Why do we accept those low $175-225k base salaries at pods?
Controversial thread that might get me some monkey shit, but I'm not here to climb the Interwebs leaderboards anyway.
How come that in times of crazy passthroughs and massive PM guarantees, pod analysts still work for $175-225k base, when inflation has been insane and every other smart kid industry pays substantially more (tech, PE, SM, consulting, banking)?
Of course, we have lots of theoretical upside, but we also have very little control over our careers. Bad PM? Sucks. Bad market? Sucks. MM downsizing strategy? Sucks. Unlucky? Sucks. No carve and PM is cheap? Sucks. Netted to zero? Sucks.
And then they also harass us with year-long non-competes, the job search is grueling, etc.
You guys have to become more open minded and realize that there are also other careers out there. The reason why MMs can do this to us is because people are stuck in their bubbles and believe that there is only one desirable career. The competition for HF jobs is too irrationally high and it's no longer a good deal.
Next time we blow up, I'm getting out.
Bro legit what mid level bases are higher? Banking vps like 250
250 is indeed higher than the numbers they quoted
Yes. Even banking VP bases are higher. And banking pay hasn't been properly inflation adjusted in 2 decades.
Also, please remember that the path to PM is much less predictable and can take an unlimited number of years.
Yeah Mid-Level HF salaries are comparable to IB/PE, if youre more senior at a pod (Director/MD Level) your base is definitely lower but you are 100% in control of your total comp. In general it would be nice to move $100k from your bonus to your base for the reasons you mentioned but it doesn’t make sense. If youre not making money you are not useful to the platform and if youre are you get the bonus.
Whether an analyst is useful or not can't be determined based on LTM pod performance. That my rent is going up next year can be determined.
I don't know why you're complaining. You could have picked a dozen other finance jobs yet you're complaining about literally the most competitive, intellectually rigorous, niche and arguably shrinking industry of all. Yet the industry also has the most asymmetric upside accordingly.
People slave away in banking for decades and you have the opportunity to make that entire decade worth of compensation in a single year. Obviously it's a veryyyyyyyyy small % chance outcome. A lottery ticket if we're being honest. But so is everything else in life that has much upside. Why should you even get $200K base? If anything, I think it's too high relative to the upside. You need to get a grip seriously.
Do you also think that playing the lottery is smart, because in theory you can win $500M?
I want to see the median, heck, even average, total comp outcome over fundamental L/S pod HF careers. Yet you only see the extreme right tail ends.
I'm betting my next bonus that the average+median are going to be below tech, PE, SM, and consulting. Not sure how bad banking is these days.
And as I mentioned in my OP: Next time we blow up, I'm getting out. I was serious about this.
You're completely missing my point. I don't disagree with the median outcome being worse off than other areas of finance. But why does that mean it should be higher? You have the skillset and pedigree to simply walk into pretty much any other finance role and you'll have a leg up over your peers. Yet, you're making a fuss over the most competitive, rigorous and smallest (with regards to headcount) area of finance. You do realize people go into HFs because they literally cannot see themselves doing anything else and don't view it as a job like you are doing? You're clearly in the wrong line of work and nothing is wrong with that considering that's the same situation as 99% of other high-finance professionals.
Lol someone needs to set the bellcurve
Because you can make a much bigger bonus than all of the other areas of the buyside
Joining a pod as a PM is like being a founder of a VC portfolio co. unlimited upside but have to be beholden to mothership. joning as a sr analyst is like joining as a VP of sales, product. If you joined stripe or spacex in 2010, you would not focus on the base comp but rather the equity that 10x over time. same with joning a pod. most startups/pods fail and it is all about the right tail
That's fine. But given this is supposed to be the high end of finance, one of the most exclusive jobs, they should at least be inflation-adjusting our base salaries, like other industries are doing it (tech and consulting come to mind).
There are no perks, they treat us like cattle, most firms don't care about people retention and development ... why would I not deserve some basic financial commitment from them?
getting a job at a top startup is hard too, with no guarantee the equity is worth anything. you are playing for the potential upside.
I feel like you can game the startup ecosystem if you networked and researched correctly. Nothing great in life comes without risk.
I think it’s funny how OP keeps saying “next time we blow up” as if it’s inevitable. That tells you everything you need to know. You sound like you’re in the wrong career. While I agree with you that in theory a higher base would be nice, but your attitude and way you talk / think about the job is telling. If you’re going to blow up, then don’t even bother sticking around. By your logic, you’re only making your measly base anyways and a blow up is a zero, so save yourself all the work and just move to a corporate role where you can get your 250k base and 50k bonus.
You are part of the reason why this career is no longer competitive vs. other options. So you know that you're NOT gonna blow up this year? You know that you're gonna kill it and that you're gonna be the top performer?
