Ridiculous SWE Pay at HF/Trading?
A couple people I know received SWE offers from hedge funds/trading firms like Citadel Securities and Hudson River Trading and their first year compensation was on average 425k with the max at 550k. All fresh out of undergrad. They mentioned that they expect to be paid at around 7 figures by 7-10 years in.
Is back office pay this good now?
HFT firms are the most lucrative part of finance today, SWE at a HFT firm is front office, that's how they make their money.
What’s SWE stand for?
Software engineering.
SWE at FAANG are making 250k-300k out of college, and those jobs aren't even hard to get. So, yes, makes sense that these more competitive jobs pay more.
Believe me those jobs are hard to get
Lol, no they aren't. I know dozens of people in these roles. These roles being hard to get is a myth perpetuated on this website.
Literally every single person at my school who wanted a FAANG job and majored in CS got one, without exception. Not even in the same realm of competitiveness as top finance opportunities. If you go to a decent school (not just Ivy, I'm talking top 50), are moderately intelligent, and seriously try for one of these jobs, you will get one.
Just to debunk some myths, you are exaggerating tech pay out of college by $50-100k. Outside of exceptional circumstances, fresh grads are hired into L3 or equivalent roles, where you can see the distribution of pay pretty clearly for FAANG (note that Netflix famously does not hire new grads):
https://www.levels.fyi/company/Facebook/salaries/Software-Engineer/E3/
https://www.levels.fyi/company/Amazon/salaries/Software-Engineer/SDE-I/
https://www.levels.fyi/company/Apple/salaries/Software-Engineer/ICT2/
https://www.levels.fyi/company/Google/salaries/Software-Engineer/L3/
Across the companies you mentioned, pay centers pretty squarely at $180k. You can see the top decile of the distribution for the role is 220k, and these tend to be in more expensive / high tax cities, for people who went to better schools, did well on their interviews, and had competitive offers (perhaps from quant finance). Moreover, longer term pay pales in comparison to most finance roles, this view is quite helpful for seeing that:
https://www.levels.fyi/?compare=Apple,Amazon,Google,Facebook&track=Soft…
The expected path for most engineers is to work up to L5 / Senior Software Engineer (most in this bucket are 6-12 YOE), where pay levels off at $350-400k. After this point, it is rare to advance, most people stall out here. About 1/20 serious candidates make it another level up (L6 / staff engineer), and 1/100 make it two levels up. However, L7 is still a couple hundred k shy of the 7 figures range, and most people who do manage to achieve this level are into their 30s/40s with 10-30 YOE.
Point is, trying to compete with tech isn't really what is driving wage growth at the top end of the quant market, top quant firms could pay less and still comfortably beat out tech from a compensation perspective (and vs. tech are helped by the fact that a segment of the best talent has become self-selecting, coming in knowing they prefer to work in quant over tech). The more important driver is quant firms have increased the extent to which they are willing to pay top dollar for the best talent on the market, which is exacerbated because they are competing with each other instead (don't want to overstate this point, but if HRT likes a top quant profile these days and fails to hire them, the odds the candidate goes to work at Citadel Sec and trades against them is much higher than it used to be, vs. 5-10 years ago when the same candidate was less self selecting and more likely to end up at Facebook).
You are right that most people on this forum have the impression it is harder to get a FAANG job than it actually is, but you are exaggerating it 25-50% like you did with the wages.
Everyone at my nephew's shit-tier school (Canadian nontarget) who took some CS courses (even just a minor) got sponsored for a FAAMG seat.
Ever since Covid, Big Tech salaries have been increasing.
disregard my title
I used to be a IT project manager at an HFT firm and was getting 250k at 40 hours a week working a true back office job. few years out of undergrad. decided to move over to a business/finance career not because of money, I just couldn't handle dealing with uber nerds all day.
I had a liberal arts degree too. Managing IT systems projects. 250k comp in my 20s...not bad for back office lol
What was your first job out of undergrad?
