Tips on getting more comp at LO?
there is a range that analysts get paid at a long only. Years at firm is the biggest factor. Performance contribution and reputation have little impact in reality. What’s the best way to raise your pay?
Is the only effective option to use another job offer as leverage? If so, isn’t it common saying to never take your firm’s counteroffer because you get screwed later?
I came from a MM so this is new to me. Seems like working hard, putting your head down, and having good performance doesn’t result in any pay increase other than the standard pre-determined path
Based on the most helpful WSO content, here are some actionable tips for increasing your compensation at a long-only (LO) fund:
Understand the Compensation Structure:
At many LO funds, compensation is often tied to tenure rather than performance or reputation. This means that simply working hard and delivering results may not directly translate into higher pay unless you’re on a pre-determined path. Recognizing this reality is crucial to strategizing effectively.
Leverage External Offers:
Using another job offer as leverage can be effective, but it comes with risks. While it might prompt your current firm to counteroffer, the common wisdom is to be cautious about accepting it. Firms may view you as a flight risk afterward, which could limit your long-term growth or lead to being sidelined. If you go this route, ensure the external offer is genuine and aligns with your career goals.
Build Influence Throughout the Year:
Instead of waiting for a single comp discussion, adopt a "Strategy of Influence" throughout the year. Regularly communicate your contributions and value to decision-makers in casual, non-confrontational ways. This keeps your achievements top of mind when comp decisions are made.
Seek Additional Responsibilities:
Volunteer for projects or tasks that demonstrate your ability to take on more responsibility. This can position you for promotions or higher pay bands, even within a rigid structure.
Network Internally:
Building strong relationships with senior team members and decision-makers can help you gain visibility and advocate for your compensation. Sometimes, internal champions can push for exceptions to the standard pay path.
Consider Lateral Moves:
If your current firm’s structure is too rigid, exploring lateral opportunities at other firms might be a better long-term strategy. Some firms may offer more flexibility in rewarding performance or faster progression.
Be Strategic in Negotiations:
When discussing pay, frame your request in terms of your commitment to the firm and your desire to contribute more. For example:
Stay Informed About Market Rates:
Knowing what peers at other firms are earning can help you gauge whether your current comp is competitive. This information can also strengthen your case during negotiations.
Ultimately, while LO funds may have rigid pay structures, strategically positioning yourself as indispensable and leveraging external opportunities can help you navigate these challenges effectively.
Sources: Feeling Undervalued? Do This, Unique LP/GP Setup - Governance Mechanics, Economics, Other Fun Considerations, Where is the compensation in banking? Is it worth taking a pay cut for the long-term prospects?, Acquisitions Analyst Compensation, Reflections from year 4 as an equity analyst
What do you feel like you’re topping out at?
6-700k, >10 YOE
You're not likely to get more than 700k at ~10 YOE at LO. Unless you go to the creme de la creme players like Wellington / Capital or a couple select boutiques
The entire point of LO is that you trade lower career upside for much greater stability. Not to say you shouldn't try to get more, but would not think of that as the base case
It's a frustrating dynamic sometimes, but I look at friends in HF side with similar or even lower net worth's at my age -- who were fired 3-4 times along the way or left and had a higher stress path to getting there -- and I shake out ok with the tradeoff.
There are of course the killers at MM's who have made ridiculous money but while I am pretty comfortable in being top 1/3rd in the LO AM world I know I'd have certainly been bottom 50% in MM world.
Anyway -- point of all this is that you need to decide which path / tradeoffs you want. Remember the other thing, you can push for even higher comp but it just makes you much easier to fire as you're also way more expensive. LO continues to bleed assets and even the top shops are firing more often & doing more layoffs, so career risk (while more attractive vs HF) is def increasing in this industry as well. Just some thoughts
+1 on this. Any thoughts on this range for analysts at small fund vs 50bn+ vs. 200bn+? Think it scales or is totally dependent on the team/fund?
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