Got my first offer but with low base
I’ve been recruiting for a buy-side seat for the past two years and finally got my first offer. It’s a less known $5bn MM fund and the opportunity looks great - the PM was a sell-side analyst as well and seems to be very keen to guide me through the process from analyst -> risk-taking seat. My concern is that the PM has been jumping funds every 2-3 years for 3-4 times. Also, the base salary is embarrassingly low - 10% lower than the lower end of the new grad salary range. I am in a relatively comfortable position now at the sell side with an ok-ish bonus, the only thing is I would like to gain risk-taking experience which the sell side job can not help me with.
Obviously doing lots of due diligence on the PM’s track record now but would like to hear more advice. Should I take the job or skip and continue interviewing for other pod shops in your opinion?
All depends on how much you actually want to be on the buy side. If you are younger then you should take it. You can hang around for 2-3 years odds are you get a better buy side offer during this period then at your current seat based on your success rate landing offers. Much easier to go from buy side to another then make the initial jump from sell side
If your main concern is base salary you are not ready to move. My old firm's CIO (a discretionary macro fund) gets $250k base like every other PM but he makes over $30m in comp (just his PNL, not mentioning running the fund) per year.
Due diligence of the PM's track record is 1000x more important when doing the switch.
do you have any advice on how to do DD on PM? And do you only do that after getting an offer, not before (cus that may sound gossipy or speculative, if the person knows)
Try these questions:
- How many people left his / her team last few years and reason for all of them (voluntary or not? what are their next jobs?)
- In last x years have the team / teammate hit drawdown and what happened afterwards.
- Have the AUM / mandate of the PM be increasing over time (this can help you figure out why he / she is jumping funds without asking the direct question)
Good PM give you more details than you ask for, the dodgy ones are those giving you vague stuffs (similar to DD on company management)
This is good advice but easily misinterpreted. You shouldn't be concerned that the vast majority of your comp is performance based, but if the base is especially low you are right to question it as a signal of the quality of the opportunity - you want to stay away from perpetually sub scale or unnecessarily cheap PMs. This is especially true when you are on a discretionary bonus structure.
Rule of thumb:
Anything $150k or higher there is little information in the base, don't be concerned.
Sub $100k should raise alarm bells. I don't know a single good PM who pays their analysts below this amount. The few examples I have seen of this occurring were at very sub scale funds which were pretty bad opportunities.
For something in between contextualize with other information. To most PMs the difference between $100k and $150k is a rounding error and if not at a platform with established guidelines they may have not put that much thought into it. But if that's not the case proceed with caution.
Depends on the moves. Sometimes people get unlucky - maybe they left firm A to join firm B and firm B shut down unrelated to him, so he moved to firm C. Those sorts of unlucky moves are unfortunate but understandable. If he’s getting blown up every 2-3 years, that’s bad. It takes at least one year to get your team up and running and build infrastructure etc. so year 1 is a wash. If you then blow up year 2 that means you didn’t have good process. Then you rinse and repeat.
Not exactly a frothy market now where you can be picky with offers.
You don’t go for hedge fund jobs for the base pay. Even your MD in sell-side gets like a $300k base tops, the rest is all bonus and stock comp and deferred.
Agree with others. You do this for the bonus, not the salary or job stability
Unless the salary means you can't get by, you should take it.
Why can’t you just say what the base is? Afraid the FBI is monitoring WSO and they will tell on you to your new HF?
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