So when will the money come?
Associate level at a mid-sized shop, doing fixed income research. I really enjoy the job which I guess is the most important thing and a good indicator for future success, but I'm just consistently disappointed with pay. Every time I switch jobs or see something floating around it's always way lower than I expect.
For example, looking at two megafund jobs advertised on LinkedIn at my level (around 5 years experience): one in NYC is paying $120-140k + bonus, and one in London (for the sake of diversity) paying GBP 80-90k + bonus. Even ignoring the fact that bonuses this year will probably suck, at my current role I was told to expect around 3-4 months (so lets say 30%). When you factor in progressive tax rates and the HCOL in these places, these comps are hardly going to finance an amazing lifestyle.
Not only are these figures way way less than someone in banking, but if I compare my earnings to those of my college buddies who got into non-finance jobs (business analysts, retail and commercial banking, Big 4 etc) it's pretty much on par. I know there's no point comparing, but people generally go into finance with money in mind and it's a bit disappointing that after slaving away on getting good internships, CFA and apparently getting into a competitive field etc I don't really have much additional earnings power to show for it.
So, when - if ever - can I expect to start making solid money?
If you’re upset about comp then why not switch into something like IB? You’ll get paid but you’ll also have to sacrifice your soul.
There’s no “cheat code” to instantly make a huge salary unless you’re a genius or getting grinded to death (ignoring illegal things, inventing something, etc.).
I will say that the MF roles probably don’t reflect the true comp - my offer is $130k base, but it was expressed that the annual bonus is ~$180k as well as a ~$30k starting bonus.
This is my point though. I had no idea that outside of IB, finance pay seems broadly in line with other (professional level) industries. I get why a junior AM analyst wouldn't make as much as an IBD analyst (who is directly contributing to the dealmaking process and thus generation of fat fees) but I always assumed there'd be some convergence with experience, assuming one was at a shop with decent AUM and returns.
So you're in AM, not IBD? Can you clarify what strategy etc?
Honestly wondering this too. IB is not a valid or sustainable long-term career alternative and frankly I was also surprised that typical non-finance corporate jobs and big 4 are on par compensation-wise, never mind tech.
I do not believe many people went into the industry expecting this, not to sound "greedy." Thanks for bringing this up-- wondering if people with more experience in asset management can speak to when/if comp scales. Working for a large AM right now that has gained AUM, has strong margins and performance; yet comp. seems to be dissatisfactory across the board unless you're on top.
Sounds like pretty solid pay to me man. And you enjoy the job. You’re what, late 20s?
What are you trying to compare yourself to? Remember: there’s always a bigger fish. Don’t get greedy, enjoy life and keep grinding. It will come with time
At a LO making 160k base plus 60K bonus doing equity research with much less experience than OP. Good paying spots are around although the seats aren't easy to come by
Location, experience, strategy, background?
Appreciate the perspective, and I know I'm in a privileged position. I guess I just want to be at a place where I can live somewhat lavishly (live alone in a nice apartment, wear nice clothes, travel without always pinching pennies etc) while still maintaining a good savings rate. Again, I know comparison isn't healthy but my best friend works PE, same amount of experience and lives in a luxury condo, drives a BMW M8 and is arranging a fancy wedding in Europe. I know he's in an exceptionally competitive career (and worked his ass off to get there), but I thought (hoped) that eventually AM would get me to a similar place before I'm like, old.
I appreciate your honesty as most people, frankly, simply aren't about things like money and lifestyle.
