Ahhhh....bonus season. What used to be the best time of year has become a stressful nightmare since 2008. Bonus pools have been steadily shrinking, and black swan events like the rogue trader at UBS even have some banks rolling a donut. What's a banker to do? If you're a senior guy at Jeffries, apparently you threaten a walkout if your bonus isn't up to snuff.
I've actually seen this happen once in my career, and it was effective. But in order for it to work, the entire office had to walk out, and it was the #3 office in the firm. The walkout so hobbled the firm that the firm was acquired by a competitor less than a year later. But do firms today take the threat seriously? I doubt it. Still, if you're brave enough to make some waves before the bonus numbers are released, it might work in your favor.
“The really successful battles come before the pie is cut up, when you convince the boss to move the knife and give you a wider slice,” says Alan Sklover, a compensation lawyer who represents CEOs and bankers. “Banks don’t care about the reward, they care about retention. If you’re good and you make them money, they’ll do almost anything to keep you.”
I think the broader and more interesting question is how much longer will the bonus system be in place? Seriously. How long before banking, at least at the junior levels, becomes a straight salaried gig? We all know it's headed that way.
I always worked in P&L-driven capacities, so you pretty much knew what you were getting and there were no real surprises. I can't imagine what it would be like to work in an area of the bank where bonus comp was so much more subjective and I had to worry about some back office mongoloid going rogue and wiping out the entire bonus pool. I guess that's reason #1,357 that I'm glad I got out when I did.
So what do you guys think about walking out or suing the firm over a shitty bonus? Should you just be so happy to have a job that you shut up and take it? How much longer do you think the bonus system will even be in place? What would you do if you rolled the dreaded donut because someone else at your firm screwed the pooch?
I fully anticipate analyst and perhaps associate IBD positions moving to a completely salaried system within a few years. No one willingly signs up for this for the salary alone, and seeing how the bonus situation has played out the past three years, I would not be surprised to see some pushback from the bankers.
This sounds terrible...I hope that what A Posse Ad Esse is suggesting does not come true. I will be starting FT as an analyst in July and I would be pretty bummed if there were no bonuses in a year or so. What do you all think could turn the situation around?
I remember speaking with an alum who was a first year at Lehman in '07. His eyes just lit up, he said it was sick having all-in first year comp just under $200k, but sucked watching it get halved for the following two years. That's the environment we're in. At first, it was just market performance that was curtailing the bonus pool. Now, you have regulation as well as public sentiment stacking on top of dismal performance, and that trifecta is shaping things differently than ever before.
Performance may pick up if the economy ever strengthens (unlikely in the short term, and that's an entirely separate debate), but the other two factors go hand in hand. Public sentiment is leading policy makers to enact tougher measures. Once in the spotlight, it's hard to ever see bankers' compensation soaring ever again.
the economy doing well would take care of that.
Between increased regulation and ever-tightening margins, it's all but a done deal. Also, first year all-in comp is down about 35% since 2007 and I don't see the trend reversing. If the job market stays the same, don't be surprised to see college seniors lining up for a $75,000 salary - all in - in the next few years.
You guys have to remember that I've already personally witnessed the disappearance of one sector of the banking market and all the signs are there that this is going to happen to at least the lower ranks of investment bankers and research analysts over the next decade.
Stockbrokers went from an average annual income of $120,000 in 1993 to $30,000 today. And no one would have ever thought it was possible in 1993.
If comp dropped to $75K all-in, do you think analysts would work less hours? I can't imagine anyone working 90-100 hrs all in for 75K in salary with no bonus potential.
what else is an undergrad going to do that makes 75k? It wasn't that long ago that banking analysts made 40k base. I started in 2008 and basically made that first year.
This is totally dependent upon the health of the economy. If things start to really pick up the rules will be pushed aside and forgotten. Salaries will have to be pushed north of 100k for anyone to consider putting in the time required for IBD. Once congress swings to a conservative majority after the comming election the Dod Frack insanity will be amended to be less suffocating and things will improve on a regualtion front. Just have to get rid of the idiots in charge to get the economy back on the rail road tracks and out of the ditch.
Very interesting. Three years ago, I thought this could never happen, but I guess you have to have been around the block a few times to see the writing on the wall.
Banks need still top talent, so even if the bonus goes, the fixed salary would top the grad average, imo.
Other than that, what do you think would be the most cash-filled sectors?
Healthcare, technology, and healthcare technology.
With all the factors people have been mentioning (economy, new laws, etc.) I think this is really going to create a chance for some price discovery in respect to the cost of labor at banks. For the past decade the major players have been raising salaries and bonuses to attract the top talent not worrying if they were overspending because they had to beat out the bank next door. Now with all the turmoil it gives them a great excuse to systematically lower their costs and see what employees will take.
