MM PM guarantees

Everyone’s seen the BB articles about how MM are paying huge packages for top talent (multimillion guaranteed bonus, multiple yrs etc). For those of us who aren’t that senior, don’t have a 10+ year track to throw around but are looking to move into a PM seat, what is a reasonable negotiation start? I’ve heard certain firms don’t like to give guarantees (Exodus) and would rather structure it another way. Would be interesting to hear people’s experiences and any numbers if available

 

Guarantees don’t really happen at the junior level, at least not at the figures you are expecting. 

Some top firms will guarantee the first year bonus (as a minimum payout), as a way to make candidates more comfortable with the risk, but you are looking at low six figures guaranteed. Usually juniors are $100-150k guaranteed.

The guarantees are at the senior level because of the risk senior hires are taking on. Additionally, senior hires will usually have a significant amount of deferred compensation (or fund equity). 

 

I’m referring to stand alone PM positions at MM which are already relatively senior. Packages I’m referring to and quoted in Bloomberg are on the order of 10s of mm for very senior PM with long track. I’m curious about relatively newer PM with shorter track

 

It is all based on how much they want you and how you can negotiate. Again, it doesn’t change all that much for newer PM’s because you aren’t in a great negotiating position. If you have a lot of deferred or equity then yes, they’ll throw stuff your way, if not, it’ll depend how much they want you, but since you don’t have a long track record that may not be much. 

Remember that firms aren’t in the business of overpaying you, they are looking to do the minimum required to get you in. So if you have a great spot right now, then sure you can get a lot, if not it won’t be much. 

 

From my experience talking with PMs and overhearing fund development strategy I can you there's a great deal of emphasis placed on potential PM process and scalability in addition to just returns and risk. A PM that can get 5% on $500m is significantly less valuable to a fund than a PM that can build a team and earn 3% on a $2bn book. 

You might be able to get a PM seat but proving you have a scalable edge is paramount to getting capital and favorable teams. 

 
Most Helpful

You're getting a promotion and you feel entitled to a guarantee?

I know the market is crazy hot, but you need to tone down your expectations. When I got a shot at being PM, you said "thank you"', signed, and focused on building a track record that would eventually maybe earn you the right to demand terms. If I had tried to negotiate a guarantee, I would've been laughed out of the room and told to go back to my analyst seat.

Guarantees are due when you are stepping away from a highly lucrative position to sign on with a competitor. When somene offers you a promotion, you don't ask for nor deserve a guarantee. The promotion itself is the reward.

Sounds to me like you have it quite wrong.

 

A little confused at the negative sentiment. I know of multiple people graduating PhD programs who got 400-500k packages coming straight out of school. These people have no experience and clearly aren’t expected to do much for a while. So your saying that someone with experience who is expected to immediately deliver alpha and build out a business should ask for less than these kids coming in with no experience getting guarantees?

 

Really confusing that people are throwing MS at this. If you disagree at least explain yourself, but this is right. 

As I said in my post firms don’t give guarantees for fun, there has to be a reason (you have a higher offer elsewhere, you are giving up a lot of deferred comp to make the move, etc). It is just a way to attract talent, if they are already giving you a better deal than you have, then they probably won’t guarantee much/anything 

 

Do not understand why this post gets shit points. MMPM has a decent track-record on this forum and his answers are always knowledgeable at least for me.

Regarding guarantees. I have seen it happens only when a PM with track-record (or seasoned analyst/researcher) switches from one platform to another; he was successful at the platform ABC, then XYZ offered him a seat + guarantee to cover a risk of replicating a business in the new platform. In the majority of cases you need them much more than they need you. 

Re: grads getting guaranteed packages at Citadels... The majority of new grads here get relatively small signing bonuses (up to 150K) which is a small number compared to comp of seasoned person. 

 

Assuming guarantees are in play (which they may not be), I'd imagine they are baselined to your current comp, plus some reasonable bump. Multi-million guaranteed bonuses go to those PMs who are already making big money.

