A panel of headhunters gives its assessment of typical London pay packages. Base salary: 85,000. Bonus: around 40% but often pre-negotiable
Those who said you never have to worry about being unemployed if you have good maths skills were probably right. Glancing at what you could do in the City, the scope seems endless, from quant through derivatives structurer, and all pretty well paid. For those who prefer the quiet of an investment bank's middle office, becoming a price testing analyst might not be a bad career move. The huge majority of us have absolutely no idea what a price-testing analyst does with his or her day, but head-hunters are quite specific about what's required.
"Basic price-testing involves the independent assessment of the prices at which a portfolio of derivative transactions is priced at a particular moment, by comparing the prices at which the portfolio has been closed versus independently-sourced market data, from sources such as Reuters, Bloomberg or market consensus forums such as TOTEM," says Enda Cahill, a consultant at Imprint Search & Selection's banking team. Having done this, if they conclude that the portfolio is overly aggressive or conservative in how it has been marked, he or she will seek to adjust the trader's P&L.
Quite a straightforward role, you might think, but recruitment personnel suggest a good mix of talents is needed.
"A good analyst will usually have a degree in a technical subject from a 'redbrick' university, (have worked) three years within a Big 4 Practice firm and then spent the last 4-6 years within one or two investment banks, having developed their derivatives and pricing knowledge," says Noel Marshall, director of Finance Professionals. He adds that the ideal candidate will have begun to manage teams effectively and ideally had exposure to different derivative products as well as working closely with the risk teams.
But having a good head for figures and technicalities and a good career track-record as a qualified accountant is not all that is required. Cahill says the typical successful candidate will have excellent interpersonal and communication skills, which are seen as vital to liaising extensively with front office and senior product control / financial control management.
So assuming you have all these qualities, how much are you likely to be paid for your time and trouble? Jamie Risso-Gill of Robert Walters suggests an individual with four to six years of derivatives experience is looking at a base of between 70,000 - 100,000 topped by a bonus of between 30%-50%. Enda Cahill broadly agrees, adding that total compensation packages typically pan out somewhere between 100,000 - 150,000. Marshall concurs with the basic salary adding that guaranteed bonuses can be asked for, and obtained, by the right individual, for the simple reason that price testing analysts are a small but well paid bunch: banks wanting to poach an individual from a competitor will usually have to pay up.
"Potential employers are always looking for the 'needle in a haystack'; someone with strong pricing experience, good product knowledge and impeccable interpersonal skills," he says.
The best news is that the market for such individuals looks pretty solid: with derivatives still very much the flavour of the moment, qualified individuals who can perform and manage price testing can look forward to their pay profile rising accordingly.
Figures and commentary Robert Walters, Finance Professionals and Imprint plc.