Maybe there are some college grads out there that will do analyst work for $75k. They may not be the best of the best, but if the banks don't see a major hit to their bottom line what's the incentive to bring bonuses back?
Excel is Excel. You certainly don't need a degree to be an expert.
Don't shoot the messenger.
You have to align interests. If you don't align comp with performance then the bankers will not have the same drive.
On the analyst side, I think you could pay them anything. We were all lemmings coming out of college and dream about the life of an MD. It really doesn't matter what you pull in the first few years out of school. If you do it right, it will all be dwarfed by your future comp.
Sucks to admit it but it's an overpaid industry so it is what it is. Bankers could cry about working "100 hours a week" but so do other people in the world and in some countries they make less than $15,000 a year. Life's not fair. Too much of Wall Street is driven by bonuses. Nothing wrong with performance perks but sometimes it encourages perverse short-term actions. A less volatile, consistent, salary should be at the forefront.
Overall compensation reduction is good because it probably saves a few of these jobs from eventually being outsourced abroad. You think that some Indian guy from one of India's top universities couldn't do a better job working on spreadsheets... for $30k a year? Wonder if he would even care about a bonus.
i'm wondering how long it'll be before all 'banking' is outsourced. the fact of the matter is, is that being an excel wiz isn't really too difficult and i'm surprised it hasn't been so already.
As I've been saying for the past two years, this is a shrinking industry. And it's going to keep shrinking for a few more decades.
It's good to keep sober, moderate ambitions and maintain transferable skills.
"If comp dropped to $75K all-in, do you think analysts would work less hours? I can't imagine anyone working 90-100 hrs all in for 75K in salary with no bonus potential."
Sure they would. In the early 2000's, analyst bases were 55k and bonuses were 15-30k. Lots of guys put up 100 hour weeks, and made 75 all in.
Ultimately, people do this job as an analyst for what it leads to. There's no reason 120k all in is the right price, but 75k would be the wrong price. There are only a handful of banks and they price their employees like a cartel would. Kids would line up for 75k (still decent money) and the chance to make more down the road, get into a good grad school or what have you. Relatively few kids on the banking side go into banking to make a career of it. Trading is different but only somewhat.
Blodget and Task pile on:
I dont think the bonus structure is going to change. Its not a matter of someone actually working 100 hours for 75k, but the person's drive and ambition being hit as a result of no bonus. The incentive system is necessary to vie for more deals and overall emloyee retention.
If for some reason, the bonus structure does dissolve and base salary stays the same...firms will see a mass exodus of incoming talent into other fields.
This article also doenst seem applicable to S&T...
Its BS that we get smaller bonuses while welfare bums get more money every year.
You missed my point, they are part of a voting group that supports regulation of Wall Street. It is BS that they demand we get paid less while they get more.
!
"But do firms today take the threat seriously? I doubt it."
Why wouldn't the take it seriously today? Explain
Simple supply and demand. There are far greater numbers of people who want to be bankers than there are active bankers. Junior bankers can be replaced in 10 minutes. High-level defections look bad, but generally don't do any lasting damage to a bank. Besides, the level of coordination required to achieve a mass defection that would actually hurt the bank's bottom line is really, really difficult to pull off.
supply and demand works only at the entry point. a third year is so much more useful than a first year that he more than pays for himself. you could argue VPs are the entry point for client development type roles, which is why they are vulnerable.
given the way the boutiques are doing, the threat of a group going it alone Moelis/UBS LA or Wasserstein/Perella style. Although there would have a be a bigger conflict there than not getting paid enough this year, but certainly if that's a symptom of under-resourcing the group or not caring about the business it could well be a tipping point. all theoretical speculation on my part I've never been within 100 miles of this type of thing in my life.
I think there will be less people working in the industry, but the compensation will keep the current structure and will keep being high. This has happened 2 or 3 times since the 80s, this one is just bigger but things will eventually pick up.
Banks need to be bleeded, so much people working in an industry that shouldn't be as big as it is today Yes we need bankers, no we don't need THAT much banker, even after the 200k layoff.
If bankers work 100 hour weeks but their companies make mediocre profits then it doesn't matter how hard they work... no bonus!
Some bankers worked exceptionally hard in 2007 and they nearly brought down the global financial system... no bonus!
Why are people becoming emotional about less bonuses if the economy remains weak? Banks'' profitability isn't what it used to be and it probably wouldn't be a bad idea for some IBs to save some cash for a rainy day. It's companies such as GE and JNJ whose Treasuries are flush with cash but they are not putting their capital to use. And for the few banks that have excess cash too the FED should charge them ~1% for holding their excess reserves (Swedish model).
