Equities pay in London: who’s getting £600k? Who’s not?
Equities researchers are having a rough time. That doesn’t mean they can’t still earn some serious money.
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A recent salary survey from recruitment firm Octavius Finance showed that UK-based equity researchers working in investment banks can earn up to £540k ($717k), higher than their buy-side peers in asset management and hedge funds, whose compensation can cap out at around £297k ($394k) and £450k ($597k), respectively.
However, buy-side researchers have an option that bank researchers do not: transitioning from research to a portfolio manager (PM) role once they prove that their analysis of firms is reputable - and profitable.
Octavius says PMs at asset management firms can earn up to £660k ($876k). Hedge fund portfolio managers usually have pnl agreements with their employers that pay them a percentage of the profit they generate for the firm as a bonus – at big firms, this can reach the eight-figure mark. Very few people employed by a bank earn that, and they’re almost always senior executives.
Pay at banks specifically has been impacted quite heavily by European MiFID regulations. These have mandated that clients are obliged to pay banks separately for their investment research since 2018 - previously, access to research was bundled into the other service packages that the bank offered.
As it turns out, bank research wasn't sellable enough, generally, to be its own service. And fortunately for researchers, the UK’s Financial Conduct Authority admitted in a recent consultation paper that UK asset managers were negatively impacted by the rules, and proposed to reverse them.
This would take a while, however; banks have been cutting back on their research teams since the regulations came into effect, according to Mark Shaw of corporate law firm Pinsent Masons.
It’s also not unheard of for bank researchers to leave finance completely – or at least financial services firms. Their most popular destinations tend to be in investor relations, bigging up the companies they used to cover. Not every researcher recommends the route, however, mostly due to it being seen as a “selling out” of their profession, as one researcher told us last year.
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