HF Comp Negotiation Tips?
When switching funds, how have you handled negotiation at a more senior level (analyst/jr PM) when you are viewed less like a commodity (more of a niche asset class)? Not well versed in the way the hedge fund world works
Any strategies to get them to "throw out" the first number? Is it best to truly have the number that it will take to make the switch nailed down?
How do you balance asking for "too much" and destroying goodwill/setting expectations too high vs. not lowballing yourself?
How do you handle guarantees?
Any other do's and dont's?
Get as much as you can in writing.
Rule of thumb, if a HF CAN screw you over, it WILL screw you over.
Tactics-
I'd let them lead with the base, but have a sense of the range you're targeting. If they push you for the initial number, go high. A guarantee for a bonus can happen if they need to cover what you're leaving behind in terms of deferred comp. Try to get some min if possible, always in writing.
If you're a jnr PM, try to get ownership of the track in writing as well as actually getting the track. Some funds have pretty bad internal PnL to divide up the track among snr PM and jnr PM, you want to get ownership of what you've done.
Best of luck, hopefully the fund you're in process with is run by decent ppl. There's a difference between the HF being run by a decent person and a decent investor, finding both is uncanny and those seats are rare.
Thank you, very useful. For an experienced senior analyst (~ a decade relevant experience) expected to make day 1 P&L contribution, but no direct risk what would qualify as a high base? Don't think i'm particularly special but do know the candidate pool is just not that big in this asset class. Coming from the long only world so very different set up from what i understand
HF's base vary drastically on fund/strat/AUM/PM being cheap/other.
If you don't have a sense of the market, I suggest chatting with a headhunter. Given they speak w/ a ton of funds, they can give you a range you should expect. You probably shouldn't mention to them the fund you're close to landing at, but say how you're open to opportunities & want to understand comp.
Best of luck!
Question on deferred comp - let's say you have close to 7 figures in this bucket, are there general guidelines for how this would be treated in certain scenarios?
1. If you leave voluntarily for another job I assume it's forfeit. Similarly if let go for cause.
2. What if you're part of a staff reduction due to fund performance or shrinking AUM? Does it generally get paid out then or have you heard of people getting short shrift (worst case is PM making up an excuse to fire you)?
That happened to me. If they fire you near the end of the year, you lose the entire bonus. I think a PM may get some guarantee against this but analysts will not.
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