Try saying this shit after you actually work 100 hours a week idiot
Hedge fund managers consistently work 100 hours and if their performance is not up to par then they don't receive performance fees... only collect the management fee. Why should bankers receive more than a salary if the company's bottom line is mediocre?
Working hard does not ensure $.... performance does. Only an idiot would subsidize underperformers... well maybe also the government.
A lot of firms are already outsourcing their analyst functions. This industry is shrinking rapidly, but there are so many kids out there dying to be analysts, I'm sure there are a ton of people in the mkt that will take less compensation to follow their dreams of being a banker BSD......despite the writing on the wall....
dont bailout dudes and let them compensate their people how they feel is necessary to retain talent problem solved
"Besides, the level of coordination required to achieve a mass defection that would actually hurt the bank's bottom line is really, really difficult to pull off."
Put it like this. Want to get into a frat without having to go through pledging? Convince the entire pledge class to deactivate. They'll wave you in. Easier said than done
Is this the end of the service sector economy as we know it? Less bank activity so less bankers, lawyers, and accountants?
Lets not forget doctors...
http://money.cnn.com/2012/01/05/smallbusiness/doctors_broke/
All professions are taking a hit. The Economy has to get better eventually because, honestly, our country can't continue to run like this.
I don't know why people are freaking out about this shit. If anything, this will be a big plus for private firms. Being public is a pain in the ass. Smaller, more agile and private investment banks, without commercial arms, will be able to snap up talent and make money. Larger banks with the anchor of commercial lending and all the bullshit regulation that comes with it will start looking like a cancer. What good is a juicy balance sheet if it comes with so many regulations and oversight that you cannot move.
People go into banking because there is the opportunity for a lucrative career. No matter what happens to banking salaries there has to be solid non banking exit ops of people wont do it. If PE/VC/HF dries up and banking salaries from to 75K all in, no one will do it. Why would you? Go work F500 or CB and make 50-60K and work a 9-5.
I also think you will see a growth in non NYC finance. NYC has such a high cost of doing business and as banker salaries decline, more people will look at Boston, Philly, Chicago, Milwaukee, Cleveland, Pittsburgh, Atlanta, etc as places to work. Your comp will get you a lot more in those cities and you will be able to fly under the radar of all the NYC Wall Street hate.
Ultimately, all this banker regulation and anti wall street will be a Pyrrhic victory for "main street". A juicy bonus to a banker is even more juicy to the tax man and economy. NYC's budget coffers are not filled by guys working a 9-5. The Federal government is not funded by the poor and boo hoo disadvantaged. Fuck 'em.
i dont see banker compensation to return to 2006 2007 levels, but the industry isn't going away. Banks always need industry bankers to maintain the corporate relationship to secure deals or companies always need M&A or restructuring bankers to guide them through the process.
That being said, I can see more upper guys without meaningful relationships to get axed soon in the next few years (VP who cannot make it to MD, or MD who can't generate enough revenues). Guys with only "product expertise" is going to get hit the hardest because when it's all said and done, it's the industry bankers who bring in the money.
Also, the junior component of banking is only getting outsourced more to India or China in the future. Who needs to pay three first year analysts over 6 digits when you can hire 20 indian analysts and one US analyst with the same money?
please don't kill for asking this but during bonus time, how are bonuses paid.
for example is it, picking up a check for "10K" from work, or is the "10k" direct deposited into your account?
But to answer what I think might be your real question, if you're not working the day the bonuses are actually paid, they don't owe you a dime.
Thanks.
Seriously, if you're not there during the time bonuses are handed out, are you really left empty handed? damn
I would do it for $55k in a heartbeat. I bet others would as well.
Bullshit... you say that because you don't fucking do it now. Doing it for $55k is asinine when you can do jack shit and make $55k a year.
Agreed. I'm kind of surprised by how many similar comments to this there have been. Kids on this board are incredibly delusional sometimes.
I dont work in banking (yet), but from the knowledge I do have it seems it would make more sense for banks to drop analyst pay and not be so hyper-selective with their hiring. You dont need the capacity to understand quantum physics to know your way around an excel spreadsheet, as was mentioned. If you can pay less for competent student good school, instead of one from and elite school, that do comparable work why wouldnt you? 75k is still a really good entry-level salary, and as a few people mentioned, people choose the career for the pay awarded to those in higher management and just try to tough out the early years.
