Technologists refusing to trust bonus promises of hedge funds

Have the pay rises enjoyed by investment banking technologists over the last year gone to their heads? It would appear so.

Recruiters attempting to lure IT professionals from banks to hedge funds are reporting "unreasonable demands" for base pay rises, and a refusal to rely on promises of larger bonuses at hedge funds.

"Most technologists in investment banking received big pay rises this year, but this was offset by smaller or zero bonuses," says Fhamid Malik, head of financial services at ReThink Recruitment. "The result is that they're wary of bonus promises at hedge funds and are demanding base salaries that hedge funds simply won't match."

Pay for investment banking technologists swelled by 25-40% last year, driven by increased demand and a hampered ability to pay bonuses.

Hedge funds, which fall under the tier four category of financial institutions outlined in the FSA remuneration code, can still offer cash bonuses without enforced deferrals.

"By their nature, packages on offer in hedge funds are heavily weighted towards bonuses, but it's a challenge convincing candidates to trust these claims," says Malik.

Even for management level hires, base salaries for technologists in hedge funds rarely go above 100k, says Nick Finlay, head of investment management at Hays Finance Technology. For technical roles, base pay is 50-80k, but bonuses come in at between 100-300% of salary, he adds.

And hedge funds are hiring technologists. Demand for greater transparency from clients, combined with regulatory pressures, is spurring investment in more sophisticated reporting technology, which is creating jobs. And there's still investment in front office IT.

"The majority of roles we're seeing from hedge funds are around the development of pricing and analytics systems, and technology that can bolster portfolio performance," says Finlay.