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Jane Street vs Citadel vs Two Sigma vs HRT
Salary Negotiation
October 15, 2022
Sameer Siddiqi
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Lead Negotiator @ Rora; 100+ negotiations completed

Quant Hedge Fund Negotiations - Citadel, Jane Street, Two Sigma

How does compensation and career progression compare at a quant hedge fund vs. FAANG? What does a Jane Street salary or PDT salary look like and how much should you expect from a HRT bonus in year 1 vs. year 2? Is a quant hedge fund negotiation even possible when your first offer is higher than all your other offers? What does a normal PDT negotiation look like? In the article below, we aim to answer these questions from our experience across thousands of tech negotiations, including many QHF negotiations. The goal is to help you get the best possible offer at a top tier quant hedge fund.

If getting the optimal outcome is your goal, you can sign up below to talk with an expert on our negotiation team.

Table of Contents

Technical Roles

Before talking about the salary and the salary negotiation processes, it’s important to briefly level-set on which roles we are focusing on in this article. As expected, most hedge funds don’t hire for as wide of a range of positions as a tech company like Facebook would. There are some exceptions such as Jane Street TPM roles and Two Sigma Data Science positions. That said, this article will focus on two main roles:

  1. Quant researchers
  2. Software engineers / developers

Many firms have developed an annoying habit of creating their own titles for these roles, but you should be able to map them back to these two core areas.

Compensation Structure at Quant Hedge Funds

Compensation at a quant hedge fund looks a little different when compared to FAANG companies. Hence, before receiving an offer, you need to understand the basic components. A typical offer contains the following elements:

  1. Base Salary
  2. Signing Bonus
  3. Annual Bonus (also called performance bonus)

Base salary is essentially what you would expect, but signing bonuses and annual bonuses have more nuances.

Signing Bonus

This is a one-time bonus that is used to incentivize you to sign an offer. It's not always included in the initial offer and the policies around this are company specific. For instance, HRT spreads the signing bonus over 2 years and pays it out quarterly. It’s important to read your contract closely and look for “clawback periods” and “payout dates”.

Annual Bonus

Annual bonuses are one of the most important components of quant hedge fund compensation. To reduce the risk associated with joining, most hedge funds offer a minimum guaranteed bonus for the first year. It’s worth noting that this is just the minimum, and it’s still possible to secure a higher bonus in year 1. One of the most common questions we receive is “what will happen to my bonus after year 1”. For most people, we’ve actually seen that annual bonuses continue to rise after year 1 (caveat: we’ve had quite the bull market through to 2021). The truth at certain companies (e.g. Citadel) is that either your Citadel bonus is going to increase or you are going to get fired. Of course if there is a prolonged market downturn and hedge fund underperformance, there is a reasonable chance bonuses across the board decrease.

Note: Each quant hedge fund's compensation structure may vary slightly, but a typical job offer for a quant researcher or developer role should contain the components mentioned above. If you have received an offer and it does not contain certain elements, it is worth looking into the company policies specifically or talking to an expert on our negotiation team.

Hedge Fund vs. FAANG Pay Comparison

Given the unique compensation structures, there are two initial differences to keep in mind:

  1. Hedge funds provide the entire salary in cash as opposed to tech companies where often 1/3 to 1/2 of your compensation will be in the form of equity (most commonly RSUs). This is obviously higher risk from a guaranteed comp perspective (early 2022 has demonstrated that), but given the flexibility to leave a poorly performing company, 4-year RSU grants give you a “call option” on above market compensation rates if the stock appreciates and you choose to stay at the company. Additionally, some big tech companies vest RSUs monthly, and you can setup auto-diversification plans that heavily mitigate your risk.
  2. Most hedge funds offer a guaranteed minimum bonus amount for the first year (e.g. 100k for an entry-level quant researcher in their first year). This is not the case at FAANG companies. Performance bonuses in tech are never guaranteed although certain companies like Google are known to have a very high percentage of employees hit their target bonus. However, after year 1, your bonus at a hedge fund depends on the company and individual performance, and is generally considered to be less secure than a big tech bonus. A hedge fund bonus from the second year onwards is expected to increase though the size of increase varies substantially by firm and individual. The numbers are much less quantifiable vs. FAANG where you can map out the increase associated with each level and performance-review rating. Because of that, it’s always a good idea to take the time to ask your recruiter questions about the expected bonus as they will be able to give you specific insights into the targets and sometimes what % of people get their target bonus.

