Hi there,
Title says it all. I have an offer from a large multi-strat for a quant role. Is a 12 month non-compete (paid at base salary) a lot these days? I honestly don't understand how anyone leaves one hedge fund to go to another if this is standard.
Thank you.
Not unusual at all, the industry is raising its non-compete periods for quants. The lowest I have seen at a major fund is 6 months, and I've seen as high as 2 years unpaid non-compete for people coming out of undergrad.
You're right that it is quite hard to hop funds. Quant finance is very different from tech in this regard- many people just stay at their firm and try to make it to the top or leave the industry altogether. The average employee duration at most of these firms (after some turnover in years 1-2) is roughly 10 years.
This is one reason why the pay in quant funds today is on average no better than the tech companies. If you're on a noncompete (and especially if you are denied access to code as well), you lack leverage to go anywhere else, so there is no need for the firm to pay more to keep you there. 6-12 months is common, but it can be more in some cases. I think Renaissance has something like 5-10 years. If it's unpaid, it likely won't be enforced by the courts, although the firm can still harrass you about it. They will usually pay the base salary to avoid this, and it will come in a lump sum (so it may be taxed at a high rate).
My wife recently joined a macro fund and had a similar issue, fund wanted a 1-year gardening leave, she thought it was overly long given she's not a quant and does macro investing. Anyway, she got a lot of advice and here are some things that you can do to help:
-Reduce the length of the non-compete in the case of termination -Eliminate the non-compete in the case of significant withdrawals (to protect yourself in case the fund blows up) -Negotiate a higher base or have part of your previous years bonus included in the garden leave -Narrow the description of competing activities (so that you can exit to tech for exemple without triggering the non-compete)
Thank you, this is very helpful
It’s on high end but not unheard of.
Have heard of 6-12 months for the fundamental roles too at said shop type.
If a non-compete comes with a pay check. I don't really the see the issue. Though, it may hold you back in your career in the mean time, but if that was the case, I would brush up to learn extra skills when I'm not working.
The issue is that you need to know you are going to a competitor in order to be paid, and competitor funds usually have no reason to hire someone that they have to wait over a year to get in the door...so you get stuck in a catch 22 unless another fund wants you that badly
Correct me if I am wrong - doesn't Renaissance do 5-yr non-competes?
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