Another Thread on LO AM Comp
I’ve seen this topic posted from time to time, but I am hoping to get more clarity. What is typical comp for a Senior Analyst in LO AM?
In Fixed Income vs. Equities? I know there’s a FI discount, but I am at a large mutual fund and it seems some seniors are making $200-300k which is much lower than I expected entering this industry.
Depends on the size of the AM. Equity division of large mutual funds will easily do $500k+ for senior analysts. Not sure how it looks on the FI side
The usual answer of “it depends” (size, team, performance, etc). $200-300k for seniors seems pretty low. I’ve seen significantly higher at LO places for senior people, and I’ve never seen that low for “senior” roles (although as I started off with, it’ll depend). Under $500k for senior roles (but you should clarify what you mean by senior) is low.
Senior Analyst meaning highest level of coverage for a sector in FI at a $300bn+ AUM shop owned by a Lifeco (5 years as a senior analyst, with associate = entry level).
Small team with fewer than 10 research analysts, average performance. Team AUM is on the smaller side for a LO.
Yeah, that seems very low. I would expect $500k or so.
Key piece of info is Lifeco: Does it have a mandate to generate alpha for its surplus book or is it managing the credits that are used to meet the liabilities?
Assuming we are talking corporates is this IG or HY? Definitely seems very low even if it is IG (imo the comp differential between the two is a bit overstated depending on the firm). I've been told at my shop average senior pay is $550-750k, with possibility to go higher under the right circumstances if you are crushing it (and likely lower too when you are not). Theres been a recent thread on HY/LL senior analyst comp, from what I can gather the info in there is a pretty good reflection of the market.
Is this in a Tier 1 market? If not, that might be playing into it. A lot of times if you "grow up" in lower COL markets at the same firm you can be underpaid relative to people in a NY/LA type market, and even those who lateral out of those markets can keep the "market rate" they set into those markets.
Lifestyle shops tend to pay less, all depends on what you value. Assuming the LifeCo is public (even if it is not), typically when an AM has a parent co you can expect the comp to be lower as the parent will use the relatively high margin business that is AM to benefit themselves and their shareholders. The places you will get paid are private firms where profits are retained internally and where there are no external shareholders to please.
Thanks! I was looking for non-HY comp with 10 YOE, no MBA/banking prior exp.
Cheap lifeco parent, lifestyle, and not being HQ in NY/LA do explain the discrepancy.
No problem, FWIW you are still probably underpaid even accounting for those factors.
Is there a view on performance related pay differences at LO? My sense is experience tends to pay better than great numbers. For example, is a sr analyst with 15-20 yoe and avg perf likely to make more than 10 yoe guy with great perf? The feedback I’ve been given from headhunters is that usually yes that’s the case and it seems ridiculous.
Depends on how the firm structures pay but I would expect that as well. Performance should in theory take priority but as an analyst years of experience, especially when you have sector/specialty expertise, is worth something as well, even if it isn’t flowing through to the numbers. Sometimes performance can be impacted by factors you cannot 100% control (sectors being out of favor, PM not tracking your recommendations, unpredictable event within your coverage etc).
For comp, it is usually some function of these factors:
-Firm financial performance (flows and profitability)
-Group financial performance (flows and profitability)
-Group investment performance (typically relative to benchmark over a few time horizons)
-Individual investment performance (as measure by alpha, vs. benchmark, or “risk-adjusted”)
-Intangibles
Especially at a firm where the parent is public, you can bet that firm-wide performance and profitability of the group is really what sets the bonus pools for the year, which can outshine bad investment performance and vice versa.
Enormous variability in pay. Very hard to bucket as “LO” and get any type of accuracy. Senior analyst could range from a couple hundred grand to many millions depending on your seat
Yeah, this isn't true. There is some variability in pay, but there's virtually no senior analyst in the AM space making $4-5ml a year. A top-notch senior analyst at a good shop can crack >$1ml but even >$2ml is pressing it
Realistically a senior analyst makes $500-800k at a good shop with >$20bl AUM, the very best can do ~$1ml but that's about it. That said, hours are 50-55 on avg so can't really complain
For PMs at LOs, is comp usually determined w a formulaic approach (ie. % of P&L above index return or % of incremental mgmt fees)? Is it realistic to expect 500-800k for an analyst in early-to-mid 30s or does senior analyst imply much longer YOE?
Not true. If you’re at a private partnership and run money as a senior analyst you can definitely make well over 1mm
As mentioned by others, senior analysts get paid north of $500K but it depends on AUM. At my firm (multibillion AUM, traditional AM), senior analysts get 500-800k but varies with fund performance, while PMs are closer to a $1M+
What AMs are known to pay well from senior analysts to PMs?
Why do you want to know?
What portion of the $500k+ would be from the base salary?
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