Now, let’s compare the total comp in both industries. Hedge funds have a reputation for paying a lot more than tech companies especially for quant researcher roles. However, tech salaries have sky-rocketed in 2022 and the gap appears to be shrinking. Let’s compare a Facebook E4 and a Two Sigma L3 salary (note: Two Sigma isn’t the highest paying shop but does pay well and raised comp bands at the end of 2021). The top of the band for Facebook E4 in the New York area would be around $360k ($190K base, $100K equity, 15% bonus, $75K signing) while at Two Sigma a top of band L3 offer would be around $375k ($200K base, $150K bonus target, $100K signing). The gap is larger for new grads where we’ve seen Citadel new grad offers clear $400K vs. at big tech companies it is rare to see new grad offers clear $300K (note: this is for undergrad/masters, phd typically gets L4-equivalent level and therefore higher comp). The comparison between hedge funds and FAANG starts to break down at senior and staff levels (i.e. VP hedge fund levels) because the performance bonus is such a large component of comp at a QHF and has a very wide payout range.

It's also worth briefly mentioning non-compensation factors. While QHFs aren’t nearly as bad as other areas in finance, the work life balance is still on average worse than tech. There are exceptions to the rule at the company level (e.g. Amazon is a grind and Two Sigma pitches it’s WLB) and also the team-level (some teams at Citadel actually do have decent WLB).

In addition to work-life balance, careers often come up as a factor when deciding between QHF and FAANG, as many software engineers complain about the skill advancement and career progression offered at hedge funds.

Hedge Fund Career Paths

When talking about career paths, there are a few things to consider: promotions within a company, switching industries, switching roles, etc. Industry switching (e.g. QHF to big tech) is a pretty easy transition for junior to mid-level positions. Roles changes on the other hand are not easy. For example, the switch from developer/software engineer to quant researcher is challenging, which makes sense given the work is quite different.

Promotions are an important consideration and certainly one of the drawback areas associated with a hedge fund career. Since these companies are growing slower, there are fewer senior roles opening each year. This means promotions get progressively harder. The career path also does depend on your role. As a quant researcher, the goal is to be responsible for a strategy/pnl and be held accountable to outcomes (at this level you’ll be compensated based on performance and pay can be astronomical). For quant researchers it’s more important to have ownership of a strategy vs. work at a top tier firm (though having both is ideal of course). On the developer side, you can progress as an IC or eventually become a manager. Pay is typically better at the top tier funds and the goal is usually to transition to one of them.

Best Quant Hedge Funds

There is a never-ending debate on whether hedge fund A is better than hedge fund B, and we certainly aren’t going to resolve that age-old question in this article. Instead, the goal of this section is to share a few companies that are actively hiring and pay near top of market. This is by no means a comprehensive list, but it’s a good starting point.

Citadel/Citadel Securities is always near the top of the list for highest paying quant hedge funds that hire a large number of researchers and developers each year. The company unfortunately has a reputation for bad WLB.

Two Sigma is another company that hires lots of QRs and SWEs but is pretty much the opposite end of the spectrum from Citadel. Two Sigma has gone all in on the WLB + positive culture pitch and has chosen not to compete as heavily on comp.

Hudson River Trading (HRT) was giving out some huge offers a few years ago, but as the firm has expanded, HRT salary bands have normalized. HRT offers are now mid-range when compared to other top-tier hedge funds (i.e. this still means they are very high!). However, HRT does have a deferred bonus structure which is less ideal compared to other top tier funds.

PDT Partners is less known in the tech world but it’s certainly a top tier fund. It’s started hiring a larger number of software engineers recently and is one of the highest paying firms.

Jane Street is another well known name with an excellent reputation. Pretty comparable to HRT in terms of compensation, although the Jane Street signing bonus is typically lower.

Again, there are many other excellent funds, but the ones listed above have been most actively hiring lately. On the flip side, RenTech and TGS are of course exceptional funds and have top tier comp packages, but they have fewer open roles.

Hedge Fund Negotiation Process

A Citadel salary negotiation process isn’t too dissimilar from FAANG negotiations, and that’s generally true across the QHF industry. Negotiations are fundamentally about creating leverage, and a company has to believe that you as a “rational actor” would choose another offer over their offer. If you simply “want X” or “saw online that people make $Y” it’s not going to carry much weight. To negotiate well you need to 1) deeply understand the compensation bands 2) prepare a strategy that optimally uses the specific point of leverage in your situation 3) understand company-specific rules 4) prepare for the actual conversations (e.g. receiving offer, counter offer, etc.). We cover some of these topics on our blog – for example, I’d recommend reading about How to Prepare Negotiation Scripts.

That said, here are a few important points and differences for QHF negotiations vs FAANG:

  • At junior levels, signing bonuses are much higher vs big tech. This does depend on the company, but it’s possible to push junior-level signing bonuses above $150K (Citadel signing bonuses are particularly strong).
  • In hedge fund negotiations you absolutely should negotiate your performance bonus targets. In FAANG negotiations this is a rookie mistake because those target values aren’t movable.
  • Certain companies are more willing to negotiate than others (this is true in big tech as well). For example, HRT negotiations are easier at the new grad level vs. a Jane Street offer negotiation.
  • Companies that focus on non-comp value props won't match other offers. You would be hard pressed during a Two Sigma salary negotiation to get them to match a Citadel offer.
  • Many hedge funds press candidates for initial expectations. It's usually best to deflect this, but if you do share, make sure you've already mapped out our your strategy and chosen your number based on the leverage you have (this is particularly important because the largest increase happens on the first round of negotiation).