I also dont understand why they dont just higher more people if you need to work 100 hours a week, which also seems suspect. Is it like a "pay you dues" thing or are these hours really necessary and contribute to the business. Again, ive never been on the inside of the business, only read a few books and browsed this site, so forgive me if my comments seem ignorant.
The hours are often out of necessity but not always. What most outsiders don't realize is that hiring more analysts wouldn't cut the hours down. The hours are a byproduct of "bankers being bankers." Imagine, if you will, every meeting being a final exam or final term paper, and senior bankers are typical students. Maybe they don't procrastinate, but they will tinker the shit out of their book right up until the last possible second ALWAYS. Without fail. Outsourcing does not eliminate this, nor does hiring more analysts. Hiring more analysts could improve the quality of the work due to less fatigue and human error due to lack of sleep, but it will not solve the root of the issue.
It's similar to Peter Gibbons in Office Space when he's talking to the Bobs. "I've got 8 different bosses Bob.... 8. So when I mess up, I have to hear about it from 8 different people." THAT's BANKING. Except even if you don't mess it up, people change it. You may think the cliches are made up, but everything you've heard about obnoxious over revision, font changes, text changes and the end product looking almost identical to previous versions is true.
This may be a naive question, but I don't see why the root of the issue you point out (the insane bureaucracy and the dilatory actions of senior bankers) cannot be changed. Tons of other industries that with time-sensitive operations (much more complex than putting together a pitch book) manage just fine. How is it that a business as large and lucrative as ibanking isn't subject to the same pressures of free enterprise that promote tinkering and efficiency?
Making $55k your first two years pales in comparison to the earnings potential for the next 20, no?
Listen dude, I know you think you're super excited to do this but that's because you haven't experienced a 125 hour week yet, and haven't been constantly called out for shit that isn't your fault or for forgetting to update one footnote in a 100 page book.. You're not going to last 20 years in this industry if you have to take all this shit and don't get the satisfaction of some decent comp. I can't explain to you how fucking hard this job is and sometimes the only thing that keeps you going is the hope that you're going to get paid out well at the end. It's also another thing entirely to go in knowing you're going to get fucked on comp. Completely different to work your fucking ass off and close deals and then get fucked on comp unexpectedly. I appreciate your enthusiasm but you guys really just have no fucking clue what this is like. Just to give you some context, my group is having a fucking phenomenal year and has been on some front page deals. We've surpassed last year's earned revenue by a healthy amount and it really sucks to have put so much blood,sweat, and tears into something and then to have the rug pulled out from under you. You just don't understand until you go through it. You can say the exit opps are worth $55k a year, and they probably are, but I would have a hard time getting through 2 years of this job at $55k just for the chance at a buyside gig. By the time you get there most people are so disenchanted they are just doing it because it's slightly different, slightly better hours, and slightly better pay.
I may be a bit bitter right now, but it's a byproduct of the fact that I haven't slept, my life is getting crushed by our client, and the outcome of this deal is very much in question. You go through an emotional roller coaster in this job and one of the things that helps you get through the lows is the light at the end of the tunnel. Don't underestimate the motivating factor of seeing a sizeable check hit your bank account.
What a whiny baby. Feel free to go jump out a window.
For those who say that Junior bankers will be outsourced and you only need Senior Bankers to bring the deals, there's something I don't get. How do you make new Senior Bankers?
BTW I agree with Rufiolove that it's very different to go in knowing that you are going to make 55k compared to go in thinking you are going to make 100k and then getting a donut as bonus. And for the performance guy, IBD bonuses don't reflect individual or group performance, they reflect firm performance, so your argument is flawed.
Someone has to run the firm when they retire. The point I was trying to make is that if you outsource everything at the Junior level, the industry is unsustainable on the long term, so I don't get people saying that there will still be a banking industry but junior work will be outsourced.
A lot of banks outsource crap now as it is. I've seen CS indian analysts and some PE shops just have senior guys with relationships and outsource the crap work. Not going to eliminate everyone, but some reduction.
Guys need to relax. Bankers have always made more money than the average person. Hence why everyone hates people in finance. This isn't going to change, just shift around. As long as people are greedy and we have interest rates and money, people will work with them and make money for themselves. Relax people.
Yup. Well, that is, if you're not employed that day, you don't get your bonus. Obviously, if you're on vacation, they'll DD it or hold the check.
^^^ Of course, in an egregious enough situation, that's when you find a good lawyer.
Or, if you are a minority, a woman, or over age 50, you've just hit the jackpot.
Only a fanboi would want to do banking at 55K a year. The argument that the money later will be good is false since PE comp and all that is based off banker comp. If bankers are slaving for 55K you are not going to be getting 200K in PE. Everything will decline with the market.
