Fees paid to hedge funds are booming. And so is pay for prime brokerage sales people.

“There’s a shortage of quality people,” says one headhunter working in the area. “Offers are quite astronomical, with some people being offered 100% more to move. One US bank recently hired a head of prime brokerage sales earning US$1.7m (870k) on a guarantee of US$6m.”

Banks’ enthusiasm for all things prime broking-related reflects the hefty fees on offer in the sector. A recent study by Dresdner Kleinwort suggested banks earned a huge 25bn globally in fees and interest payments from hedge funds in 2006.

There’s potential to earn more in future. With hedge funds increasingly going public, prime brokerage relationships can be leveraged to provide other investment banking services. “People who hold the relationships with hedge funds have suddenly become very valuable,” says the headhunter.

In January, Morgan Stanley poached David Cantillion, the European head of prime broking at Goldman Sachs. Merrill Lynch is understood to be creating new prime brokerage sales teams.

The 2006 salary survey from international search firm Options Group suggested prime broker pay rose by between 20% and 25% overall last year. Nevertheless, pay isn’t exactly dizzyingly high at the lower levels. London-based associates working in prime brokerage earned an average base salary of 51k last year, according to Options Group, plus a bonus of 125% to 150%. Vice presidents earned a base of around 75k, plus a bonus of between 240% and 320%.

If you’re inspired to move into prime brokerage, Chris Sevenoaks, a hedge fund and prime broking-focused consultant at recruitment firm Finance Professionals, says demand now is for people who have a consultative rather than a hard-nosed sales approach. According to Sevenoaks, favoured candidates are often working in operational or prime broker facing positions in hedge funds. Hedge fund risk managers can also make the move.