Joining a smaller L/S SM ($400mm AUM) next summer as an analyst. Really excited and loved the team members I met with. It’s just 5 smart guys, all down to earth and open about their current strategy and how they’d get me up to speed. They’re offering 150k base, targeting $275k all-in on a positive year with additional upside on a great year. Do y’all have any data points on normal year comp?
Any other considerations I should keep in mind of? Potential buy-in, 401k match and other benefits?
I know HF comps are highly variable, but want to know if this is a good starting point. Asking because IB comps have changed dramatically over the last year and whether HF space has kept up to market rates. Thanks everyone!
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What’s your yrs of xp, past experience, and what’s the role? Sr analyst pitching all of your own names or supporting a sector head? We need more color to be helpful
Thanks for the response. I’m currently An1 in IB, so 0 YOE in HF. Role will be supporting sector head with possibly my own name on a trade ~2 years from now. Wondering if you had any insight given this info?
so you are 1 year out of college with 1 year of IB under your belt? Then this is a super generous offer. Enjoy.
That offer seems on the generous side actually given your experience level and the size of the fund. I’d be very happy with it myself
Thanks, appreciate the input!
I would ask though how much downside there is in your bonus if the fund doesn’t perform. Ideally fund performance should only impact your bonus to the upside, and even in a down year you should get your full target bonus (assuming they like you)
If I were the hiring manager and a candidate implied he wanted full bonus irrespective of collective/individual performance, I would think twice about hiring that person. Shows entitlement and no focus whatsoever on performance.
If you want a steady paycheck, this is not the industry, period.
What? No…
Company performance impacting only the upside isn’t the way this works. When you work at a HF you are taking on risk (and higher compensation for that reason), the whole agreement is that you are part of a team and you sink or swim, but you don’t only share in the good times. Yes, some places will guarantee bonuses for people, almost always to either 1) convince you to join so you aren’t taking a ton of risk early on or 2) make you whole based on other agreements and compensation you have at your current firm.
If you are looking for a guarantee with only upside you are in the wrong industry.
One last note to try and clarify, everyone has a guarantee in a way (your base is a “guarantee”) what I’m talking about is a “large” guarantee (for the experience/responsibility/etc) - if you have those large guarantees then you are paying a lot (over market) to compensate for risk that doesn’t really exist (outside of you getting fired). There are roles that guarantee $1mm+ a year, but these are senior positions where the upside is 8 figures and that “guarantee” is low relative to what you can earn elsewhere. Firms generally calculate these bonuses in a way that there is room in either direction, but the midpoint is higher than what you can earn elsewhere, but the bottom is worse. At the end of the day, if the firm underperforms consistently, it won’t matter because you won’t have a job.
Do not ask this as a 1st year coming in for discretionary, unless you are comparing to the other better offer you brought with you. If fund is, down assume you get nothing but at an SM maybe they’ll throw you a bone form mgmt fee, depending on if your Pm is already established and very rich and worried you’ll leave.
That’s probably pretty good for yr 1 at that size fund. Base similar at MMs and larger funds. Maybe (maybe) lower bonus but probably risk-adjusted similar to a 1st year at MM. If you like it and you think there’s growth in the long term in AUM and/or a path to direct PnL linkage sounds like a very good role
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