Given the large number of small firms in the industry, it's impossible to cover many of the important company-specific points in this article. If you want support to ensure you don't leave any money on the table, book a call with our negotiation team.

Can I Lose my Hedge Fund Offer by Negotiating?

This is by far the number 1 question Rora’s career partners are asked. It is a very common and valid fear, especially considering today’s volatile market conditions. But based on our data, what’s the actual probability that hedge fund companies would decide to pull the offer?

First, let’s discuss what benefits companies like Citadel, Jane Street, and Two Sigma would get from rescinding your offer. The primary reason a hiring manager would elect to rescind an offer would be a fear of liability with their intended hire - i.e., this hire may cause a scandal, this hire will in no way be able to perform their duties, this hire will be detrimental to the company, etc. Aside from that, when an offer has been extended, they have already invested a substantial amount of time and money into the candidate they’re giving an offer to, and should have a solid understanding of how this candidate will perform in the role. It would be a net loss for the company to go through all those interviews, conversations, and putting together the offer to then decide that they want to cut ties with the candidate – this is a risk they try to mitigate before giving an offer. 

Even in this economy, we have seen clients get increases in their offers from companies of all sizes by making respectful and well-reasoned requests. A company is very unlikely to pull the offer based on negotiation - in our experience across thousands of negotiations, we’ve seen this happen less than 0.5% of the time. And that includes companies that are on hiring slowdown/freezes right now.

Now, there is a fundamental difference between getting an offer rescinded and losing the offer due to headcount. A headcount loss is solely based on the state of the hedge fund and the necessity of the role within the team. This isn’t common but can occasionally happen if needs at the company shift – and is more common with earlier-stage startups. It does not reflect your interview performance or skill level, and oftentimes companies will try to keep in touch with you and share other opportunities once headcount opens up. If your offer was rescinded, the company would not have any interest in keeping you warm. 

Regardless of the low likelihood of getting an offer rescinded, we know that this is a very common fear – and one that often holds candidates back from negotiating! To help mitigate the risk (and increase your confidence while negotiating) - follow these dos and don’ts to lower the probability of your offer getting rescinded:

  1. Do keep it professional - avoid getting into politics or making jokes that may be poorly received and make your hiring manager think you might be a liability to the company
  2. Do give justification and reasoning behind your ask for increased compensation – this could be based on your market value, another opportunity you have, specific expertise you bring to the table, or the strong relationship you’ve built with your hiring manager
  3. Do your first compensation ask over a phone call - in most cases we see a higher rate of success and understanding when the first ask is done over a call versus an email
  4. Do demonstrate to your hiring manager that you’re a solid candidate who would be a strong hire by creating and collaborating on an impact roadmap (outlining your 30 day, 60 day, and 90 day goals for getting started in your new role and your understanding of the priorities for this position)
  5. Do your best to understand the necessity of the role on this team - How critical is it? How long has the role been open for? This can help you determine the likelihood of the headcount being lost – and also the leverage you may have in negotiating
Sameer Siddiqi
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Lead Negotiator @ Rora; 100+ negotiations completed

Sameer is a Lead Negotiator at Rora where helps individuals understand their market value and supports them during the negotiation process. Sameer has done over 400 negotiations and has been negotiating professionally for 2 years.

Previously - Sameer worked in Venture Capital in North America and multiple start-ups in the Middle East, where he frequently used financial modelling and operational analytics to negotiate equity with investors.

As a negotiator, Sameer has assisted several clients in increasing their offers by millions of dollars, and has helped hundreds of talented candidates advocate to receive their appropriate compensation and seniority.

Over 1000 individuals have used Rora to negotiate more than $10M in pay increases at companies like Amazon, Google, Meta, hundreds of startups, as well as consulting firms such as Vanguard, Cornerstone, BCG, Bain, and McKinsey. Their work has been featured in Forbes, ABC News, The TODAY Show, and theSkimm.

1:1 Salary Negotiation Support

Negotiation strategy

Step 1 is defining the strategy, which often starts by helping you create leverage for your negotiation (e.g. setting up conversations with FAANG recruiters).

Negotiation anchor number

Step 2 we decide on anchor numbers and target numbers with the goal of securing a top of band offer, based on our internal verified data sets.

Negotiation execution plan

Step 3 we create custom scripts for each of your calls, practice multiple 1:1 mock negotiations, and join your recruiter calls to guide you via chat.

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