PnL% as an analyst?
Hello,
It is near year-end and I want to start having discussions with my PM about being a % of the PnL for our team because it seems like there's much more upside here. I am wondering for current multi-manager analysts, if your comp is tied to a % of the pnl what is the %number? Can you also share your strategy?
To get a cut of the pnl you have to generate pnl (and more p than l)
I have, what is your pnl % attribution if i can ask?
0%
Totally up to the PM, but 5% is a good starting point at a pod shop. Best I got was 10% of net but the PM wasn't a risk taker (went for singles and doubles, not grand slams) so I left for a seat where I could take more risk.
There are also above and below the line considerations which, to my embarrassment, I still don't have a great understanding of despite being in an HF analyst for a while now.
thank you so much! wow my PM has only mentioned 2% i didn't even know 5-10 is possible. Can i ask if this is the PnL% before or after fees? E.g. if our team gets 20% of our total pnl the 5% is out of the 20% or out of the total pnl?
Also if you don't mind me asking, have you ever made 7 figure as an analyst with pnl attribution?
My team's performance is within the low double digits so 2% of it isn't really much
Again, I'm not great when it comes to gross and net/above or below the line. Maybe MMPM or someone else at the PM level can give you a better answer.
2% seems pretty low. If you make $20mm PnL you get $400k? Yuck.
Won't get into my personal comp history but 7 figures is def doable. At this point, I almost find a risk taking analyst seat as attractive as a PM seat at a pod. You can make good money with much fewer headaches/politics.
Oh I meant 5% out of say 20% would that mean u get 1/4th of the total team pay, or 5% out of the net pay that the team receives (so if it's a team of 2 then PM keeps the other 95% of net pay)
Yeah that's around the number I'm expecting for 2%, not great but it is only my first full year here (5yrs exp total). Congrats on achieving 7 figures I'd be super happy to make that as an analyst! Can I ask how you negotiated with the PM to get a higher pnl percentage? And is it too late if I tried to negotiate for this year or should I do it for next year?
It's 5% of PnL generated in my names, PM keeps rest of payout.
So if my net PnL is $1mm that's $50k for me, ~$150k for PM.
Got it thank you! I guess it's different for me since we work as a team and there's no carve-out piece like L/S strats, and the total PnL is on the whole book and my total comp is 2% of that. I definitely want either a bigger net AUM or a bigger % cut.
3/1 ratio for a decently experienced analyst sounds fair. 5% and 3/1 obviously implies a 20% payout which you can’t find too many places. Or at least not places that let you take a lot of risk.
Wow then I am making 1/7 or 1/8 probably right now, 1/3 would be more than double my current comp. That is insane. Do you think then I am underpaid at this team? What's the typical ratio for a smaller team of 2-3 people at a mm?
No typical but it really depends on experience. I mean if I hire someone out of a banking program, the ratio will be very different than an analyst who has been with me 10 years.
When I left my last analyst job to take a PM gig I was probably being paid 2.5/1.
Analysts will have a lower delta than the PM (meaning more protected in a mediocre year but won’t participate as much in a big year).
Absolute dollars matter too. I have worked at places which have a mental cap on analyst comp - i.e., no analyst should make more than X. X was still a good number but it wasn’t a crazy number.
The real question is who “made” the $20mm. Analysts look at their covered names and think they are responsible for 100% of that amount of p&l. That’s not fair/true.
the right question is how much value the analyst added. and also realizing that the analyst is learning from and benefitting from the platform, PM, etc.
it’s never about current year comp. It’s about putting yourself in a position to generate wealth over many years.
This seems much more consistent with what I’d expect.
This seems excessively high. Especially when you consider the PM seems to have taken netting risk.
Spoke to PM a couple of weeks ago who asked how I would like my comp structured, base and bonus. How do I answer this? I want to get as much as possible, but don't want to sound ridiculous. Can anyone assist? I am still quite junior, but she stated comp wouldn't be an issue.
bump
BUMP
Anyone?
bump
any help appreciated.
You could start by laying out whether you're at a MM or single manager, how many people in your team, AUM range, whether your experience is on buy side or not, etc.
Depending on all that context, the answer could be very different.
Thank you, of course I should've been more specific, it is for a 2-3 person team at a mm, our largest single side notl is 0.5-0.8b at max size, this is my first full year of buy-side exp
It is very rare to give someone a cut of P&L with barely a year of buyside experience. In most cases, someone with that bakground will just get a discretionary bonus.
If your PM were amenable to doing %, in my mind giving you 10-15% of the bonus pool would be the ceiling, probably closer to 10%.
Finally, you said at some point your team is up low double digit %, kind of dismissing it as a modest year. Not sure what your point of reference is, but at a MM and running that AUM range, that is actually a strong year.
I would also say, be careful what you wish for. Getting paid a % is great if the team consistnetly has great years. But if there's bad years, you might get a laughable bonus. Net net, many analysts fare better with a discretionary bonus where they capture less upside but also less downside in mediocre years.
Most of the guys I know in the pods have a % deal with their PM but the dollar amount of their bonus is capped, so they do not participate in the upside to the same degree as their PM. This makes sense as the PM is the one taking the risk. As an example, I have a friend in a merger arb pod that generated a USD 20m payout last year. His PM gave him a USD 2m bonus, which equates to 10%. His deal with his PM is they split the pod payout 70/30, but his bonus is capped at USD 2m, which is the max his PM thinks an analyst should make.
damn those are insane numbers to me, he negotiated a very high pnl% of 30% payout, I dont think i can even crack the 7-figure for quite a couple of years here
oh just realized i missed a detail here - when you said 20m payout, that means this is the net amount the team gets to take home and not the pure pnl they made? eg maybe the pod generated over 150m but got to keep 20m in pocket
Yes, 20m was the net pay out to the pod. I think the pod manages a yard afaik.
So at a pod where PM makes ~20% something nearing 10% of generated P&L on names isn't unheard of for senior analysts? ie analyst's names contributed $30mm in P&L for the team, so analyst could make $3mm in a 10% structure? Understanding that caveats could be hard dollar payout caps, shared expense considerations, etc. Is that reasonable for a more senior level payout structure?
1-3%
1-3% of the pods 20%, or 1-3% of 100% of the bonus pool for the pod?
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