Private equity firms face tough competition for talent in the UK

Current and future earnings are influencing people joining the workforce

Top three functions in financial services against which private equity firms compete to attract entry-level investment analyst and associate roles

Comparing market median compensation levels across investment-focused roles

What this comparison reveals

• Private equity tends to pay marginally higher base salaries at analyst level.
• Equities and fixed income offer higher bonus levels than private equity, resulting in comparatively higher actual total annual compensation.
• There can be more variation in year-on-year bonuses across investment banking, equities and fixed income. Significant bonuses are expected when the market performs well.
• When carried interest is factored in (typically offered at around associate levels onwards), private equity pay can outpace investment banking.
• Top talent considers both immediate pay and future earnings potential when considering where to focus their careers.

Certain infrastructure and operations roles are also challenging to source

The private equity industry varies in its approach to annual base salary for cross-industry roles, potentially negatively impacting attraction and retention efforts in key areas.

Our insights on this data

• There is much variation in pay competitiveness for key functions, when comparing private equity to the broader financial services UK sector.
• Information Technology presents a particularly fierce competition for talent. As more organisations move through digital transformation journeys, this will be an area for private equity firms to watch.

How UK’s private equity firms can compete in the race for talent

• Evaluate the current workforce to determine opportunities for improvements in talent attraction and retention.
• Leverage timely, credible market data to make compensation recommendations that are both competitive and defensible.
• Redesign employment and compensation practices based on workforce needs as well as the wider market backdrop to maximise compensation spend.

*Sources: 
2022 WTW Financial Services and Private Equity Compensation Surveys – United Kingdom 
2022 WTW European Carried Interest Report