Comments (45)

Nov 30, 2021 - 11:43am

Totally up to the PM, but 5% is a good starting point at a pod shop. Best I got was 10% of net but the PM wasn't a risk taker (went for singles and doubles, not grand slams) so I left for a seat where I could take more risk.

There are also above and below the line considerations which, to my embarrassment, I still don't have a great understanding of despite being in an HF analyst for a while now.

Nov 30, 2021 - 11:47am

thank you so much! wow my PM has only mentioned 2% i didn't even know 5-10 is possible. Can i ask if this is the PnL% before or after fees? E.g. if our team gets 20% of our total pnl the 5% is out of the 20% or out of the total pnl? 

Also if you don't mind me asking, have you ever made 7 figure as an analyst with pnl attribution? 

My team's performance is within the low double digits so 2% of it isn't really much

Nov 30, 2021 - 11:54am

Again, I'm not great when it comes to gross and net/above or below the line. Maybe MMPM or someone else at the PM level can give you a better answer.

2% seems pretty low. If you make $20mm PnL you get $400k? Yuck.

Won't get into my personal comp history but 7 figures is def doable. At this point, I almost find a risk taking analyst seat as attractive as a PM seat at a pod. You can make good money with much fewer headaches/politics.

Nov 30, 2021 - 12:07pm

Oh I meant 5% out of say 20% would that mean u get 1/4th of the total team pay, or 5% out of the net pay that the team receives (so if it's a team of 2 then PM keeps the other 95% of net pay)

Yeah that's around the number I'm expecting for 2%, not great but it is only my first full year here (5yrs exp total). Congrats on achieving 7 figures I'd be super happy to make that as an analyst! Can I ask how you negotiated with the PM to get a higher pnl percentage? And is it too late if I tried to negotiate for this year or should I do it for next year? 

Nov 30, 2021 - 12:51pm

Got it thank you! I guess it's different for me since we work as a team and there's no carve-out piece like L/S strats, and the total PnL is on the whole book and my total comp is 2% of that. I definitely want either a bigger net AUM or a bigger % cut. 

Most Helpful
  • PM in HF - EquityHedge
Nov 30, 2021 - 9:06pm

No typical but it really depends on experience. I mean if I hire someone out of a banking program, the ratio will be very different than an analyst who has been with me 10 years. 
 

When I left my last analyst job to take a PM gig I was probably being paid 2.5/1.

Analysts will have a lower delta than the PM (meaning more protected in a mediocre year but won't participate as much in a big year).  
 

Absolute dollars matter too. I have worked at places which have a mental cap on analyst comp - i.e., no analyst should make more than X. X was still a good number but it wasn't a crazy number. 

  • PM in HF - EquityHedge
Nov 30, 2021 - 9:11pm

sonibubu

Again, I'm not great when it comes to gross and net/above or below the line. Maybe MMPM or someone else at the PM level can give you a better answer.

2% seems pretty low. If you make $20mm PnL you get $400k? Yuck.

Won't get into my personal comp history but 7 figures is def doable. At this point, I almost find a risk taking analyst seat as attractive as a PM seat at a pod. You can make good money with much fewer headaches/politics.

The real question is who "made" the $20mm. Analysts look at their covered names and think they are responsible for 100% of that amount of p&l. That's not fair/true. 

the right question is how much value the analyst added. and also realizing that the analyst is learning from and benefitting from the platform, PM, etc. 

it's never about current year comp. It's about putting yourself in a position to generate wealth over many years. 

  • Prospect in HF - Other
Nov 30, 2021 - 1:26pm

Spoke to PM a couple of weeks ago who asked how I would like my comp structured, base and bonus. How do I answer this? I want to get as much as possible, but don't want to sound ridiculous. Can anyone assist? I am still quite junior, but she stated comp wouldn't be an issue.

Nov 30, 2021 - 8:46pm

You could start by laying out whether you're at a MM or single manager, how many people in your team, AUM range, whether your experience is on buy side or not, etc.

Depending on all that context, the answer could be very different.

Nov 30, 2021 - 9:39pm

It is very rare to give someone a cut of P&L with barely a year of buyside experience. In most cases, someone with that bakground will just get a discretionary bonus.

If your PM were amenable to doing %, in my mind giving you 10-15% of the bonus pool would be the ceiling, probably closer to 10%.

Finally, you said at some point your team is up low double digit %, kind of dismissing it as a modest year. Not sure what your point of reference is, but at a MM and running that AUM range, that is actually a strong year.

I would also say, be careful what you wish for. Getting paid a % is great if the team consistnetly has great years. But if there's bad years, you might get a laughable bonus. Net net, many analysts fare better with a discretionary bonus where they capture less upside but also less downside in mediocre years.

Dec 1, 2021 - 3:11pm

Most of the guys I know in the pods have a % deal with their PM but the dollar amount of their bonus is capped, so they do not participate in the upside to the same degree as their PM. This makes sense as the PM is the one taking the risk. As an example, I have a friend in a merger arb pod that generated a USD 20m payout last year. His PM gave him a USD 2m bonus, which equates to 10%. His deal with his PM is they split the pod payout 70/30, but his bonus is capped at USD 2m, which is the max his PM thinks an analyst should make.   

  • 2
Dec 2, 2021 - 10:39am

So at a pod where PM makes ~20% something nearing 10% of generated P&L on names isn't unheard of for senior analysts? ie analyst's names contributed $30mm in P&L for the team, so analyst could make $3mm in a 10% structure? Understanding that caveats could be hard dollar payout caps, shared expense considerations, etc. Is that reasonable for a more senior level payout structure?

  • Analyst 2 in PE - LBOs
Dec 11, 2021 - 12:24pm

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  • Assistant PM in HF - Other
Dec 18, 2021 - 1:05pm

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