 

There’s some culture clash on here 

You do get guarantees at top quant funds if you have elite academic credentials but are totally inexperienced. It’s really quite normal especially this year to get a $400k guarantee as an inexperienced quant if you join a top firm. This is because these top quant firms actually do create a lot of alpha which isn’t at all true at normal hedge funds. It’s honestly a totally different beast and you can’t compare the two job markets at all. 

Otherwise yes the guarantees I hear in “normal” hf seats usually are like “person X was a PM at point72 for many years and killed it but then is recruited to join Citadel. Citadel negotiates a guaranteed first year comp with you in order to get you to join.” You only hear about this if you are managing money and are a fairly senior baller. Even if you are junior though and work in a conventional long short type seat you’ll hear about target bonus numbers that I do think people generally stick to. 

 

Well I am a QR at a boutique fund with a few years of alpha QR experience where I’m involved in the entire research process from signal construction, portfolio management and trade execution. The head PM owns the PnL so I don’t have a verifiable track record to apply for PM roles. But the group PnL can be attributed to the work that I’m doing. So I am interested in sub PM roles to start building a track record. Interestingly, it seems recently some HFT firms are looking to build teams in the strategy that I’m working on. Are these good places to start building a track record or should I stick to trying to get a sleeve to manage on the HF side? In short, what’s the best path for a QR with experience in short term alpha strategies but with no verifiable track record to start building such track record to eventually apply for PM roles?

 

Guarantees are calibrated to your last year's PnL. The purpose of guarantees is to ensure you're no worse off during the year or so that you need to rebuild your infrastructure and team. Someone who negotiates from a position of extreme strength (for example, a PM with a decade of tenure leaving Citadel to build out a team at MLP) could maybe command that $10M package. However, he could probably also make his "guarantee" by not moving jobs at all.

Analogously, a new PM who was previously a senior analyst would get a guarantee roughly equal to his previous year's bonus. That number is very likely < $1M. A PM who failed out of a MMHF could expect $0 of guarantee at his next job. In that case, a second opportunity would be considered enough.

 

Aperiam autem in voluptas asperiores repellat ipsam quis. Quod corrupti dignissimos qui est tempora. Facere neque qui blanditiis facilis aut deleniti. Perferendis eum illo maiores sint dolorem aut quibusdam. Eos ad ut libero repellendus aut perspiciatis. Excepturi et voluptas illo similique pariatur velit.

Laboriosam optio dicta in aspernatur labore harum. Perferendis autem rerum et voluptatem rerum. Deleniti quasi beatae dolorem qui perspiciatis laboriosam quia. Explicabo non delectus nulla praesentium facere. Provident possimus amet quo. Aliquam expedita rem totam eos. Et aperiam ut saepe.

Est non unde voluptatum tempore cupiditate. Consequatur rerum voluptatem cupiditate voluptatibus mollitia voluptas. Ea aperiam sed officia. Optio laborum eligendi a et maiores voluptates perferendis. Illo consequatur et laboriosam unde magnam.

Career Advancement Opportunities

March 2024 Hedge Fund

  • Point72 98.9%
  • D.E. Shaw 97.9%
  • Magnetar Capital 96.8%
  • Citadel Investment Group 95.8%
  • AQR Capital Management 94.7%

Overall Employee Satisfaction

March 2024 Hedge Fund

  • Magnetar Capital 98.9%
  • D.E. Shaw 97.8%
  • Blackstone Group 96.8%
  • Two Sigma Investments 95.7%
  • Citadel Investment Group 94.6%

Professional Growth Opportunities

March 2024 Hedge Fund

  • AQR Capital Management 99.0%
  • Point72 97.9%
  • D.E. Shaw 96.9%
  • Citadel Investment Group 95.8%
  • Magnetar Capital 94.8%

Total Avg Compensation

March 2024 Hedge Fund

  • Portfolio Manager (9) $1,648
  • Vice President (23) $474
  • Director/MD (12) $423
  • NA (6) $322
  • 3rd+ Year Associate (24) $287
  • Manager (4) $282
  • Engineer/Quant (71) $274
  • 2nd Year Associate (30) $251
  • 1st Year Associate (73) $190
  • Analysts (225) $179
  • Intern/Summer Associate (22) $131
  • Junior Trader (5) $102
  • Intern/Summer Analyst (249) $85
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”