What's market for LO junior level compensation?

Hey guys, currently interviewing with a number of LO shops for research associate roles (2 yrs of IB experience) and I'm curious what I should expect in terms of comp?

My current role is paying 90 base + 75 bonus as a second year IB ANL and should increase to 95 + 90 in my third year. Not sure what large LO funds pay their juniors - I'm assuming 125 + 125? How does that scale over time? Funds I'm referring to are Artisan, Allianz, etc. 

Assuming I spend a few years here and look to lateral elsewhere, would SM HF opps be on the table, or do L/S SM funds view LO shops negatively?

Thanks!

Hedge Fund Interview Course

  • 814 questions across 165 hedge funds. Crowdsourced from over 500,000 members.
  • 11 Detailed Sample Pitches and 10+ hours of video.
  • Trusted by over 1,000 aspiring hedge fund professionals just like you.

Comments (19)

May 14, 2021 - 4:06pm

125 + 125 is highly unlikely for a research associate. I'm guessing you're in SF based on your tech banking background and the firms you listed. I'd use Dodge & Cox numbers as a benchmark. Seems like somewhere between 150 to 200 all-in.

  • Investment Manager in HF - Other
May 17, 2021 - 1:51pm

This is another thing people should keep in mind, especially if 3rd party recruiters (as opposed to internal recruiters). Third party recruiters get paid if they place you, that isn't to say they'll give a comp number of $300k when it is $100k, but if they think you are a good candidate they can place, they are going to try and get you hooked and then work on the details. If you are at $180 they'll give you the range of possible that is attractive (as long as it's not an outright lie) but most likely they are exaggerating a bit and then will talk about the growth at the firm, the opportunities you'll have, the "soft" benefits, etc. 

May 14, 2021 - 4:17pm

I work in LO after doing a stint in IB. That said, I worked in IB at two EBs in NYC for two summers and ended up joining LO out of college. 

At my company, total comp is usually around $115k in out of college roles, but after about 4-5 years gets to close to $180k. That's close to what you would be making. My company is also on the lower paying side due to being located in a lower cost of living area. Personally, I think that this is a great place to work after some time in IB, and even with the compensation being a bit lower, you still have decent places to go. 

I do not believe that L/S SM or MM shops look negatively on LO shops at all. In fact paired with IB, this could set you apart since you have both IB and investing experience. I know many people who have gone from LO to the HF space and they did not think they had some uphill battle coming from LO. 

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
May 16, 2021 - 5:38pm

No problem! Admittedly, I bet you most LO shops would pay you below $215k, likely at around $200k with maybe a few pushing to $225.

Again, I'd bet my shop would pay you around the $160k-$180k range, which is lower than most LO firms would pay. This is considerably below your floor. This is justified by my company for increased work-life balance, as well as other perks like reduced rent at some of the best nearby apartments (I get my first month free and a 10% discount) or access to private clubs in the area. 

Most people coming from IB are prepared for a bit of sticker-shock when changing to LO, since they pretty badly want a "lifestyle change" (as it is said at my company). That said, comp progression in LO can be pretty good, so long as you are able to be promoted quickly. Make it to Portfolio Manager, and your comp will probably dwarf your friends at the VP level in PE

  • Analyst 2 in HF - EquityHedge
May 14, 2021 - 8:46pm

depends heavily on whether they are standalone hedge fund structure/private equity spinout or large asset manager, the former will usually pay more but less stable

examples of the former are stockbridge abdiel sequoia public equities etc. 

  • Investment Manager in HF - Other
May 14, 2021 - 9:06pm

From my experience LO won't pay that much ($250k all in), I would guess more around $200 with your experience. They tend to be a fair bit lower than HFs (a lot less vol at least). Maybe some of the top shops will be closer to that, but like I said they tend to have more structure comp and smaller increases. 

Start Discussion

Total Avg Compensation

July 2021 Hedge Fund

  • Vice President (18) $520
  • Director/MD (10) $359
  • NA (4) $325
  • Portfolio Manager (7) $297
  • Manager (4) $282
  • 3rd+ Year Associate (18) $269
  • 2nd Year Associate (27) $247
  • Engineer/Quant (51) $237
  • 1st Year Associate (63) $188
  • Analysts (184) $168
  • Intern/Summer Associate (15) $125
  • Junior Trader (5) $102
  • Intern/Summer Analyst (208) $82