My boyfriend works at a hedge fund and I have a couple of questions.
I don't work in finance or have any intentions to work in any finance related job, but my boyfriend of 5 years works at a hedge fund.
I didn't know anything about hedge funds or even private equity firms and investment banks before meeting him, so I was pretty much illiterate about finance industry.
My boyfriend has a great career and a well paying one but the way he works and getting paid is very-very unusual to me, so I'm a bit suspicious. I will explain it here and I would be really happy if you can verify that this is how it really works in the hedge fund industry.
First of all, his salary is in mid to high seven figures but one time he got paid around $500.000. Is that possible? Can his salary really change that much because he had a bad performance? or is he keeping his salary hidden from me, or possibly evading taxes, something like that?
Secondly, he most of the time works 8-10 hours a day and sometimes 16 hours a day. And sometimes he gets a call in the middle of the night from his analyst and wakes up does some finance things and sleeps back.
Are these things normal? Does everyone in the hedge fund industry work like this?
Edit: Just because I'm a woman and asking about something that I don't know doesn't mean that I have trust issues. I heard that people in HF industry do shady things, that's why I'm asking here.
Yes it's normal (assuming you mean total compensation for the year and not just base salary, as most people in the industry get paid majority of their earnings in a highly variable bonus). Also, if 500k is a "bad year" and he's pulling mid-to-high seven figure in good ones, he seems to be in a very good seat, even for a HF role. Both comp and hours can be highly variable, and hours are generally long. He may be waking up in the night to deal with European/Asian stocks, or other reasons. I would recommend working on trust though, as a relationship of >5 years should have more of that by now, and you shouldn't need to ask an anonymous forum whether you're being Anna Delvey'ed.
Just because I'm a woman and asking about something that I don't know doesn't mean that I have trust issues. I heard that people in HF industry do shady things, that's why I'm asking here.
Taking the bait on the .0001% chance this is not a troll post. People in trusting relationships for >5 years have open and frank discussions about this stuff. This has nothing to do with the fact you are a woman. The fact that you cannot ask him simple questions like "what did you have to do in the middle of the night" or "how does your job work" or "how does your salary/compensation work" indicates you are not in the right relationship.
Ok if you are asking these questions and don't believe him, well that means you have trust issues.... Needing the internet to answer / validate basic questions about your partner's life instead of listening to your partner means you have trust issues. If you were dating for 7 months, ok, but 5 years.... come on. To make you feel better, yea this is normal. Or he is a drug dealer... 50/50 honestly...
Mid to high seven figures? So 4 million to 9 million? Holy fuck. You know if his hedge fund is hiring?
I’m sensing an undertone here that you do not fully trust your bf of five years & are using this as a micro example for validity. May be entirely off-base but it comes off that way.
To answer your question, based on my few friends experiences at HFs, this seems normal. However, you should really just ask the real questions you’re wondering if you want real answers
I mean, it's a valid concern. Given her bf's earnings and her ignorance/lack of upper echelon awareness, it's very likely she could be some kind of trophy wife/eastern European model side chick. It's not uncommon to see these multimillionaires/billionaires with multiple (secret) wives/affairs and divorces.
Yeah, you have some trust issues that need to be addressed before you take the relationship further. A hedge fund is an "eat what you kill" type of business. Most of the compensation is based on performance, and money never sleeps. 8-10 are good hours, but if shit has to get done in the middle of the night, it needs to get done, especially if your compensation is based on performance.
Just because I'm a woman and asking about something that I don't know doesn't mean that I have trust issues. I heard that people in HF industry do shady things, that's why I'm asking here.
Thus all sounds completely normal but yeah you never know.
Girl you have severe trust issues.
Just because I'm a woman and asking about something that I don't know doesn't mean that I have trust issues. I heard that people in HF industry do shady things, that's why I'm asking here.
Is this a troll post?
100% right
1) Yes...
2) Ask him these questions directly, and if you don't feel comfortable, examine where you are in your relationship maybe focus less on his job and earnings and more on who he is as a person and the characteristics/traits you like. If you cannot identify any traits/characteristics, please let us know who this guy is, so we can give him a heads up...
3) Therapy is super helpful for trust issues and other situations. Posting on anonymous finance forums is not.
You've watched too many movies.
The most famous book on Hedge Funds is called More Money Than God, this title should already indicate that he's in a highly paid industry. Might as well start reading it to understand better you're boyfriend's job.
Even if he were hiding his earnings from you, your his girlfriend, it’s not your money fuck off you sound like a leech.
Based af. Pretty sure she's just a side chick/trophy wife material type shawty given how clueless she is and the bf's earnings.
He makes $4-9m as an analyst?
Put the phone and insecurity down honey and focus on yourself.
Just because I'm a woman and asking about something that I don't know doesn't mean that I'm insecure. I heard that people in HF industry do shady things, that's why I'm asking here.
mid to high seven figures!? Good for him - what kind of cars does he have?
Serious answer with a very basic example.
Pershing Square (famous hedge fund). Assets Managed - USD 18.5 billion. Number of employees - 30. (all according to Wikipedia)
Hedge funds make money in two ways - a management fee (lets say 2% of assets managed per year) and a performance fee (lets say 20% of all profits above their target of lets say 5% per year). We can assume running costs of the company apart from salaries are not that much - an office, computers for everyone, some compliance systems etc. These fees are quite high as you will see below, but investors in Pershing Square trust the managers of the fund due to their track record of making money.
If they make no money whatsoever, the firm earns 2% of the assets they manage per year - USD370m. Obviously this is a bad year, pay will be "low" across the firm (still high by normal people standards).
If they make 10%, they earn the management fee plus the performance fee - USD740m. Double the money, with no change in the number of employees or any other costs. There isn't much to put it towards in the company, new computers? Maybe. New employees? Why bother! The current employees are perfectly capable of running the fund as they have been. It then gets paid out in bonuses to staff.
Most hedge fund employees will have a "low" salary, but with a potential for a very high bonus if the fund does well. "Total compensation" is always "salary + bonus", though if talking to people outside the industry he may just call it salary. This ensures incentives are aligned across investors and the managers of the fund, and that the employees only get paid very well if their investors also make a lot of money too.
I doubt your boyfriends "salary" is mid-high seven figures, in fact his "salary" might just be the USD500k that he got paid that one time when the fund had a bad year. The rest of the time it would come from bonuses when the fund does well, and it sounds like this fund consistently does quite well. Good for him!
Hedge funds in general do not do shady stuff. The issue is they are not subject to the same restrictions and transparency requirements as other funds such as mutual funds and pension funds, because only very wealthy investors can put money into them, who are assumed to be able to do their own research. Sometimes a hedge fund manager will use this lack of transparency to commit fraud or take extremely risky bets, which will sometimes end up with them in the news. However these tend to be the people who manage the fund and run it like their own kingdom, which can lead to trouble. The average hedge fund employee will not be doing shady stuff, as any good hedge fund will have a risk, legal, compliance department etc to make sure employees follow the rules (like at any normal company). The problem is when the person who is running the fund and making the decisions also uses this power to override those who are supposed to provide the checks and balances, or just doesn't bother to hire these people in the first place. Again, could happen at any normal company!
Long story short - the big swings in pay are not an indication of something dodgy going on, it is simply the nature of the business.
You put all this effort in to answer a troll question bro
Hope she sees this bro
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