For 55K I will work in a smaller city as a credit analyst at a bank and do the 9-5. Many others will do the same. Finance is desirable only because of the higher than average salary and bonus. The work is tedious and inconsequential.
Thank you for being a voice of reason here ANT.... notacunt can go eat a dick... nice ironic nickname idiot
Whatever happened to the 3-6-3 banking business model?
Pay depositors 3%, charge borrowers 6%, and be on the golf course by 3.
Google, IBM, Amazon, Microsoft, Expedia are all offering high five/low six figure salaries for starting developer roles. And they work 40 hours/week.
BP/Shell/Conoco are paying newly minted oilfield engineers and geologists more than starting bankers were making in 2006. That's how most of their CEOs got their starts.
1.) Go to a cheap state school. 2.) Study engineering. (or science) 3.) Profit.
So yes, there are plenty of places for folks to go to earn more than $75K/year.
Friends of mine that did engineering I think did at least an extra year and received a masters. I was referring to undergrads, but I will concede the point that those with programming or engineering math heavy degrees can get high paying engineering jobs with a four year degree. I do have a cousin at amazon with just an undergrad, but it was from a school heavily weighted in engineering. I might as well have asked the question with the qualification 'without an engineering degree' or more specifically 'undergrads with an interest in finance or economics.'
I could have over generalized though. I suppose if we add up all the misc. jobs like pharma or medical device sales, junior exec. training programs, or others maybe there are more 75k jobs recent 4 year grads can get today than I gave credit for. However, i just remember most of the jobs available after graduation didn't pay much more than 50k.
Nor did any of them require you to work much more than 40 hours per week.
Regards
"please don't kill for asking this but during bonus time, how are bonuses paid. for example is it, picking up a check for "10K" from work, or is the "10k" direct deposited into your account? "
it's direct deposited like any regular paycheck
Just FYI, $55k per year is $11 / hr PRE TAX... As ANT mentioned you wouldn't have buyside pay days like you are envisioning if comp dropped that low.
Since ANT and Illini and a few other posters here actually have experience, I can appreciate their sentiments about how they have seen down years or that they have received similar shitty comp, but to be honest this IS a bad sign for the street, and to all you junior undergrads out there with fucking hard-ons who keep saying you would do this for $55k a year, I HOPE you get a legitimate taste of what you're in for...
To the guy that called me a whiny baby, you have one post on this site so shut the fuck up... unless you know what it's like to work these kind of hours your opinion has absolutely NO credence. You're totally right though, the ~$100 Million dollar fee event deal I'm currently working on, of which a shit ton of senior bankers are going to cash in on and potentially retire but will not be reflected in my comp I have no right to be frustrated about. I should just be "Happy to have the experience." Go fellate a curling iron... get real, seriously.
I have no problem working hard but to quote Ben Affleck, "People come and work for this firm for one reason, to become filthy rich. That's it. We're not here to make friends. We're not saving the fucking manatees, here guys." You want to get indignant about people getting overpaid? How about people who make $60 a year and do about 20 minutes of actual work in a day and collect full benefits... Get serious.
This number seems off. Are you calculating based off a fixed salary of 55k a year and assuming an 100-hour week? Otherwise, for simplicity:
250 workdays x 9 hours a day x $11 an hour = $24,750 before any deductions
Also, out of ~50 work weeks, how many do you actually work 100 hours? I feel like the 100-hour claims are well exaggerated. Big difference between three 100-hour weeks and twenty 100-hour weeks.
Chinese sweatshop workers consistently work 100 hour-weeks and in brutal conditions. These people make less than 75 cents an hour. Perhaps bankers don't have it too bad.
If people say they will work for $55 then its pointless to discredit them just because they haven't experienced the rigor yet. It just really proves that banker salaries will face an inevitable decline. The supply of skilled labor is high and I bet that young people would be more than willing to work grueling hours because of the rosier expectations of their future with the company/industry.
I don't know where you get this whole notion that the 100 hour week is a mythical thing that never happens... Sure every week is not a 100 hour week but I know many kids in my firm that have put in over 100 every single week they've been on the job, and neither they, nor I have clocked any vacation yet... so you can feel free to throw on another week at least to your days worked. We definitely aren't working only 250 days a year... that's a joke...
I also hear there are slaves working for nothing in Africa and India, among other places. Perhaps those Chinese sweatshop worker don't have it too bad.
I'm going to go home and start an internet business tonight and be a billionaire by the morning!!! Don't discredit me because I have no idea what I am doing or what I am talking about!
