Investment banks are slashing bonuses for technologists, hedge funds are increasing them

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If you work in a technology role within an investment bank currently, don’t expect much of a bonus this year. However, if you’re one of the lucky few able to make the switch across to a hedge fund, expect your pay to increase.

Hedge funds are increasing both base pay and bonuses for technologists this year, according to a new salary survey by headhunters Glocap. The biggest increases for rank-and-file IT staff are for senior developers, suggests the research, with bonuses rising by an average of 9% to $105k.

However, all IT roles are set to see a pay increase this year, as firms battle for a limited supply of talent.

“Most funds want IT professionals that not only have the technical skills, but also have at least good, if not great, communication skills,” says Anthony Keizner, managing director of Glocap. “Ideally, most funds want someone who has been battle-tested at another hedge fund and thus has the wherewithal to work successfully with hedge fund professionals.”

If the fact that hedge funds are increasing bonuses looks good generally, it looks great when compared with what’s happening at investment banks. As we’ve pointed to previously, the majority of technologists should expect little or no bonuses this year and some are already considering their options having braced themselves for zeros.

“The majority of technologists should expect between 0-10% of salary as a bonus this year,” says Paul Bennie, director of IT in finance headhunters Bennie MacLean. “The top 10% should expect 30-50%, and only senior directors are anticipating more than this.”

The good news for developers is that hedge funds are willing to consider those from a brokerage and investment banking background, suggest both Keizner and Nick Finlay, head of investment management at Hays Finance Technology.

“Generally, there’s not a huge amount of movement between hedge funds, since the hierarchical structure is quite flat, career progression isn’t great and therefore most hedge funds retain IT staff with financial incentives,” he says. “They therefore tend to hire from investment banks, but they have to have worked in a small team with a great deal of accountability. If you’ve worked as one cog in a team of 40, you’re unlikely to find success.”

If you do make it to the top at a hedge fund, then pay can be lucrative. Average total compensation for chief technology officer is likely to be $720k, according to Glocap.

Here are some data points from Glocap’s survey, which is available in its entirety here:

• Average pay for project managers is expected to increase by 3.55% to $175k this year.

• Business analysts will receive their biggest pay packets for four years, with an average of $158k in total comp.

• Even junior programmers will receive a bonus of $48k this year.

• Senior developers, meanwhile, should expect a 7.8% increase in compensation, to $345k.

• Pay for technical architects has also reached a three-year high, with average comp expected to reach $241k.

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