Commodity structurer, junior to mid level: How much am I worth?

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If you think your life is complicated, consider that of the commodity structurer. Not long ago, all he or she did was pull together a relatively straightforward hedging deal or package to protect the client from price volatility, usually comprising a single product, and then market it.

Those days are long gone. Indeed, now the very definition of a commodity structurer differs wildly from one institution to another with the one unifying factor being that all are basically packaging a risk management product.

"Structurers are now engaged in putting together extremely complex structures that are rarely just one transaction, can be multi-year and can comprise a different number of commodities," says Nick Mooney of Exchange Consulting.

Indeed, it can even go beyond commodities. Paul Chrispin of Principal Search says many of the structures put together by these individuals comprise almost everything bar the kitchen sink: certainly it is not usual to package commodities with foreign exchange or credit linked notes. Understandably, this can make finding qualified people a difficult task.

If you want to make your life more complicated, where to start? Although you don't exactly have to be a quant, you do need a good maths brain; obviously, you also need to have had a good education, work well with colleagues and be persuasive. Most important, say recruiters, is to be a deal-closer: it's no good structuring a wonderfully complex product to see it left, unwanted, on the shelf. This not only means you must know your stuff: you also need to know your clients.

"The real art of the role is coming up with structured solutions to client problems," says a former metals industry structurer turned recruiter. "For this, you must listen to their needs rather than just coming out with strategies."

So how much money do you get for your efforts? Mooney says structurers working for utilities get paid "a lot" whilst banks are increasingly keen to pay the right person whatever it takes. Other recruiters agree.

"Gas and power structurers are very much in demand from banking, energy trading and utility sectors in both London and continental Europe," says Jakob Bloch, energy recruiter at Commodity Appointments Ltd. "The blend of quantitative ability, product knowledge and commercial deal structure understanding in energy is very attractive."

At the junior to intermediate level, the role is more salaried than for a commodity trader, with bonuses forming a lesser proportion of the total package. This can work out for the best over time, however, especially during market downturns.

According to Bloch, juniors entering this area would be looking at base salaries, depending on quant ability, of between 35,000 and 50,000 with a bonus potential of up to 100%. Intermediate commodity and energy structurers would typically be on a base of around 80,000 with sometimes uncapped bonuses that could range from 100%-300%.

By contrast, Mooney says an individual with a few years experience is on around 100,000 base with bonus of maybe 100%, judged according to their performance over the year. Chrispin agrees, suggesting a base of more than 110,000 is unusual. However the more experience you build up, the greater the rewards, particularly at banks where structurers often have to start from scratch, unlike utilities and majors, which have a large amount of existing, or "warm", business.

Chrispin says that in a good year an experienced structurer, bringing in over 10m in business, could see total earnings of 1m, although more typically total remuneration is around 500,000. He adds that prospects for mid-level structurers with a good track record are good, whilst Mooney notes a big need for individuals to work as marketers, alongside commodity traders, to ensure that what is structured is sold effectively to clients.

Either way becoming a commodity structurer confirms that making your life more complex can pay off, big time.

Figures and commentary by Principal Search, Commodity Appointments and Exchange Consulting

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