The point that was being made is that it's easy for people to talk shit when they have no clue, but there are very few sane people that would work the Wall Street hours they do now for $55k...not because they are obnoxious money grubbing assholes, just because it changes the paradigm of opportunity cost. Very few people, if anyone would work 80+ hour weeks for $55k when they could make that much or more working as a credit analyst someplace that doesn't rape their wallets with a tax magnet.
Regards
Yeah, I kinda LOL'd at this one, too. I get what you're saying rufio, but I'd like to see you tell someone making $11 an hour at Home Depot that they're pulling down $55k a year.
Here's an actual hourly/salary calculator for y'all to play with:
By hourlysalaries.com
Eddie, I agree with you... the implied $ / hour is driven based on an assumption of 50 weeks at 100 hours... for those of you who think that 100 hour weeks are not that typical, it's completely depended on shop and deal flow... right now since I have been engaged on a live deal I have been working 110+ hour weeks... last week here was my schedule:
Monday - 9am - 2am Tuesday - 9am - 5am Wednesday - 10 am - 2am Thursday - 9am - 9am went home showered, slept for ~2.5 hours Friday 12pm - 4am Saturday 11:30am - 3am Sunday - 10am - 6am
~127-128 hours... this was probably one of the worst weeks of my life, absurd client wanting calls early am and late evening every day... the past month every week has been around 110.
Have I had 60 hour weeks on the job, yeah, and that pulls the average down. I also haven't taken any vacation time with the exception of 1 day after Thanksgiving.
So for those of you saying "Oh yeah, $55k a year no bonus, I'm down!" All I can say is have fun with that...
Eddie, to your point, given the calculator and based on normal hours worked, you're definitely not getting anywhere near $55k, which is why I reiterate that working in banking for 55k all in is probably the most absurd thing ever. But of course all you kids who are dying to do banking took introductory econ courses so I'm sure you can prove the economic utility here... oh wait...
Stop whining, you little girl. There's thousands of people who could do your grunt work. You are a worthless robot. You should model yourself on this winner: http://www.metro.co.uk/news/699371-stockbroker-jumps-to-his-death
[quote=notacunt]You should model yourself on this winner: http://www.metro.co.uk/news/699371-stockbroker-jumps-to-his-death[/quote]
Thanks guy.
F500 Strat out of UG
Starting: ~70k + 10k sign + bonus (varies...a lot) Hours: 45 - 50/week Awesome benefits Much more relaxed Work Environment Good BSchool Opps
I doubt banks would struggle to fill analyst positions for $75K total comp (while working the same hours). There just aren't that many $75K jobs out of undergraduate.
Other opportunities. Top shelf programming/coding gigs. Petroleum engineers. Only the absolute upper crust for other engineering disciplines. That's it.
You are probably talking about 25,000 salaried positions a year for 23 year olds that can earn that.
I agree that it's very tough, and that folks who can earn six figures out of undergrad should consider themselves very lucky, but I think there's a lot of routes there.
Some of this is always contingent on the economy. Back when I was sophomore in 2004 (this was right after something called the dot-com crash for you younguns in college), my goal was to get a job that paid $40K/year. That was the same goal of the hundreds of students at UIUC who were over the age of 25 or 30 and had spent several years working as programmers with mere high school diplomas for double that.
Ha-ha, I pay first year people more than that and it's difficult finding qualified applicants.
75K all in and working 100 hour weeks? A lot of people would not be interested in doing it. Especially in NYC.
"75K all in and working 100 hour weeks? A lot of people would not be interested in doing it. Especially in NYC."
Even so, a lot of people would be interested in that, especially if it leads to more money down the road.
The simple fact of the matter is that 75K is high for non-technically trained personnel and the carrot still exists for high income in the future.
rufiolove...completely agree with you that people who said they would do banking for 55k, or even 70k all in are ones who havent been through banking
i had a couple week like yours before when i was on 4 deals at once but it was just hell. I was easily irritated and people would know i was not in a good mood from a mile away.
good luck dude. always remember that there's indeed a light in the end of the tunnel and health is always the #1 thing.
For all the people who say they would do banking for 55K because of the high paying exit ops, you fail to realize that those ops are so high paying because banking is high paying. PE firms pay what they pay because that is what people can earn. If banking salaries drop to 55K you will see some PE firms pay a tiny bit better. Everything will decline in relation.
To be clear, I never said 55k. I think 75k is the delineation point where banks could still fulfill their hiring needs with very little drop in supply.
It all has to do with other opportunities and in this economy there is an incredible dearth of opportunities. People are forced to choose from a bunch of crappy options.
Banks don't want the level of talent that would be willing to work for that compensation.
other thing, banks would lose a lot of talent to F500, buy-side and consulting at that level for MBA hiring, and analysts are just paid a discounted associates salary/bonus.
