Who the hell makes this much??

I won't beat around the bush here. My friends father is expecting an $18 million dollar bonus. I don't know so much about HF pay but when I heard this it seemed fucking crazy. He works for some HF in NYC. Is this an average number for top performers? That's like never work again money right? He's middle aged why not retire?? Do I not know, is something
HF managers just make in an average year?! He's not a famous investor or anything. Is this all just a golden handcuff for the top employees?

Comments (32)

 
  • Investment Manager in HF - Other
Dec 9, 2020 - 6:11pm

Yes those numbers do happen, no they aren't "common" (although you say average for top performers, depends how you define top), and so many people don't make it in this field (so the amount of "filters" by the time you get to top performer is a lot). 

To hit those numbers you either have to be running your own book (with solid AUM and of course great returns) or have an equity stake (partner type) at a fund (again with a good AUM to partner/investor ratio). The partners take home what's leftover after expenses, so in a good year that can be a ton of money. 

Again, depends how you define top performer (so average across top (small) %, sure, but that's not a reasonable way to look at it).

Most "top" people are more in the low/mid 7 figures.  

 
Dec 9, 2020 - 6:41pm

yeah...make 100mm trading/investing a 1bln slug of AUM (10% return)...get paid 18% of 100mm = 18mm....that is the general target for a HF PM...pretty common

just google it...you're welcome
  • 4
 
  • Analyst 2 in HF - Macro
Dec 9, 2020 - 8:03pm

1) A lot of very highly paid HF guys are not household names because they don't want to be

2) that is not a "common" payday when you look at the industry but it is "common" for the best performers - this is a small percentage of existing investors and an even smaller percentage of all HF employees ever (I.e. lots of survivorship bias)

3) I'm sure he could totally retire if he wants to but he chooses not to

 

now that I've answered your questions, I have a few questions of my own.

1) what exactly does he do? What is the strategy of his fund? What sector or sectors does he look at? How much capital does he run?

 

2) what did his career path look like? How old is he? How many years ago did he start getting into the industry? What kind of funds did he work at?

 
Dec 9, 2020 - 8:31pm

I really don't know much. Wish I could help. Here's what I know

1) late middle aged aged (50-55 probably)

2) don't know anything about his fund ( I'm assuming he holds a key role.)

3) Word got out about his bonus within my community.

Strategy, where, even what he does specifically idk... probably an investor. When I met him (that one time) he appeared super intelligent but didn't really give me his full attention. So, I could ask my friend but it's kind of a sensitive topic. I don't think he sees his dad :/

 
Dec 11, 2020 - 1:43pm

As a father, that last comment really hits home.  There was an interview that Stanley Druckenmiller did sometime in the past few years, where he referenced missing his children's childhood and now focusing on spending more time with his grandchildren later in his life.  It seems like a common regret from older (and successful, to be fair) investors, so I try to always keep it in mind.  

 
Dec 9, 2020 - 8:22pm

Funny though. While you may be right ( I never see my friends dad and I don't think he does either ) it's still a golden handcuff
what you described. Aware or not he's definitely a slave of sorts to the office " allergic to relaxing" like you said. Always need more. However I would like to think there are some who stay grounded and find extreme success.

 
  • Investment Manager in HF - Other
Dec 9, 2020 - 8:30pm

Sort of. I love work, work a ton, could retire (or close) but also enjoy many things in life. It's not really golden handcuffs if you enjoy what you are doing; it is when you use your work to spend like crazy and then you have to keep coming back because it is the only way to keep up. 

I do agree that it is bad that this person prioritizes work over family (or appears to), but those are personal decisions. I think you have to find balance in life, but others are happy without it. 

 
  • Principal in HF - Event
Dec 10, 2020 - 9:50pm

The number of people who make this much money working in finance in any given year and who aren't CIOs, CEOs, or equity-holding 20 year veterans of funds that exploded in AUM can be counted on 2 hands (might have to take off your socks and add in your toes in a good year).

Regular high-level employees - even those managing a good chunk of risk - would be lucky to see a fifth of this in any given year, and even these people are a rarity - think PMs with a long track record at an MM who had a blowout year, or the level below CIO at major 10bln+ SMs in a good year.

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