Please rate this sub pm deal for me
Total comp = 200k base + (my PnL-500k)*10% + 0.6% my boss’s PnL
any thoughts? thank you!
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Is this deal good as a starting point for a junior sub-pm? Heard some guys at multi-pm platform making only 7-10% all in including base.
Any thoughts? Thank you
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I’m under a senior pm in one of the multi-pm pods. the senior pm makes 12 to 25mm annually.
The reason I think I should get the “incentive bonus” from my manager’s PnL is because I was hired as the major quant under him and have since built the entire infrastructure and tools for him to be successful in what he is doing. I’m still supporting him by maintaining the system and adding new features from time to time. And I don’t think 0.6% is too greedy.
I have some strategies that I manage on my own which are completely separate from my boss. He sometimes follows my signals in his core book as well when the opportunity gets really good.
As a relatively new sub-PM, if you're getting half your boss's payout that's roughly fair.
Yes, in this deal though I would get 450k all in for 3mm pnl instead of 300k as I’m doing more than what a sub pm would do - research/infrastructure for the boss
$3m PNL is bush league trading firm pnl. Is that a number they provided to you? If so, you should more thoroughly vet your boss, and understand why the PNL is so low. Find out what the PNL distribution has been for this boss in prior years (not just at this firm but prior firms too), Is it low because you aren’t getting a lot of capital, if so why? Does your new firm have shit technology which makes it very difficult to compete in your trade?
Don’t look just at the high payout potential, but look at what you’ll learn and what type of environment you’ll be in. A lot of people make mistakes taking a job for some pie in the sky payout potential but join a team that’s shit with zero hopes of making any PNL which only will tarnish your resume/track record, which will hurt your future prospects of working in a legit platform.
It's an ok deal - though the minus 500k detail would annoy me. The bigger deal is that it is not a great seat to work for someone / team that makes 12 to 25mm annually, because it obviously limits the risk limit you have to work with / get paid on. I would reframe it to say that you want a seat where you make 12 to 25mm and he makes >100m (or at least a seat that can grow into that). Thats the difference between an ok deal in an ok seat (mediocre set-up) and an ok deal in a good seat (good set-up). Put differently, the seat matters more than the deal. I would take a bad deal in a good seat everyday over an ok deal in an ok seat. If you make 12 to 25mm in P+L and get a bad share, you can easily shop that for a good deal elsewhere. If you make 3m in P+L, I don't really care what the Sharpe looks like - its going to be a bit more challenging to navigate (at the end of day, you and clients eat $s not Sharpe).
For transparency, my deal is 12% of my P+L, 0% my bosses P+L, and discretion for my boss to toss on a sweetener if he feels I was particularly helpful (expectation is for zero but get some participation on massive years if I'm involved). This is basically structured as my boss pays my costs and my contributions to his process make us even and I largely eat what I kill. This is much more akin to a different flavor of a junior PM deal vs. sub-PM deal and I am expected to put up more like 12 to 25mm than 3mm. When I was more junior, I had a 7.5% my P+L deal, 1.5% my bosses P+L type of deal.
The big question you did not address is what happens if you make money and he does not - is he going to pay you out of his deferred compensation or not? And is it believable that he will have enough deferred over time to make you whole on that promise.
Sorry if this comes across as harsh - just trying to share the thoughts that I wish someone had shared with me many moons ago. I don't know what type of shop you work at, asset class, or full background so its hard to opine much more. Just trying to reframe the question to point you in a better direction.
Yes, any place where any risktaker is expected to put up 3mm is not serious. For reference, my first sub-PM deal was 10% of my PL, 0% of bosses' PL, 200k salary, with an allocation/stop sized to make $15mm of PL/year. Boss was an equity partner in the firm and had ~10mm in deferred so I was fairly sure I was going to be made whole if I made money/boss didn't but that scenario never materialized over my 2 years as a sub-PM.
Thank you very much for your comment here.
You pointed out a key concern here which is the overall profitability of the pod that caps my upside individually. I’ll give it a serious consideration
Seems like a pretty decent deal. Although how does he do p&l attribution? Unless you have a completely separate book with no netting at all (which doesn't seem like given the small numbers), it's a bit tricky.
Yea, I have a completely separate book. The trades I do will go directly into this book. Sometimes our positions are even opposite
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