The profitability of the business determines what they can pay their employees, not what talent they desire. All companies desire top talent - the supply & demand of the labor market determines what they actually get.
What you have just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you ever close to anything that resembled a rational thought. Everyone on this forum is now dumber for having listened to it. I award you no points and may God have mercy on your soul.
Your logic is flawed. But then again you don't work in banking so you wouldn't really understand. If what you said made sense then why the fuck wouldn't banks drop their salary? Clearly there is plenty of excess supply for the jobs they wish to fill... Could it be that maybe they need to pay a premium to get a certain level of talent to fill those positions.
You're right... the NFL, MLB, MLS, NHL don't pay players based on their talent level. Managing Directors at investment banks get paid millions because there are so few people out there who want to make a lot of money that they have to offer loads of cash just so that they can entice people to take the joband there is very little competition for such positions. Or, could it be that there is a reason that Lebron gets paid to play basketball when there are literally hundreds of thousands of kids out there who dream of playing pro basketball.
But you're right, compensation has nothing to do with talent level... it's purely supply and demand.
What about Alan Turing?
How many multimillionaire mathematicians do you know? Artists? Concert Pianists? Teachers? Nurses? (OK, nurses have been making a lot more in the past ten years, but they've still got a long way to go.)
How much does Matt Taibbi or Anderson Cooper make? Something, but probably not as much as your average Front Office VP.
The fact is that there's talent everywhere. Yes, it may be geometrically distributed- such that only a few people hold a lot of talent, but not every industry can pay the same amount for it. Hence why NFL quarterbacks make tens of millions every year while it's impossible to name more than three or four millionaire teachers.
You understand that if IB declines from .5% of US GDP to .4% of US GDP that the amount of money set aside to compensation will decline, right? Either headcount will go down or comp will go down. In fact, both are happening as we speak.
"If what you said made sense then why the fuck wouldn't banks drop their salary?" That's exactly what's happening right now, can you not see that? Comp is falling because the industry is shrinking.
Where I work is irrelevant. The argument holds true. Or are you attempting to say the industry is actually healthy right now? Laughable.
When I said $55k, I was thinking more of a cheap city. I agree that $75k would be more realistic in NY. You can sign me up. I do feel for you though Rufio because budgeting for $125k in income and only getting $75k is much worse than knowing you'll only get $75k.
But Rufio, if you think you are more "talented" than others vying for your job, you're just delusional. There are very high barriers to entry for IB jobs that have nothing to do with "talent".
I'm trying to say that the benchmark of talent you mentioned is far below the market rate. You seem to be mistaking talent for experience rufio. The level of competence (talent) required for IB is possessed by a much larger amount of people than the industry can support. My point is that what earns an analyst the job isn't their talent, but their university pedigree and 3x relevant internships. Why would IB pay state school Joe $75k when they can pay $20k more and get an ivy student with relevant experience? Risk vs. reward. This has nothing to do with talent.
I do agree that you have a point at the VP level and up. Analysts, not so much.
A few points (you'll want to send some hate / monkey shit, but it won't change reality...)
- Investment Banking Analysts aren't bankers: Analysts at financial supermarkets aren't bankers. They are staff. Associates / lower VPs are junior bankers (in training) and their compensation will matter more to long term retention and performance than analyst level pay. When you see their compensation drop "permanently" this is a bad sign...
- You guys are employees: You guys are employees. If you don't like your lot, leave your employer or organise to negotiate (unlikely). Having said that, bonuses are part of the deal for employees. Your employer can't set expectations of bonuses and then constantly disappoint them without expecting defections, bank ink or long term changes in the kind of employee they attract. If this is happening, take it as a bad sign.
It's not realistic to expect comp at the junior staff level to be tied closely to corporate performance. You guys aren't partners / shareholders / CEOs. Analyst bonuses are rounding errors.
- This industry is going through structural changes: Big banking is going through structural regulatory changes as well as economic ones. It might make more sense to think of how these changes will shape possible roles and careers for you than to worry about the jobs of the past.
It might be a good thing for bankers in the long term. It might make their work meaningful again. what do you guys think? Will the partnership model make a comeback? . Would you rather be a VP at a proper boutique doing deals based on your relationships and expertise or at a financial supermarket that wins deals based on loaning out your grannies savings? The latter is shrinking due to regulator / economic forces.
If you haven't, I'd recommend reading John Knee's "The Accidental Investment Banker". Regulation will shape the nature of banking (it already has).
