Comp season has passed in my firm. I know it's ongoing at the big banks and happens at various times throughout the year for the big funds. A few observations based on my experiences and conversations with people who work in the industry.
If you've been working for 5 years or less, you need to get over your comp. It's amazing to me how pissed people will get if they are 5k below someone who is working at another firm, another team, or even their same team. Everyone should be aware of how arbitrary your ranking and comp is when you're starting out. The number is not what matters, at least initially.
If you're at an asset manager, here are 8 questions to be asking when evaluating your workplace are the following:
- Am I learning new things?
- Am I developing knowledge of a specific industry/group that will build and be useful?
- Am I developing contacts throughout the industry?
- Am I able to build a thesis from start to finish?
- Would I feel comfortable pitching a max position to our investment committee?
- Am I getting access to senior analysts and portfolio managers?
- Am I being given real assignments that actually matter?
- Do I still need to be given assignments or can I work independently?
Note that none of these include comp or a path to higher comp. If you are able to generate value, you will eventually get paid. If you prove yourself to be unable to generate value, you will eventually be out of a job. When you are starting out (excluding certain hedge funds) you are being given an opportunity to learn without the pressure to perform. Both the pressure and the rewards will come, either at your current firm or at another.
Great post. I have my first year-end review at my fund in a few months. Interested to see how it goes, mainly to get a better idea of where I stand and in what direction they see me moving for the future. Any specific advice for approaching the actual review? (key points to bring up, questions to ask, what to look for, etc.)
I've found year end reviews to really vary, depending on how the manager approaches them and your relation with him or her. I don't think there's any magic bullet here. A lot of firms force grading on a bell curve, so you can have a great review and end up with a rating of average. I asked if there was anything I could do to improve and the response was, no you're doing well, I'm just not allowed to rate you higher because then I would have to dock someone else.
Remember that managers are likely doing multiple reviews, and are being told by their bosses what they expect. In terms of getting anything worthwhile out of it, I don't have much to add aside from common sense. If you get criticism, for god's sake don't argue with it, even if it seems unfair to you. If you don't get anything specific, broad questions are fine, but don't be disappointed if you don't get a thought out response. People generally think about themselves, and if you're doing a good job as a junior person you are not a top priority. Also, remember that promotions past a certain point are not really planned. Once you have your CFA and are an analyst with your own coverage, it's all about how well you do your job. Learn and perform and good things will follow.
All makes sense, nothing revolutionary but nice to know I have a similar approach. Your posts have always been helpful in shedding some light on a pretty under covered area of finance on here
Excellent post, SB. Couldn't agree more. The point about being given an opportunity to learn without the pressure to perform is extremely relevant. There is so much work you need to do proactively and independently in your first few years that will be barely recognised (if at all), but you have to do because it gives you the tools you need to do the job properly later on. And you can't do that if you are under the intense pressure to perform which you very often are at a HF. There are so many things which you can only learn over time, especially if you cover more than one sector. You can accelerate the learning process as much as possible, but it takes time to properly get to know the sector(s), learn the accounting, work out what matters, how to interact with management teams... and all of that takes time to "properly" understand - you may think you understand it at the time, but 5 years later you look back and realise you didn't. Having the ability to learn these things properly is a major advantage of the MF industry as a place to start, and one that i think is completely underestimated. Great post.
I think working for a big mutual fund family is the single most underrated career path in finance.
Agreed - at both the junior and senior levels, but especially the latter.
Nice.
I'll have my second review in a month time. Totally agree with the idea that you are given the opportunity to learn without the pressure to perform. In my first review, I was asked to give more macro opinions. Curious to see what I'm asked this time...
Important to remember that feedback can often be just a justification for your rating or based upon what he is thinking that morning rather than something well thought out or relevant.
In my experience if you arent providing something your superior wants,they will tell you in freaking real time. Not wait 6 months later to tell you in a review.
I tell new people that they should be seeking out feedback more than once a year. Your job is to be a mindreader, but its also to get people to help you do your job better.
Thanks for sharing your experience. Your opinion is not far from what I thought when receiving those comments... just a justification for the low bonus in a year with excellent performance...
This goes both ways too: I've gotten lucky breaks on pay even if I had a rough year as well as being clearly shafted on very good years. The bottom line is that someone else is deciding what you get paid and humans are often capricious, dishonest, and ignorant of all available facts.
The one way to control your income is to own the source of your income and I'll be damned if I don't find a way to do that.
guess what guys? there's always someone with a bigger dick, learn to appreciate what you have and try to be happy if you ever could.
Great post good to keep it all in perspective
Really good post. Thank you for the perspective.
Great post. Completely agree that most people get caught up in salary instead of the valuable skills you describe in your post. Some good food for thought to get others focused on what is really important.
I'm not that bothered about differences in comp. I do get bothered about asking for proper/formal feedback every 6 months - to get a sense of progress through the year - but it doesn't happen. The posts are a good kick up the backside to get it happening. That said, I get pointers all the time so it's reasonably continuous.
There was a horrible year when I was pretty unproductive (was going through some family health stuff) and was told at the end of the year to pick things up or else. I changed a lot of what I did and my processes, and became more vocal with everyone even if it's small talk. All of it matters. Anyway it still makes me think that mid year reviews are useful.
As for being part of a big mutual fund family, of which I am, I agree about being given space and time to learn, which is a massive benefit, but I often wonder how much you're sacrificing in terms of nimbleness and returns, and how the larger HFs would approach it. My interactions with HFs is practically nil.
@alman Big AUM levels are certainly a challenge once you are looking at companies outside the S&P 500. I've seen plenty of small and mid funds do great, accumulate assets, and subsequently dive bomb. Tons of analysts at my firm came from HFs. I personally think working for a HF is overrated in many aspects. The most important people at a HF are the ones bringing in the assets and writing the compensation agreements for clients. A friend of mine works at a long short hedge fund that doesn't need to be market neutral. Their benchmark is the 1 year treasury bond and they've managed to get 2 and 20 from their clients. The HF industry is a great way to get paid and rip off clients while they think you are doing them a favor.
Great post
Great post
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