It's the same reason why hedge funds underperform other investments. The egos and biases of people in the industry are too fucking toxic. It only works because LPs have the wrong incentives. But they're starting to wake up and push back.
lol I have nothing to do with your own misery and the “industry not being competitive”
As you continue to demonstrate - your comprehension skills seem quite low so maybe that’s why you are in such a bad mental state and put words in my mouth. I never said I know I’m going to kill it or that I’m not going to blow up. In fact I made no comment about myself at all. My point is you operate under the assumption that blowing up is inevitable and that is not a good way to go into work every day. Not everyone in the industry blows up. Yes, many do, but it’s not an inevitability
I think even the PM base at Millennium is just 150k. That is insanely low right? Which firms pay base of 250-300k for QR / senior qr / PM?
Idk if it's just 150, but it wouldn't infuriate me as much as analyst salaries do, given PMs can negotiate guarantees more easily and they can fire analysts and take all the upside for themselves.
But yeah, even PMs should be paid a higher base in 2025. 150 is an insult, given even bschool grads get more guaranteed comp these days.
Yes, PM base doesn't matter in the context of high 7 to low 8 figure guarantees getting thrown around. And to your point they can keep 100% of the upside if they like, and some are that greedy.
I've seen quant teams spend 2 years building out, PM didn't care cuz they had their guarantee.. analysts got 0s year 2 because there was on PNL (not heard much of multi-year analyst level guarantees). Day before finally launching, he fired half his analysts.
Analyst base being similar to PMs with 1/10th the upside is a reminder that its not a terminal role.
The mentality of some of these commenters "its not so bad suck it up" is a reminder there is an oversupply of hardos willing to suck it up for an EV negative lottery ticket. Look at all the "how do I make it in the big leagues, coach" posts by kids not even old enough to drink on here.
The PM signing packages & full control of their own bonus pool more than compensates them for low salary & pnl risk. I've heard stories of PMs paying analysts as little as 5% of the PNL bonus pool they generated (ie 1% of the topline PNL).
Analyst, in the non-Citadel strictest sense (no sleeve / formulaic comp) has the pnl downside and blowup risk of PM job, without the 100x right tail. They might find you a seat if your PM blows up, they also might not. PM can fire you for non-PNL reasons, where generally a MMHF is not letting go a PM just for being a jerk. Comp - analyst might make $1-5M. Also might make $150k. Will not make $150M.
Garden leave 3-18 months earning the paltry $150K base becomes pretty untenable once you are over 25 and have fixed costs you need to spend your past bonus dollars on. Some shops do classy things during garden leave like revoke your health care benefits.
Pod base salaries in UK are even lower than the numbers you are quoting (for the vast majority at least). Kinda agree that base should go up. I’ve basically had no bonus for 2 years - and it’s not because I underperformed, it’s in fact the opposite, but it’s one of the other reasons you are mentioning.
What salary range have you heard - Ive been told its between £120-150k for analysts
Sounds about right in my experience
80% of base salary 2 years ago, no bonus this year. You're not alone
I’ve been a pod guy for 10+ years and look it is a good question, and it’s something I’ve thought about. Why isn’t the associate base $300k, analyst $750k, PM $1m etc? We’ll never know the answer but one would ask, at the best firms with the greatest pass through structures, why can’t they pass an incremental $200-300m to LPs to fund a step function change in base salaries on tens of billions of firm wide PnL? Who knows. It would be nice to have but it’s not like that important if we’re being honest
As a senior analyst and likely career analyst, I tend to think of my range as somewhere between $500k and HSD millions. My base hasn’t changed for the past 7 years. I’ve had 2 flat years, but that doesn’t equate to zero bonus - I’m sure every team is different but many have something similar to retained earnings to pay people in flat years. Of course a benefit like that requires you to be on a bigger, more successful, more generous team and then to last on it. But to answer the broader question I’ve never been zeroed out
I agree with the premise and I actually think I’m going to bring it up to mgmt. Obviously nothing will change but it’s an interesting angle to attract a certain type of talent that might look like “more senior analyst who’s covered a sector for 10-15+ years with a family who’s not a PM who has a great reputation as an analyst but isn’t necessarily a proven alpha generator but rather someone better suited for a career analyst/sector head role that can be in the weeds on 40 stocks/their debates and give a PM 15 longs and 15 shorts, when to flip them, when to size up and down, but is OK with not making 8 figures and being paid unlimited upside as a PM”
I know many people in that bucket who work in single manager land that want to move to a pod but don’t want to leave $1-2m a year seat for a $300k - $7m a year seat. This solves that. Someone should start a platform paying people higher base but maybe smaller % of PnL in bonus. Does Marshall Wace do this?
