Does background matter for comp? Exp. Analyst Level

Sorry in advance... hypothetical comp question incoming....

The main question is does background matter. For example if I am coming in and have much worse background / lower current comp than the other analysts when they came in, will my comp be much lower? We will have the same seat and same responsibilities at this place, but they were earning much more than what I am earning now when coming in. How would I know if I am getting screwed when they do make an offer? 

What do you think comp looks like at a SM concentrated value fund with 1.7bn in AUM with 6 IP right now + Founder (fund has been around 20 years at least). My initial sense is that comp is going to be somewhat average of 150 base with 100%-150% bonus maybe, but when I look at the backgrounds of the other low level analyst, and the senior analysts, it seems like this comp would be significantly lower than what they were earning before. 
The other equivalent seat there was at BB IB + UM PE + top tier MM HF + then this fund. The other senior analysts had +10yrs experience across buyside at citadel/equivalent places.
I know there are a million factors and I hate reading these questions too, but amuse me for a second and general thoughts would be appreciated. 

Comments (10)

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  • Investment Analyst in AM - Equities

I am coming from ~5 years of buyside experience already but LO side and not a performance fee structure. No that comp isn't bad at all (I was just guessing btw, no idea if that is accurate). That base would be marginally better than my current and that bonus would be much better (I'm usually in the 75%-85% range), but was just posing the question re: if I would get an offer that is in-line with other previous analysts despite the fact they were probably earning more than that previously, and if my guessetimate was somewhat accurate given fund I outlined. 

  • Research Analyst in HF - Event

Your offer / guarantee will likely be lower year 1 than someone with the background described above.  Fund needs to pay enough to get someone to move and 300 wouldn't move the needle with a 2+2 with decent HF experience. 

Performance matters after that though it's harder to drop someone from 500 to 450 than moving someone from 300 to 450 on a personnel morale basis so there is some drag I'd think for next couple years. 

  • Investment Analyst in AM - Equities

Do you have evidence of this or is this just what you would expect - to your point it seems very logical, especially as comp is not something that is widely discussed across analysts at a place like this so it seems possible to do. Would it hypothetically make a lower comp candidate more attractive or does it not really matter? 

  • PM in HF - Macro

The HF analyst job, especially at a smaller firm like this, is not like the PE associate or banking analyst job where talent is fungible and as such there are tightly banded compensation ranges for each YOE bucket. Across my current and previous teams there have been analysts with 0-2 YOE earning 150-200k all in and analysts with 15+ YOE who earn low/mid 7 figures in good years. It's a functional title, not a corporate title.

There's a huge amount of variability and discretion associated with compensation based on what the main risk taker views as your contribution to the bottom line. As such, a "cheaper" candidate doesn't necessarily mean anything positive or negative right off the bat. Are they a good investment and team fit at their required Y1 comp is a far more relevant question.

  • 2
  • PM in HF - Macro

The 2+2+MM equivalent seat will almost certainly have a higher year 1 guarantee than you yes, because for them to leave that seat they needed more money than you do. PMs/firms tend to be smart and will tailor year one comp based on what they need to bring you in the door. For the 2+2+2-3 years of MM background I would ballpark somewhere between 400k and 800k Y1 guarantee, with the specific point in the range driven by individual and group performance of the previous pod. Perhaps there are cases even above that number, but for that I would think you'd need a sleeve + individual track.

I think your hypothetical offer of 150+100%-150% is very good given your background. Beyond year one it will depend primarily on the PMs view of your contribution and if you're adding value to their process it will scale very quickly. 

  • 2
  • Investment Analyst in AM - Equities

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