as Deutsche Bank, Sal. Oppenheim, Trinkhaus & Burkhardt and Berenberg. As a
    consequence, top asset gatherers on the private banking side with quality client contacts are a
    scarce resource in great demand.

!   With Fortis having acquired the asset and wealth management business of ABN AMRO, there is a
    new and sizable player in the market looking to further build on ABN’s existing platform. At the
    same time, the industry will be watching closely to see how this integration unfolds on both the
    strategic and tactical levels.

!   Top senior institutional and wholesale talent remains scarce, with recruiting activity having been
    heavy throughout 2007.

!   Clients are demanding liability-driven investment solutions, leaving little room for pure product-
    driven sales efforts. This is a consequence of evolving corporate governance standards and changing
    legislation that has created a demand for value-added products and services as well as for sales
    solutions for fund management specialists in asset management organizations and investment banks.




                                                                                                   54
The Netherlands
The Netherlands

The Quest for Absolute Alpha

2007 Trends


!   Influenced by regulators, institutional investors continued to adopt liability-driven investment
    strategies. Currently, only the larger funds such as PGGM separate alpha and beta within their
    portfolios, but a growing percentage of the midsized funds are preparing to follow suit.


!   Strategic asset allocation strategies are including new investment ideas and changes in risk
    tolerance. Institutional investors have become more receptive to using alternative investment
    products like exposures to commodities, emerging markets, real estate, timber, private equity,
    catastrophe bonds or climate-linked products.


!   Total return or absolute return strategies (130/30, multi-asset, etc.) that strive for pure alpha, rather
    than the traditional outperformance against benchmark strategies, have become an increasingly
    important part of overall internal investment strategies.


!   Fiduciary management strategies have grown in importance. New providers of fiduciary services
    have entered the local market. Due to the increasing complexity of the investment landscape, more
    pension funds are looking to outsource their investment activities to a fiduciary manager with
    which they have a strategic partnership. It is still too early, however, to evaluate the success of this
    strategy.


!   Corporate social responsibility/socially responsible investing (CSR/SRI) products and strategies
    have become important due to growing expectations from governments, the public and the media. In
    addition to traditionally “green” funds, many general asset managers have also introduced
    specialized CSR/SRI funds. Allocations to micro-credit finance funds have accelerated, with ABP
    Pension Fund doubling its exposure in this class.


!   Real estate as an asset class is still growing strong in terms of professionalism, popularity (number
    of funds available) and diversification (regional, long/short, etc.).


!   Due to active public relations campaigning and positive media coverage, private equity firms, their
    role in the economy and their effect on the companies they acquire now are regarded in a more
    favorable light.


!   There has been a tremendous increase in shareholder activism by both hedge funds and pension
    funds, with the ultimate example provided by the letter The Children’s Investment Fund sent to the




                                                                                                    56
The Netherlands! continued


    management board of ABN AMRO in February 2007, eventually resulting in the sale of the largest
    financial institution in the Netherlands to a consortium of three other banks.


!   The Holland Financial Centre was launched as a new initiative to promote the Netherlands as an
    international financial hub. All key representatives from the Dutch government, banking,
    insurance, pension and investments are participating in this high-profile initiative. Regulatory
    changes and initiatives by the Dutch National Bank have resulted in the Netherlands emerging as a
    serious competitor to countries like Ireland and Luxembourg as the preferred location for cross-
    border asset pooling.




                                                                                             57
Asia/Pacific
Australia
Australia

Strong Growth in Total Assets and Consolidation Continues

2007 Trends

!   In the first half of 2007, superannuation assets in Australia exceeded AUD$1 trillion.

!   The government’s introduction of simplified superannuation reforms (simple super) to reduce the
    taxation complexity and further encourage savings above the 9 percent compulsory level led to very
    substantial inflow into funds, especially because one-off contributions were allowed prior to the
    June 30 end of the tax year.

!   Because of the substantial improvement of the attractiveness of superannuation assets for retirees
    (with earnings and withdrawals completely tax-free after age 60), a large amount of individual
    discretionary assets, such as property and individual share holdings, has either been exchanged for
    or moved into superannuation accounts.

!   Self-managed superannuation accounts have accounted for a disproportionate share of the growth
    since these accounts bring a number of advantages for investors with larger balances and the
    sophistication to act as their own trustees.

!   The four major trading banks account for a significant portion of the total superannuation assets
    under management, but they have followed quite different paths. Westpac and Commonwealth
    Bank own significant asset management divisions in their own right, while National Australia Bank
    outsources the “manufacturing” aspect to external managers, and ANZ uses a joint venture with
    ING.