Maybe I can convince a couple guys to go on strike ;)
Update: a few guys are onboard and are thinking about bringing it up to mgmt.
Just generally, what has to happen for you to make $7mm? Maybe you have contractual PnL linkage or a sub-book (like some analysts at Citadel have). But I’m assuming this means you had a $100mm+ P&L year on your positions and a good year for the pod in general. I’ve never really heard of pod shop analyst bonuses being this high in the last 5 years so just genuinely curious. Maybe the folks I’ve spoken to just work for PMs with books that aren’t big enough to realize this level of comp.
What is your background and how did you break into the industry in the first place? Career analyst isn't so bad it seems.
Wow
It’s supply and demand. There’s thousands of qualified people who would kill to get your job so be happy with what you get or go somewhere else. That’s the only choice anyone of us has.
Right, the MMHF business model does not care about analysts because they don't have to. Lots of juniors offering themselves up for what is a bad trade, so management can churn through junior talent at little cost or risk to themselves.
They might have analysts programs, but its not by choice. It's because the sell-side supply chain of investment professionals dried up after the GFC. Management would rather punt $50M guarantees on a single PM than spend actual money developing junior talent internally.
Right, and the only thing you can do is to not take those jobs.
I've told more than one headhunter that I'm not gonna interview for 175k base and unclear other guarantees, even when I was out of a job.
If they get enough similar feedback, the MMs will eventually hear it.
The short answer is because analysts are replaceable. At some point, the market will turn against the pods, so you'll see analysts get more leverage. Anecdotally, I know an analyst who covers a super niche area so he was able to get closer to $350k base.
Has it ever turned? Seems the pipeline of irrational grunts offering their future at a big discount is still huge.
Not yet, but everything has a cycle. At different points, traditional HF, PE, Tech, etc were the go to places. I suspect the pods will have a good run. How long, who knows.
Unreal
Unreal that we're complaining about $225k base salary? Wait until you had a "Tier 2" (in Finance bro view) job that paid $400k+ base.
Also, the main point of this thread is that base has not increased much in a decade, despite 30% inflation just in the last few years. Other industries have adjusted base salaries for inflation.
Senior associate (Citadel parlance, "Analyst" in others) base at the big 4 was $150 in 2021 so yeah its right in line with inflation
How enforceable are non-competes?
It's not that they have to take people to court often. It's that you are leaving Fund A for Fund B, the new fund has no interest in violating Fund A's NC. It's sort of an old boys club of pretending NCs are bulletproof so that your own NC doesn't get violated.
They each are generally aware of the standard terms of each others NCs and may ask to see your contract if you claim to diverge greatly.
If you lie that you got it waived, and Fund A contacts Fund B, they are happy to let you go rather than face any legal risk. Certainly not putting their neck on the line for any analyst ever. For a big shot PM, sure, maybe.
If the funds are this close and aligned, why not just decide to get rid of the non-competes altogether?
That would make the industry more efficient, and LPs wouldn't have to pay for garden leaves.
market was down so someone's pissed
Why do AAA baseball players accept 50k when they could just coach middle school and for 70k + job security???
Cause they think they’re good and thus base salary / AAA salary isn’t the point? Do they overestimate themselves? Many do yes, but that’s any call option style career
The official cumulative inflation over the last 3 years alone has been >20%.
Having an existential crisis here so I'm just curious. What are you doing if you decide to get out?
I have exits that are not generally available to the average HF analyst, given my pre-Finance experience.
Move to SM. Most scaled ones pay 300-500k base salaries post covid inflation ..
The whole point is your bonus could be many multiples whatever it is at the SM
No one’s doing this job for the base salary
Damn I’m broke as fuck
Base is low to align incentives. This is a job where bonus (variable pay) could literally be 10-30x base, so a person in this industry is in it for the wrong reasons if they’re focusing on and prioritizing what base is vs what their bonus should be.
It’s also aligned with the business model because as a HF you want fixed cost to be as low as possible given possibility of mediocre/down years (top line is not stable).
Missing the argument. Base is supposed to cover living expenses. Living expenses are exposed to inflation.
And Pods rarely ever pay analysts $6m bonuses.
Look in no other industry can you get a shot at making $1-2m as a 26 year old and $5m+ as a 30-35 year old.
If we can’t stomach the idea of a bear case, we shouldn’t earn the right for the upside case.
It is what it is and I face the same reality. We all have the freedom to go to a SM or LO to make $300k-1m more consistently over a 10 year period with much less upside (and arguably same amount of blow up risk at SMs). No one is forcing us to work at an MM.
To ask for much higher base but also retain much higher upside is trying to have the cake and eat it too imo.
