Thelander IF Digest: April 2025
How Much Do Investment Firms Spend on Payroll?
This month, we are excited to dig into new data on payroll costs for investment firms based on assets under management (AUM). Curious about firm structure and how it relates to compensation based on firm size? Check out last month’s digest here.
And if you want to gain access to additional exclusive data, completely free, along with discounts on full access, complete the Thelander-PitchBook Investment Firm Compensation Survey here. We can even help you with data input, just respond to this email.
Back to the Digest. Our data shows that the annual payroll costs go up the larger the firm. This is true across the board in firms with under $1 Billion in AUM to over $4 Billion, with some exceptions at smaller firms.
Let’s dig in to find the patterns, anomalies and key takeaways for your firm.
Key Takeaways:
Firms with less than $500 million AUM have 25th – 75th percentile payroll costs between $687,500 and $2 million.
Firms with $500 up to $1 billion pay out between $3 million and $5.15 million.
Firms with $1 billion plus in AUM, according to our data, pay out $5.7 million up to $16 million.
For firms with AUM between $1 and $2 billion, median payroll costs range from $5.7 million to $11.2 million. For firms with $2 billion to $3.9 billion, median payroll costs range from $5.75 million to $18 million. In general, the larger the firm, the higher the payroll cost.
Payroll As a Percentage of Revenue
To gain greater perspective, let’s look at payroll costs for investment firms as a percentage of total revenue for firms with less than $100 million up to $4 billion plus.
Unlike total payroll costs, the general trend is the smaller the investment firm, the more they spend on payroll, proportionately.
Firms in the 75th percentile with less than $100 million in AUM spend 80% of their total revenue on payroll and 50% at the 25th percentile.
Firms with $100 million to $249.9 million only spend slightly less (75%) at the 75th percentile, and the same (50%) at the 25th percentile.
We see a break in this tend for firms from $250 million up to $499.9 million. At the 75th percentile, they spend 76% – a marginal difference from what smaller firms spend. But the 25th percentile of this group spends just 34.5% of their total revenue on payroll.
Let’s look at firms with more than $1 billion in AUM.
Payroll costs as a percentage of revenue drops fairly consistently as the AUM increases from $1 billion plus. The median drops from 57.00% to 51.00% to 45.0% at $4 billion plus. As firm AUM increases, we start to see consistent drops in the percentage of revenue spent on payroll. 75% of firms with more than $4 billion in AUM spend 50% or less of their income on payroll.
This may not surprise investment firms, since you don’t necessarily require twice the amount of people to do double the amount of work. Certain positions will remain similar in size regardless of the firm’s AUM.
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Tags: Investment Firm, Newsletter