Comp for junior level?

I've read some previous posts on this but most of the conclusions seem to be that comp is super variable, so I thought I'd ask for my specific case. I'm interviewing with a few top tier large distressed funds (at least one of which is known to pay well, according to WSO/Glassdoor) and I'm <2 years out of undergrad. What base/bonus range should I be expecting? Is the industry standard for bonuses completely discretionary, or can you negotiate a minimum? I'm obviously not expecting to make as much as a typical analyst who is 3-5 years out of school but just don't want to get lowballed.

Comments (8)

  • Research Associate in HF - Event
Jun 11, 2020 - 11:11pm

Expect 300-350k as a first year (performance isn't great right now so might be lower). I wrote more on this in below thread. There's no negotiating, you will get a standard 125-150k (and that may or may not increase) while bonuses your first few years generally track around 100-200% of base. Elliott is probably an outlier where you can get closer to 400-500k all-in but they tend to hire a bit more experienced folks as well.

Research Associate in HF - Event:
A frame of reference (there's a huge amount of variability and the meritocratic nature of performance can quickly sift top performers outside of these ranges while non-performers or people who can't stomach industry tend to leave or start firm-hopping before they get 3-4 yrs impregnated with the same firm):
  • $300-450 1st year comp (i.e. 1-3 yrs out of college)
  • $350-550 2nd year
  • $450-600 3rd year
  • $500-1mm 4-7th yrs (it will become highly variable including potentially lower bonuses than your prior years based on fund performance, how firm values your longetivity, responsibility / coverage, P&L "ownership" i.e. if you were sr. guy who entered trade that made firm $100-300mm of P&L for the year..expect to be handsomely rewarded etc.)
  • $1mm +/- 500k for non-partner MDs (i.e. starting ~mid-30s and remember this funnel is very small of people actually in these ranks)
  • $2-5mm+ for Partners (could be much much more or slightly less and highly dependent on when they became partner and what % of GP they got...early guys clear it out year-in / year-out as big funds reach significant critical mass that revenue variability on just mgmt. fee alone can support the low end of their comp setups and big bonus years can hugely drive payout)
  • Analyst 1 in Other
Jun 12, 2020 - 9:01am

Gotcha. So I should be guaranteed at least what I'm making now (IB analyst comp)? And do you think now would be a risky time to make the move given the environment even at the most junior level, or are bigger firms safer?

  • Incoming Analyst in Other
Jun 12, 2020 - 10:25am

Correct me if I'm wrong but a lot of the big name funds aren't having the best of the returns so I'm not sure what's going on the hiring front with some of the big names, but if you're already in the process I would assume they have decent to good returns YTD. Also some of the big names not doing well have some of their capital locked up in very illiquid positions, etc. Bigger firms would be generally safer I would think than some small fund that has more chances of blowing up. I'm headed to a distressed fund as well and if you're interested in distressed stuff, why not make the move now when there's going to be a lot of opportunities to look at. At least that was my reasoning to make the move vs other options.

Also bonuses at most of the places I've worked at / will work at or know of from my conversations is at the discretion of the PM. Haven't heard of guaranteed bonus but may be wrong here if some fund has a funky structure?

  • Analyst 1 in Other
Jun 12, 2020 - 11:09am

Yeah that's exactly my rationale as well. Are you heading to a big fund? How did you decide it was the right place for you? As for bonus, I know people at quant funds that are on a "minimum" contract but not sure about fundamental funds

  • Incoming Analyst in Other
Jun 12, 2020 - 12:44pm

not heading to a big 10b+ fund. Heading to a mid sized fund that's growing. How did I know it was the right place? Good track record (including YTD), strong referrals from places I had worked at, PM had great pedigree, small investment team so potential to contribute to book and take % of pnl, focus on growing within firm rather than 2 and out. Most importantly I spoke to the people and they genuinely seemed to care about me as a person and an investor rather than just an investor. Good group of people sealed the deal for me.

  • Research Associate in HF - Event
Jun 12, 2020 - 12:30pm

Yes - if you came from an EVR/PJT/HL type place where you were getting 215k+ as a 2nd year analyst; of course your buyside gig will be paying as much if not more.

There is no guaranteed bonus in this field unless you make partner. Just think about it like how I framed it in the thread I linked...if a large firm is making 100-400mm in annual revenue, you think they won't pay their team of 30-60 investment professionals people decently well while still making the MgmtCo partners very wealthy (after paying market rate for standard crew of 50-100 back office people)?

Ask yourself, a good RX first-year associate makes 300k so what would I need to believe that a distressed HF won't pay me as much? Either it's a small firm with unstable/lumpy revenues, they are shedding AUM/high-fee pool money, firm is chopshop known to underpay or the people are just not that charitable (sometimes associated with greedy billionaire founders). the first two you can kind of figure out, the third you have to ask around and fourth is a judgement call you need to make.

  • Analyst 1 in Other
Jun 12, 2020 - 12:44pm

Thanks. Is it safe to say then if my offer doesn't come in at ~200 that it's a lowball and I should try to negotiate? Not currently at one of the places you mentioned though.

And on your latter two points, is there any way to try to figure that out before signing (ex. asking alum via LinkedIn)? Or can anyone on here confirm examples of top distressed shops that do/don't pay well?

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