Part of the analyst quid-pro-quo is evenutally becoming a PM (and getting that guarantee that you mentioned)?
Given the risk-reward profile it's a great base.
You Gotta eat what you kill my G
It’s information asymmetry. If the failure rate was disclosed the supply / demand would be a lot different for pod analyst jobs, and salaries would reflect the extremely high risk and high stress nature of the job.
Thus this thread.
In the prop/HFT world a few large firms have teams with no base salary or healthcare at all, in exchange for much larger pnl cuts with better terms. So you need a second job in a different industry or substantial savings. This has pros and cons, you need to juggle two jobs at once but the firm also gives you a longer leash to deliver and it's possible to negotiate IP ownership with no noncompete. Any base salary is the at PM's discretion and comes out of their expenses. The infrastructure is critical in this space, so it's still a good deal for the right person.
Here is a article on this type of setup, typically the firms only look at top level pnl/sharpe and costs. If you do a second unrelated job, you have a "diversified portfolio" too and are not completely reliant on the pnl. This also avoids the situation with traditional MMs (in fact all jobs) where you get stopped out right when the portfolio (business) drops and cannot benefit from the rebound.
Simple supply / demand.. way too many people want to be an analyst at C / P / M so they can do whatever they want. Btw it goes beyond base.. feels like all these places can make you sign ridiculous terms at any time (1-2 year non-competes, clawbacks, etc.)
I don't understand this point on living expenses. On a $200k salary your after tax take home in NYC is $140k, so you can spend $10k/mo and still have $20k of annual buffer left for one time expenses. That base is enough to live a comfortable life for one person in any major city - a luxury 1BR (6-7k), everyday expenses (1k), and eating out / fun (2k).
Yes you are NOT living first class, adding to savings without making lifestyle sacrifices, or raising a family off it without an earning partner -- but that is what bonuses are for. I don't see why incentives in that component shouldn't be fully aligned.
The salaries have tracked with inflation (100-150k was the range a decade ago) just not quite as fast as floor pay in other highly compensated fields. If you prefer higher guaranteed comp go literally anywhere else - but save at least a few industries for those of us who want to bet on ourselves, and compound everything above living expenses into our careers.
The issues I am sympathetic to are:
My early career was full of this - lost my first job quickly when my PM was canned, waited a low pay non-compete, and then had a nasty "net to zero" with second PM multiple times over the years (of course I wasn't proportionally rewarded the one year he put up strong numbers). Hard to feel like it is "eat what you kill" when you have so little control, are subject to discretion, and perform well but aren't rewarded - and that incentive misalignment is ultimately bad for GPs and LPs too, nobody wants this.
But the solution isn't to leave things broken and throw higher bases to accommodate. I think platform structure can solve for this and is evolving. Some good ideas I have seen are:
Have already observed PMs negotiating these terms into contracts from the start and platforms understanding and approving - the crazy PM market right now will naturally usher in some of these changes. When I was an analyst, I would have much preferred these over a higher base salary.
I like your proposed changes. But there's no urgent incentive for firms to implement this as long as the applicant pools are still so huge.
Nah you can't, because many landlords require you to make 40-50x your monthly rent (before discretionary pay). With $200k that means you can pay at most $4-5k in rent, which won't get you a 1BR in a central Manhattan location these days. Not even an alcove studio in some places. You are basically "poor" in Manhattan terms.
And now do the same math for $175k base.
$200k is closer to $130k net, before retirement contributions and insurance (yes, plenty of MMs don't fully cover your insurance and other benefits).
Exactly. I've been in other fields before, and I had so much more control over my career than now. My risk adjusted pay was substantially higher, and I didn't feel like an intern despite years of work experience.
Ah yes used the same site but I had the "married" toggle on - you are correct it is actually $130k for the single filer case I suggested above. Still can spend $10k/mo at that range and have buffer though.
Most find a guarantor, I've done this for new analysts before (there are services to pay for one too at 5-7% of rent). Showing a high income year and enough cash in an account to cover the full lease works at many buildings as well.
It's being driven by PM asks, not the firm, and the firm accepts the conditions to hire the PM. You will see on all of these the PM incentive is fully aligned with the analysts (and it is less negative sum for the firm than just giving more cash - much easier to get team $ than guarantee $).
ive never had a landlord begrudge a prior year W-2 instead of a salary.
These are all great. Another way to ensure good analysts still get compensated even if they have an underperforming PM that gets fired and/or just leaves is to increase payouts related to paper books analysts typically have. Firms typically do monetize those ideas as far as I know in the central book.
firms could also increase the threshold at which deferred compensation policies kicks in.
Lot of things they could do.. sadly they probably won’t as there’s a consistent steady supply of analysts and only a few platforms worth working for.
bump
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