Salary VS Bonus

[pancho]

Hi,

I am considering switching to a Quant career in a far or near future. Looking to job ads, I ve been suprised to see salaries close to £80-100k for entrey level.

I then guess bonuses are a big part of what a quant earns. Is this true ? which is the proportion ? Of course I also guess it depends on the location, company etc, so let's say in London, for a Hedge Fund, or someone like Goldman and Sachs.

thanks in advance,

pancho

 

[ThinkDifferent]

you were surprised salaries looked too high or too low?

 

[Andy D.]

£80-100k for entrey level.

The average UK salary is something in the region of £24K if I remember correctly? So £100K for an entry level job sounds pretty good to me.

 

[pancho]

Hi,

>>ThinkDifferent : I would say : too low

>>NewHavenCT : Yes, of course it is a very good amount of money to live with, and I would be happy with half of that. The only thing is that you hear everwhere that there is an insane amount of money in the world of finance, and that you can get 10 times in finance compared to what you would get as an engineer, it s why i am a bit surprised.

Anyway, the topic is not to discuss if it s a good or bad salary, the question is more what is the proportion between salary and bonus, i.e. if bonuses are just a little something or a big part of the money you get.

Thanks !!

 

[Joy Pathak]

Hi,

>>ThinkDifferent : I would say : too low

>>NewHavenCT : Yes, of course it is a very good amount of money to live with, and I would be happy with half of that. The only thing is that you hear everwhere that there is an insane amount of money in the world of finance, and that you can get 10 times in finance compared to what you would get as an engineer, it s why i am a bit surprised.

Anyway, the topic is not to discuss if it s a good or bad salary, the question is more what is the proportion between salary and bonus, i.e. if bonuses are just a little something or a big part of the money you get.

Thanks !!

I could be wrong, but I think the time of the "big salaries/bonus" checks are done. Most of the jobs are at the big banks and they will not pay you much since there is no more prop trading happening.

The big money is at the hedge funds and prop shops but you have to generate 50M to get 10M. IF you are good enough to generate 50M you deserve 10M to 25M salary. If you generate 100K you're good enough only for 50K.

 

[euroazn]

I would say : too low

Whatatool. :O

As for bonus percentage, check out the second to last page of this guide: http://www.math.chalmers.se/Math/Grundutb/CTH/tma285/0304/M_Page_QF.pdf

Outdated, but still shows how bonuses grow over time.

NOTE THAT THESE DAYS YOU WILL BE GETTING MUCH (?) LESS (In terms of bonuses)!!!

 

[ThinkDifferent]

if you think 80K for an entry level is too low then you should definitely keep your high paying job and stay where you are.

 

[pancho]

Thanks for your answers !
it seems that it is a bit shocking that I find a 80k salary too low. IT is NOT too low, it s just lower than what I was told.

The thing is that if I decide to go in this field, it would mean a lot of personnal investment and quiting a career as an engineer where I am doing ~40k. That means I would do that for 80k, not for 45k.

Cheers

 

[goldski]

if you think 80K for an entry level is too low then you should definitely keep your high paying job and stay where you are.

Yup. I recently interviewed with one of the top 3 Private equity firms for an entry level position and it was like 60-70K base. No sign on bonus or anything. Good benefits package. I had another with a large foreign BB bank and it was within 55-65K range for an entry level package, but AMAZING benefits package and year end bonus.

I think it todays age, if you;re going to a bank, 55-70K is standard for entry level pay and you get year end bonus depending on where you are.

 

[ThinkDifferent]

yes, 55K-70K seems to be the range for quant entry level positions.
Bonuses for <4y experience vary from 25%-50% for model validation (middle office quants) to 40%-100% for FO quants.

this is based on my knowledge only, so the sample size is not too large

 

[goldski]

yes, 55K-70K seems to be the range for quant entry level positions.
Bonuses for <4y experience vary from 25%-50% for model validation (middle office quants) to 40%-100% for FO quants.

this is based on my knowledge only, so the sample size is not too large

That is right. Depending on the firm tho. If you're at a good profit making firm with good flow, you can expect 20% in MO positions. You can expect 40-100% in FO position in terms of bonus.

55-70K is the standard salary for majority of bank entry level quant positions. If you have an MFE or a Masters and an MFE or a Masters in quant field, then you can be on the 70Side...

If you're at a firm which took huge bailouts and didn't come back strong, bonus is almost close to 0%

 

[ThinkDifferent]

The good thing about MO (model validation) (apart from higher job security) is that a level of bonuses is not too sensitive to the profitability of the firm. good or bad year, my bonus was practically the same (around 40%)... I know for a fact that at Goldmans model val quants are getting something around 50%.

...although for firms that were bailed out (on top of poor performance) it could be that everyone including MO were affected the same way (e.g. Dresdner or Commerzebank employees got virtually nothing in 2008).

 

[Andy Nguyen]

This is a good article on how level of bonus this year may be
Wall Street Pay Will Be Unequal as Some Receiving No Bonus - NYTimes.com

 

[Andy Nguyen]

See 2009 bonus survey by investment bankers. The numbers will most likely not represent what people here are making.
http://www.wallstreetcomps.com/2009_Wall_Street_Comps_Survey.pdf

 

[pancho]

Thanks again for your answers.

Just a little precision (showing how little I know so far, sorry about that), when we speak of a n% bonus, that is a % of the base salary, am I right ?

if not, a % of what ?
if yes, how does it depend on the results of the company and/or employee ?

Thanks

 

[Andy Nguyen]

Bonus is % of base. It is decided by your manager, his boss, compensation committee, your group's PnL share, PnL you generate, your performance, your self-evaluation, luck, timing.
The current trend is to increase the base and lower the bonus or tie it into some form of future performance.

Don't worry too much about it, you may get laid off a few months into your jobs. If you count bonus as part of reasons you want to move into finance, forget about it. Uncertainty is the trademark of the industry.