So what does comp look like for those after the first few years. Until they reach 7 figures just curious.
Someone quoted to me 20% average YoY growth. So by year 2, total compensation should be close to year 1 compensation, and meet/beat (depending on performance) by year 3.
Apparently the compensation is difficult to generalize as disparity grows a lot wider
wtf...i went into the wrong business
this is front office. The alpha generation comes from having the best systems. Also these are all-in comp numbers, that may not be repeated. The 7 figure+ would require PnL contribution.
300-500k is the "new normal" for top of market quant new grads going to the best firms. SWE is pretty much a front office role at trading firms now (though not at quant hedge funds). In HFT every year people at the top figured out it is higher ROI to take what a quant trader is doing and replace it with software, to the point where if I ever wanted to go back into HFT I would prefer to do it as a SWE (esp. at HRT, less so at Citadel) as it is basically the same comp with much less risk.
Others are suggesting that competition from tech is driving wages, but that is really not the case. levels.fyi provides transparent data on tech wages and shows a big tech new grad typically gets < $200k in comp without much variance on that number. Most of the quant openings pay about the same as big tech (maybe 10-20% higher) for entry level, but the best firms have recently shifted to paying a fat premium for the very best young talent in a small number of roles (would say this started around 2017-2019). My perspective on this has always been firms are getting much better at converting young talent into revenue generators quickly (though it is much harder to do this with B players), so its becoming less of a gamble to pay to lock down the best talent from the start. Also, these roles have rightfully becoming riskier with the wage increase, where if the new hire doesn't live up to expectations they are just as quickly shown the door.
Am I crazy for thinking that 7 figs 7-10 years out isn’t that crazy? Yes these people are top performers in school, but top performers in L/S or PE are paid 7 figs as well? I’ve always thought that HFT pays a lot out of ugrad to compete with big tech for intellectual talent, but after that the pay progression slows down compared to other areas of finance. Obviously 7 figs is a lot but presumably if you can get a HFT job you could also get a banking/PE job out of ugrad
HFT firms do not treat their employees that great before everyone goes ape shit. Not only very tough roles to get, ironclad non competes, golden handcuffs list goes on.
they would still be able to jump to FAANG though? with non competes
Depends on the non-compete, but generally, yes you can still go to FAANG. Although, FAANG generally pays a fair bit less than revenue producing “quant” roles.
Lower pay, different skillset, different environment. The point of the noncompetes is to control you, imagine if you found out your algo made your firm 20x what you mean maybe 50x. But your firm gives no path to being a partner.
Apparently you can go work in MF PE, exit to Tiger Global, and make 7-8 figures within 3 years of working there...those numbers eclipse HFT
Who! So u can make 8 figures at tiger in 2-3 years of joining? No wonder its the dream job
According to the Tiger recruitment thread, Tiger Global and Pershing economics justify high 7, low 8 figures a year even in a mediocre year
Lmao here we go again. Tech vs Finance. Both sides unwilling to kneel to the other.
You want both skillsets fellas, and maybe a bit more (s&m, analytics, product, bizops), so you can run your own shit and make more than the coding monkeys and pitchbook monkeys combined.
Im currently a SWE at a top prop trading firm in London (ignore my title) and while the pay is indeed very high starting out (~£200k+), the comp progression still pales in comparison to what the traders can earn. 7 figures for senior traders is far more common than 7 figures for senior SWEs. I would guess my comp ceiling would be around £500-600k after 8+ years if I perform very well. But there's also less risk and lower stress/hours so it's a decent tradeoff.
I am curious, how much are senior traders generally earning in London?
varies a lot but my desk's junior traders (< 3 yoe) are on £250-400k+ this year and I would expect my desk's senior trader (5 yoe) to be on at least £1m+.
Is the SWE your first role out of undergrad? 200k pound? That's insane considering how much London underpays in general.
Yes it is my first role out of undergrad.
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