!   The other major sector that aggregates retail superannuation funds is the industry fund sector; at
    least two of these now have AUD$20 billion in assets under management, and further
    consolidation in this sector is expected as individuals are able to freely move their funds and
    economies of scale become more apparent.

!   An increasing proportion of assets has been directed to offshore and alternative funds.
    Infrastructure and global property as well as hedge funds have been featured in asset allocation of
    the new funds inflow as the performance of global equity markets has tended to converge
    internationally and as investors continue to look for outperformance.

!   The Australian funds management business at the individual level is still very advice dependent,
    with financial planners directing a large proportion of the funds inflow. The Australian Prudential
    Regulatory Authority has increased its resources and efforts to scrutinize the conduct of planners
    and self-managed funds trustees.




                                                                                                   60
Australia!continued


!   Although private equity has participated in the successful takeover of several medium and large
    listed Australian companies, institutional investors blocked similar attempts for Qantas and Flight
    Centre, showing an increasingly proactive voice in major corporate actions.

!   Australia entered the government wealth funds management sector, creating the Future Fund to
    move federal government budget surpluses into a dedicated fund to cover the retirement liabilities
    of Commonwealth public servants. The Future Fund houses AUD$60 billion in assets and is
    projected to fully fund the outstanding liabilities within the next three years.

!   Both the Future Fund and the State of Victoria’s public sector fund manager, Victorian Funds
    Management Corporation, are adopting an investment philosophy separating its alpha and beta
    investment operations. They are using low-cost index tracking managers (including some in-house
    capability) to generate overall market returns, placing their risk budget with a range of external
    managers that promise potentially higher returns.

!   There has been greater movement of senior investment professionals and teams among fund
    managers this year than in prior years. The continuing trend of well-regarded investment
    professionals forming boutiques shows no signs of slowing. Perhaps the most visible
    acknowledgement of this is the recent announcement by Westpac that it plans to partially divest its
    asset management division (BT Financial) to provide equity participation to the investment group’s
    management.




                                                                                               61
China and Hong Kong
China and Hong Kong

Continued Demand for Both Local and Global Talent

2007 Trends

!   The asset management industry in Asia continues to experience significant growth fueled by several
    key factors, including rising sovereign institutional and private wealth in the region, the increasing
    pace of pension reforms in Asia and the diversification needs of global investors. Total assets under
    management in the Asia region exceeded U.S. $2 trillion, up from U.S.$1.2 trillion a year ago.
    South Korea, Taiwan, India and China have led asset growth.

!   The equities markets in China and Hong Kong became focal points for investors in 2007. As of
    mid-October 2007, Chinese stocks have more than doubled in value from two years ago, the
    Shanghai Composite Index topped 6000 for the first time, and the combined market value of China's
    Shanghai and Shenzhen exchanges reached U.S.$3.7 trillion. In addition to foreign investment, local
    Chinese investors continued to pour their savings into the home market. The local regulatory
    authorities are considering doubling the QFII quotas to meet demand. The liberalization of QDII,
    allowing Chinese financial institutions as well-qualified retail investors to invest through
    authorized Chinese financial institutions in selective overseas financial instruments, continues to
    drive growth in the Hong Kong stock market.

!   With its U.S.$1.4 trillion of reserves, the government formed a new investment entity, China
    Investment Corporation (CIC). The anticipation that a significant portion of CIC's U.S.$200 billion
    sovereign wealth inflow will be invested in the Hong Kong exchanges along with assets from retail
    investors is driving the Heng Seng Index, H-Share Index and the RedChip Index to unprecedented
    levels. Sovereign wealth funds from Asia and the Middle East have become new and powerful
    players in the global markets.

!   New entrants and continued expansion of the existing players in both traditional and alternative
    asset managers have contributed to explosive demand for office space and talent, beyond even the
    frenzied levels of the ‘90s. In the traditional asset management arena, new entrants from the United
    States, Europe and the Middle East have established regional hubs in Hong Kong or Singapore.
    Among alternatives, hedge funds have tended to set up shop in Hong Kong, while private equity and
    real estate have clustered in Beijing and Shanghai.

!   The overseas subprime problem has little visible impact on the Asian hedge fund and asset
    management markets, given the bias of Asian investors, particularly the retail and private banking
    segments, toward equities.

!   Hong Kong remains a key regional hub for the industry. Established firms found that growth
    brought complexity and established new senior positions with expanded regional responsibilities,
    including COOs, chief credit officers, CFOs and specialized sales or marketing-related
    professionals. There also were numerous changes at the CEO level.




                                                                                                   63
China and Hong Kong!continued


!   The high turnover – more than 50 percent – of sales and marketing professionals in 2006 continued
    into the first half of 2007. Both traditional houses and hedge funds are driving demand for
    investment research talent.

