How much am I worth? Foreign exchange risk advisor

A panel of specialist headhunters give their assessment of typical London pay packages: foreign exchange risk advisor, leading international bank; salary at least 100,000 - bonus up to 250%, with global heads earning total compensation up to 750,000

Not long ago only the most Darwinian bank employee seriously felt an obligation to 'add value' and 'be proactive'; these days, with even top employees having to work hard to justify their pay cheque, nobody is laughing at the clichés or making jokes about survival of the fittest.

If banking is a jungle, then the usually lavishly paid foreign exchange (FX) risk advisor is one of the kings, though to keep their positions they must now offer much more than an old-style vanilla service.

In most institutions, the role of the FX risk advisor remains supervisory: an economist, or somebody with a very strong quantitative background, they spend much of their time ensuring traders understand their markets and appreciate the risk of taking positions in a certain currency.

As a result, most are up to date on anything that could affect the movement of traded currencies or impact on their institution's positions. However with the advent of the euro, trades in smaller European currencies have diminished.

The emphasis has shifted to less well known but riskier exotic currencies, many from countries the man in the street may never have heard of, which means the FX risk advisor must have more specialist knowledge than ever before.

'This remains a key role: well paid, with a lot of responsibility and for many a road to the very top,' says Tony Tucker of the Executive Resourcing Group (ERG).

Although the role and the responsibilities of an FX risk advisor varies widely from institution to institution, headhunters agree that even at its most staid and traditional it has changed markedly - as evidenced by the sorts of background the most ambitious and successful come from.

Simon Head, principal of FX Sales at Alexander Mann, says today's FX risk advisors can be from an FX sales background, an FX asset management background or an FX quant or risk management consultant environment, with the last of these viewed as ideal for a position that has a substantial corporate risk advisory focus.

'The goal is now to deliver a true value-added service: to establish what (institutional and corporate) customers want, and to sell in a new way,' says Head.

He points out that the FX risk advisor will have access to confidential information rarely available to sales teams, including potential mergers and acquisitions activity, how much money is available to spend on option premiums, true currency and financial exposures, and sales forecasts - all of which can help the client determine hedging policies and new, optimal ways of managing risk.

The FX risk advisor may also take a different approach to institutional and corporate clients, being product specific for the former but taking a more multi-focused approach for the latter, incorporating FX advice with strategic advice on everything from interest rates to credit derivatives.

He or she will certainly be well rewarded. Tucker of the ERG says that although pay rates differ widely between banks, FX risk advisors in London will almost always be paid a six figure sterling basic salary.

Bonuses typically run at at 200%-250%. Head says the highest paid FX risk advisors will be European and global Heads, with the former getting total compensation of about 500,000 and the latter 750,000.

Surely more than sufficient incentive for staying 'pro-active' and ahead of the competition.

Figures and commentary supplied by Alexander Mann and the Executive Resourcing Group.