If you’re an investment banker, private equity, or hedge fund professional feeling as though your personal finances are a bit of a mess despite your bonus increasing, then have no fear: you are in good company.
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Recent research from wealth management firm Investec shed some light on the issue. The firm noted that 85% of ultra-high net worth individuals (UHNWIs) expect “carry distributions, bonuses, dividends and business sale proceeds” to be a greater part of their income in the future.
This year isn’t just a one-off, either. Investec noted that half of UHNWIs in the past three years have observed the non-salary proportion of their income increase. A further 40% said that it had stayed the same, and just 10% said that the salary proportion decreased.
“This shift reflects a more uneven income environment,” said Investec private banker Emily Cvijan. The greater share of bonuses and carried interest income means that “income can become less predictable and more dependent on the timing of distributions, exits and other one-off events rather than regular salary cycles.”
Naturally, this makes cashflow much harder to manage. Bonuses come reliably, but aren’t a reliable number. That makes it difficult to plan around things like house purchases, Cvijan noted.
And, if you’re in private equity, carried interest is more of a “if”, rather than “when” these days. “It’s clearly harder to earn a lot of carried interest in private equity now,” a recruiter told us back in 2024, and it’s even harder still now – private equity exists have been dominated by secondaries, a scheme by which private equity firms sell their investments to each other rather than onwards.
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