Strategists soar as markets fall

With markets looking wobblier than they used to, strategists are becoming increasingly prominent. They're also being paid well for their trouble.

These days, a director-level strategist can command a basic salary of around 100k to 120k and total compensation of around 550k to 800k, estimates Russell Clarke, a director at search firm Mantis Partners.

Wayward markets aside, Clarke says strategists' pay is rising as they become more client-facing and are expected to initialise relationships with sophisticated clients like hedge funds. Alongside their core role of offering general trading strategies to the existing client base, Clarke says strategists are increasingly expected to offer value-added trading ideas to match these sophisticated clients' demands.

"As the investors seek to combat margin compression, their appetite becomes more discerning for derivatives and structured products, resulting in higher demand for cross-market trading strategies and quantitatively-backed ideas," says Clarke.

"The success of a sell-side strategist is now measured by their ability to generate fee-driven research relationships," he adds.

The corollary is that there is now much lower demand for qualitative, bottom-up equity researchers and for strategists who can't generate the requisite relationships.

"Some banks will not even staff that area now because of less favourable cost-returns, leaving it to big players such as UBS," says Clarke.

Most equity research departments have seen headcounts reduce in the past three to four years, agrees Mark Horlock at Akamai Financial Markets.

"A lot of investment banks still have difficulty about how do they make money out of research. Along with sector analysts, strategists have been cut in numbers," he says.