-Alternative careers in finance: It might be time to consider alternative careers in finance or alternative types of firms if you want to be a highly paid employee. The buyside is interesting and can be lucrative (I'm biased). On the sellside, how are firms unaffiliated with your grannies savings doing? Cantor Fitzgerald, boutique banks, etc...
The only way I could see myself on the sell side is if I was raising money for my own deals or if I was at a boutique firm where I could make partner at some point. It's just more meaningful work to me. I've never seen the appeal of being a lifelong employee of a large banking corporation, but to each his own.
- Don't define yourself by your job & don't postpone living your life: Take a look at the comments on the girlfriend / entry level dating thread. You don't want to be one of these losers. Sacrificing your youth and relationships to a financial supermarket / other employer only for them to screw you on your bonus. Look out for yourself, your employer isn't going to do it for you.
Manage your career and focus on what you can control. What industry you are in, your education, the relationships you have developed, your client list and your transferable skills.
- Working for not much $55k, $100k, $150k, whatever... You can't expect to get away with paying people less while retaining high calibre & motivated people. The market doesn't work that way. In the short term they will work less, they will leave or they will work for you and sell you out to a competitor (jump ship with your client list). Long term they will retain lower calibre people or those who choose to work less for less.
I'm not special, but I've turned down offers of $150k salary plus a bonus of 100 - 200% deferred over two years (I called bullshit, who pays 200% and differs the bonus?) while being out of work, because it was for roles that should have paid salaries of $200k (or less with a proper bonus structure). It's a signal that there is something seriously wrong with the company that makes that kind of offer. Sure, someone else who needed the job to make payments on their mortgage would have taken it, but they would leave to another role 6 months later.
The only reason employers would move to a model that pays less if they are adopting a business model that doesn't require highly paid high calibre employees. So if this goes on for a long term, take it as a signal to do something else.
Manage your career. No one is going to do it for you.
Relinquis, no monkey shit here, SB.
What exactly are we talking about being outsourced? Are people aware of the massive headache that outsourcing some analyst jobs would cause? I can't imagine how inefficient it would be to outsource pitchbook edits and models. Just doesn't make sense
Wow, someone is as pissed off at your comment as I liked yours'.
The US will be poorer, Bankers will make less, and fewer rich people will be created.
Whoever it is, you can either deal with reality or not deal with it. You can't change it.
I am aggressively building my contact book for a reason; more and more of the comp is going to the idea generators vs the data processors. My goal is to source a deal during my first three years. Pretty sure my firm will take care of me if I can do that.
Imagine you're sitting on a file a week before it's due that could mean millions in your bank account. You really aren't going to flip through it up until the last second possible ? You won't order changes that you think will increase your odds of success? People get pissed off when they don't get something. You won't get a pat on the back for a job well done; however, you will definitely get fingers pointed at you if people are looking for someone to blame.
I think some of you need to try working in it before you try to comment on it.
Incentives are essential but there's an asymmetry in reward between bankers (or people in the financial services industry in general) and main street. Even in this industry failed hedge fund/venture capital/private equity analysts don't receive bonuses if their firms under-perform... if anything they get peanuts.
Put yourself in the shoes of a soldier in Afghanistan. He's risking death and his reward is survival and a salary of 40k.
That's a retarded argument because they only reason people even go into this industry is to make fucking money, why are you even on this forum, only about half of your points are cogent and you aren't really fit to comment on banking comp and structure if you don't work in banking. I don't tell the starbucks barista that they shouldn't charge 4.50 for a latte.
I don't know man, after working for 4 years or so, I view things quite differently nowadays. Senior guys are there to make money and get their "deserts". Junior guys are the method for how the senior guys can get the larger bonuses. Work is fun at times, but lots of it is the grind.
I don't do nearly as many 100 hour weeks, have a few close to it. But they are no joke, they suck as much balls as you would think. People who scoff and piss at it, F*ck off.
But at the same token, Rufio and other junior guys: Most junior roles are execution. It doesn't matter how hard you worked or how many hours it took you, the only thing that are matters are, was the deal/deliverable executed on time AND most importantly was it successful? You are brought-in from college to execute and thus fairly replaceable until you develop more value-added skills/experience. It's not fair, but the quicker people learn this, the better they can get at playing the game.
Is there any way we look back on this in three years and laugh?
Banking would just have to pay somewhat more than consulting if it wants to recruit a similar caliber of junior people - McBain Group also has good exit opportunities and fewer hours (but more travel) and most of the target school kids are considering banking vs consulting.
Its not impossible that the industry could cede the top spot to consulting (since consulting used to pay better back in the day), but I think even the callous senior banker would not be happy to see his analyst getting taunted by a junior consultant.
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