As far as AM compensation goes - if you are at an LO shop, you need to re-adjust your expectations a bit as far as compensation structures go at least early career velocity wise. If your goal is compensation only, you need to start moving upward. In your case, that probably means portfolio manager where your comp will start to scale upward - higher performing, more aggressive strategies w/ clients who pay more - will obviously pay you more. If you want to stick in LO, and you want real compensation upside, go find a smaller or mid sized firm with a partnership structure - the tail is longer, the risk is higher but your compensation will scale appropriately. If you stick it out as a research analyst - you'll move up toward the 200-300 range as you become an expert in your sector/coverage area and, of course, a jump or two between firms is how you generally increase your compensation. And I'm confident that there are exceptions to this all over the place - but that's generally what you see across various markets, etc. PIMCO as an example has higher pay across the board, you can find it out there - but it is basically an IB shop, extremely caustic culture from my understanding and in Newport $350k might as well get you a shack across from a Starbucks. I'm kidding, somewhat, but you get my point. People can, and do, make a lot of money in LO AM - it takes time, it takes climbing up the ladder, it takes expertise, it takes strong performance and it takes some patience mixed with aggressive moves.
if Comp is your primary concern - and it seems to be - you need to put yourself in the position to be shown, or find, better opportunities. Develop a deep expertise in your coverage area, network with others, look for roles with potentially higher upsides - distressed debt funds, hedge funds, etc. Make that jump to a PM role - get a track record and go sell that to other firms who will pay up. Maybe you'll be more of a client facing PM where you can take that experience and sell it. As you mentioned - the options are out there.
Everything in life is trade-off: someone brought up IB as a prime example. You can also go to a hedge fund, where investment style, lifestyle and culture are quite different from a long-only.
Don't be in NYC / SF / LA. Outside of these, your money will go a MUCH longer way
Curious as someone starting full-time west coast next year are there good FI shops in lower cost cities? Think I’ll spend a couple years enjoying the weather but couldn’t see myself settling down there but was also thinking the other place that would be on par in terms of work NYC but same COL.
I do not work in FI so no idea unfortunately
Off the top of my head
trowe (Baltimore)
invesco (atl and others there too)
vanguard (pa)
all the Minnesota asset management scene insurers in all kinds of random places
janus(Denver)
TIAA (Charlotte)
Obviously not all have entire teams here but believe all have some investment seats in these locations. And yes some will say not all LCOL but all materially lower than NYC/London. Finally- all don’t qualify as top shops but can get paid in all locales.
make money through investments. salary is not the only possible source of income. you're making $100k net. you can save heavy for 3-5 years and you'll have enough capital for additional significant source of income from investing.
I'm making 200K+ plus and am seriously considering buying a house by myself or pooling with some close college friends, forming an LLC, and starting to buy up once prices really drop. If I spend some money on that other than watches and traveling for a few years, I could really be having some passive income in 5 years time. Would require some sacrifices in my everyday and social life, such as living in the basement of one of the houses or something, but after a few years I'd probably net a few thousand a month if I really invested in it with bonuses over a few years. Even if I didn't break even for the first year on the spread between mortgage and and rent per se, I could still live in a house for "free" (vs. paying $2k+ for rent monthly), and other people would be giving me thousands a month that would start turning into equity— especially if I put a decent chunk of my bonus towards it. If you invest in equities, real estate, bonds or whatever with the money we make, we could really have a bit of passive income and net worths in a few years. Pretty fresh out of school and seriously considering switching up my lifestyle given I've lived in the city for a few years now (NYC-metro area)
that's the spirit
OP, what kind of shop are you at? aum? my perception is that LO comp is extremely back-loaded
Approximately $50b AUM, AM arm of a diversified financial services group (IBD, PB, AM)
A lot of good advice here but would emphasize
- pay is backloaded in investment management unless you go the hedge fund route
- a lot of LO's are in LCOL areas and those are generally good trades as the comp hit typically much less than the COL decline (I get it if you don't want to go at this point in your life but nice for future)
- a big step change typically from an associate supporting someone to a senior analyst making the calls- generally a slog to get there but don't need to be a the tier 1 shops to make say 300-400 k as an analyst in a LCOL area which I think is pretty solid
- ignore the advice about side investments- firmly believe that in investment management it takes a long time until the return from time spent on a PA investment exceeds the return from working on the investments skills/ideas relevant to your day gig
- use this bonus season to look around, should see some reasonable resilience going forward in FI with current yields
Last q- what part of FI are you in? Are we talking LO IG credit or munis research or something like rates/fx or leveraged credit? That can make a difference and depending on answer see if you can optimize your skillset for the higher upside areas as others have mentioned
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