!   New entrants in the real estate and private equity segments experienced growing demand for
    professionals with both deal sourcing and execution skills at the director and managing director
    levels.

!   The war for talent underway in the asset and wealth management industry in Asia is exacerbated by
    the growth in the financial services sector as a whole. The banking and insurance sectors, for
    example also are experiencing unprecedented growth at a time when a senior cohort is retiring. That
    multiple sectors are feeding from the same talent pool has led to greater flexibility by talent
    managers and a steady stream of professionals switching fields. Investment banking professionals
    have long been favored targets for private equity and hedge fund players; real estate developers
    have lost talent to the real estate investment communities. Banking and insurance firms consider
    COOs, CFOs and CTOs from the asset management industry and vice versa. Private banks have
    drawn investment management salespeople as well as investment professionals from the asset
    management industry.


2008 Expectations

!   Asian mutual fund performance delivered stellar double-digit returns across the region on a year-to-
    date basis with the equities markets in China, Hong Kong, India, Singapore, Malaysia and the
    Philippines outperforming most developed markets. Therefore, we expect firms will establish
    increased investment/research presence and relocate product development managers and asset
    allocation strategists to the region.

!   While the Chinese fund management industry, with RMB2 trillion, is still a closed market, it has
    seen significant talent turnover in the last year. Many portfolio managers – some say up to 40
    percent – have left for the private sector and its higher and more flexible compensation. The
    coming year will determine whether local fund houses will step up and change the compensation
    system to compete with the private sector.




                                                                                                 64
China and Hong Kong!continued


!   The recently announced easing of restrictions by the Hong Kong Securities and Futures
    Commission regarding the appointment of overseas investment managers by local fund houses is
    expected to draw more international talent to locate to Hong Kong.




                                                                                             65
India
India

Sustained Growth Builds Pressure on Supply of Talent

2007 Trends

!   Steady growth in GDP of 7 percent to 8 percent continues, supported by sustained liberalization of
    the economy. This has driven strong inflows of foreign investment into the country, reflected in
    buoyant capital markets and a positive business outlook for corporate and financial services players.

!   The asset management and wealth management space has seen significant activity with many
    international players entering the market. During the last few months, both AIG and JPMorgan
    have launched their AMC operations and a half-dozen other global players are at varying stages of
    approvals or launch. UBS acquired the asset management business of Standard Chartered Bank.

!   Given the rapid expansion of the industry, firms are having difficulty building and retaining their
    teams. The increasing demand for experienced portfolio managers and compliance, sales and
    distribution talent has led to firms to adopt multi-pronged strategies to meet their personnel needs.
    Recruiting strategies include hiring candidates from more mature geographical markets, repatriating
    Indians living abroad and recruiting candidates from non-traditional sources such as research and
    retail banking into these areas.

!   Hedge funds and private equity players have increasing interest in setting up local offices as the
    Indian stock markets are seen as a key investment destination. Offering higher compensation and
    greater autonomy, hedge funds have had success recruiting top-tier fund managers from the asset
    management world, and private equity firms have brought people in from elite consulting firms.

!   The real estate business has been opened up to foreign investment. This has led to an explosion of
    real estate funds (from Morgan Stanley, Merrill Lynch, Blackstone, GE and others), bringing the
    associated demand for professionals who understand the Indian real estate markets. The shortage
    of professional talent is accentuated by the fact that the real estate market in India historically has
    not been a career destination for quality financial talent.

!   Private banking still is developing as an industry in India, moving from financial planning to the
    more sophisticated portfolio of products and services found elsewhere. As with real estate, this is a
    new growth area, with demand for experienced and qualified private bankers far outstripping
    supply.


2008 Expectations

!   Demand for asset management professionals across the investment and sales functions is likely to
    continue to rise, fueled by the launch of Indian asset management firms by Dawnay Day,
    AEGON, Shinsei, Mirae and some local players like Edelweiss and Peerless. Some existing players


                                                                                                    67
India!continued


    may see consolidation through tie-ups with strategic partners (for example, Robeco with Canara
    Bank Mutual Fund).

!   Real estate is expected to see an increased level of activity, with global and local funds likely to
    start making serious investments. Demand for CIOs, asset managers and business development staff
    in both funds and services companies is expected to grow rapidly.

!   Indian investment professionals abroad will continue to return home, particularly to seek
    opportunity in asset management and real estate.

!   Pension funds and REITs are likely to receive regulatory approval, further driving demand for
    talent across the board.




