Being asked for bonus expectations
I am part of a pod at a small multistrat. I have no idea what my PMs contractual terms are with the fund (he won't tell me) and as such I cannot estimate what the distributable bonus pool is.
For context the pod consists of 1 PM and 2 Analysts - the other Analyst has been with us for 1 year and my tenure is coming up to 3 years. My initial 2 years were not great, with little pod PnL generated and therefore less than 100% bonuses in each year. This year we did much better with $25m PnL (~5% return).
My PM has asked me what my bonus expectations are for this year. What sort of bonus should I be looking for roughly given our PnL, team size and tenure? Any help would be appreciated
5% of P&L you contributed, or half a buck TC, sounds about right.
Thanks a lot - I will be asking for something slightly above that actually and will settle with half a buck TC
Based on the most helpful WSO content, here's what you need to know:
General Bonus Structure in Multistrats:
Team Size and Tenure Considerations:
Rough Estimate:
How to Frame Your Expectation:
Additional Tips:
Let me know if you'd like further clarification or help crafting your response!
Sources: Fired as 1st year analyst?, RE: Prop/Quant Trading - Why is it not as big a target as Investment Banking?, 2020 bonuses, https://www.wallstreetoasis.com/forum/trading/qa-vp-trader-at-bb?customgpt=1, Millionaire by 30
Are you sure the pod didnt lose any money in the first two years? Sounds like it may have, which the $25M would have to be netted against if so
Thanks for the response - we did not lose any money since I can see our pod PnL. We made very little, around ~1% with less capital than we currently have
Would say closer to $1M than $500k then
sounds high
if there's $5m bonus to go around pm is keeping 4 - 4.5 esp if he made no money last 2 years
so 500 - 1m for two guys
I would expect 500k or lower, unless you were a clear pnl generator. How would you assess your contribution?
Difficult to assess contribution given what we trade - neither me nor the other Analyst really trade as such, we are research analysts and the PM uses our research, models and assumptions to trade. From that perspective I have a significant impact on our PnL since the PM trades based purely on my research and assumptions. His discretion revolves around sizing and timing of trades (he knows very little about the assumptions themselves, fully relying on his Analysts for these), but any and all trades are based on the research and assumptions made by his Analysts. All in all very difficult to quantify contribution unfortunately..
I will be pitching 500k and will settle for 400k since he will very likely push back against any number I give.
Also to temper expectations I think you have to realize that the PM will want to maximize his pay since he didn't take much home either the first two years and will see himself as the main "risk taker" with the pod... so while you know best what to ask for, I would think about the calculus your PM is doing which is YOE (total and industry) + whats the minimum you'll take to stay + actual alpha contribution + your ask/expectations to get to your total comp number... I'm sure he already has a number in mind for you. Hope for the best but keep the HHs engaged in case he's wildly off
Thanks for the input, this is exactly how I am thinking about it. My pitched number is almost certainly higher than what he has in mind. The number I will settle for lies somewhere between the number I pitch and the number I believe he has in mind for me
500k is definitely the number. The street likely knows he did well, and if he gives you 400k then a competitor will easily offer you 500k to learn part of his process.
What's the best way to set expectations when talking to your PM? If you think 400k is fair, is it better to inflate it and say 450?
Pretty much what I am doing, although the best strategy is entirely dependant on how your PM thinks. Know thou PM well..
Yeah fair. It's always a negotiation process with my PM better to start higher.
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