                                                                                                 68
Japan
Japan

Recovery Continues as the Market Heats Up

2007 Trends

!   The Japanese economy is booming, with most analysts expecting growth to continue at least though
    the beginning of the year. As elsewhere, however, the subprime loan implosion has cast long-term
    uncertainty.

!   Despite this upturn, both retail and institutional investors have been beset by a lack of opportunities
    for absolute returns, with the downturn in global credit markets exacerbating the problems at home,
    particularly for traditional investors. As a result, both domestic and foreign asset managers are
    beginning to roll out more alternative investment products (AIP) such as leveraged hedge funds,
    REITs and private equity funds, targeted to pension plans. UFJ Trust Bank is planning to introduce
    a hedge fund of funds and Sumitomo Mitsui Asset Management is planning to increase its AIP
    allocation from ¥32 billion to ¥50 billion. Sumitomo Trust & Banking Co., meanwhile, has ¥180
    billion allocated to alternatives, with 70 percent of that going to hedge funds.

!   The increased visibility of hedge funds could lead to their acceptance as an allowed asset class for
    investment of government funds. This could be a large opportunity for hedge funds, either through a
    gradual acceptance of hedge funds or fund of funds as an asset class by the government or through
    hedge funds focusing on corporate restructuring in Japan.


2008 Expectations

!   2007 is ending with an increase in activity in terms of new entrants. We expect to see a couple of
    large, high-profile foreign start-ups in Japan by year-end. We take this as an encouraging sign for
    the market. The rapid development of a range of investment styles and options will continue to
    make competition fierce among foreign and domestic players. There will continue to be an increase
    in alternative investment products, hedge fund activity and mutual fund players.

!   Distribution channel still plays a vital role in Japan, as Japanese investors are starting to develop
    more interest in alternative products and have a larger appetite for risk. Hedge funds will continue
    to be a topic of controversy in Japan, but the market is more favorable than ever before.
.




                                                                                                     70
Singapore
Singapore

The Bullish Outlook Continues

2007 Trends

!   Like 2006, this year continued to see a steady stream of U.S. and European investment management
    firms setting up shop in Singapore, attracted by a mix of factors including investor demand, an
    attractive tax and regulatory environment, a well-functioning legal and a higher quality of life
    compared with other regional alternatives. Singapore also has emerged as a favored hub for firms
    wishing to consolidate their regional back- and middle-office operations.

!   The separation of research from portfolio management accelerated. Investment management firms
    want portfolio managers to focus on managing money and constructing portfolios without the
    distractions of overseeing a research operation. Many firms now have regional-based research
    hubs supplemented with local research in countries where they have a presence.

!   High investor demand combined with high potential return have compelled both new entrants and
    existing players to either build or add to their emerging markets fixed-income businesses. There
    has been considerable demand for emerging market bond and currency portfolio managers and
    analysts, as well as credit portfolio managers and analysts (although demand for these last two
    positions has dropped somewhat following the late summer turbulence).

!   The expanding number of market entrants combined with market growth have led to a considerable
    demand for sales and marketing professionals in both the institutional and retail spheres. Smaller
    firms attempting to cover both areas are finding it hard to locate individuals who can do both, even
    when they are addressing the retail markets via third-party distributors.

!   Many investment management firms are setting up their own internal multi-strategy hedge funds
    or balanced funds in an attempt to increase risk returns from uncorrelated investments. This has
    been prompted by the both the promise of higher returns and the need to retain talented staff
    attracted to the growing hedge fund industry, which is increasingly taking talent from traditional
    money managers.

!   Competition for talent also is being fueled by the rapidly growing private banking sector, which is
    hiring investment officers, client service and marketing staff from the asset management arena.
    Sales staff professionals often are seen as having the right skill sets to become private banking
    relationship managers.




                                                                                                  72
Looking Ahead

Optimistic with a small “o.”

!    We approach 2008 with selective optimism. On one hand, we believe that as long as investor capital
     continues to pour into certain strategies, particularly alternatives, firms will expand into new areas.
     On the other hand, capital could move to the sidelines if the markets trend downward for a
     prolonged period of time.

!    Recruiting at large, long-only platforms will be driven by the need to retool their current
     organizations in favor of alpha generation and talent who can provide solutions addressing
     retirement and liability management needs.

!    Alternatives boutiques will require a greater number of professional managers who can direct their
     teams to generate high returns for investors while minimizing execution risk that often
     accompanies aggressive growth into new markets and new strategies.

!    Several questions remain to be answered:

            –      Are the retooling and talent upgrade initiatives complete?
            –      Will a market slowdown expose opportunities to invest in displaced talent?
            –      Has the impact of the subprime meltdown largely been recognized?

The answers to these questions will set the stage for hiring in 2008.


Stay tuned . . .




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