Could be completely wrong on this and would love to learn more.
Based on some of the numbers I have seen, why aren’t S&T bonuses higher or at least in line with IDB. Based on Morgan Stanley’s 10k trading revenue made up 9.3 billion and ibd did 4.4.
Just curious about it, I have dug a little deeper but not too much. Thanks
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Want to point out that I understand this is not the case at a lot of the banks but is with others too.
Because base-pay is lower for S&T positions (I think) so the difference is made up for via bonus. If this is wrong, somebody correct it please.
Answers may vary depending on firm...BUT.
Both S&T and IB are areas where the departments produce easily quantifiable revenue streams. S&T revenue is down across the board because global trading volume (as of the last time I checked) is still less than half of what it was pre-2008. Meanwhile in the IBD sector 2016 set a record for M&A activity. Those two pieces of information alone go a long way towards explaining the difference. On an incidental point the lack of a recovery in trading volume is a key driver of the past few year's volatility.
Base pay is more or less in line across IBD and S&T at the BBs (at least at the junior level).
At the end of the day, firms compensate employees based on the value they bring to the firm (in theory). Thus if you are a bank you need to pay the amount that will get good people to stay in their seats and generate money. At the junior level hours are considerably worse in banking generally and thus you likely need to pay them a premium.
At the senior level: The trading business may have brought in double the revenue but they did so utilizing considerably more of the firm's assets (the balance sheet) with considerably higher risk levels. In trading you can lose millions of the firm's capital (or billions as recent history has shown) on single trades. To the extent IBD isn't losing its hat underwriting crappy assets, advisory fees are more or less risk free (aside from time). Thus arguably a BB MD who brings in a $10M M&A fee by himself (using the junior resources and research assets like CapIQ) should be paid more than a trader who brought in $10M but put $2Bn of assets at risk in doing so.
This is gold thank you.
A couple of traders I've spoken to on the rates side have said that internal cash that's actually going into a trade is shockingly minimal, especially post regulation. So I don't really buy that, although in theory I would, but the risk just isn't there like it used to be.
awesome. thanks!
Less regulatory environment might bump up the bonuses. Then again, automation might keep them in check.
S&T bonuses versus IBD bonuses? (Originally Posted: 12/27/2006)
Can somebody please shed some light on Sales & Trading analyst bonuses for years 1, 2 and 3 on the job as well as typical hours/career progression? When is it that traders makes the millions of dollars that everybody spews about (including Trader magazine)?
I know that the general consensus for IBD analyst comp is as follows:
Year 1 bonus: ~60-80k Year 2 bonus: ~80-100k Year 3 bonus: ~100-120k
in general i work 55-60 hours a week. to the last question....it's when you make a lot of revenue for the firm. could be at 25, could be at 28, could be at 30. no hard rules. and it may never happen at all
Could you give a more concrete example. Like give some specifics on what an average first year trader might bring in for the firm, and what percentage he can expect from that to be awarded to him.
Is it tiered where if you bring in 10MM for the firm you get 1 percent of that? Etc....
depends on group. generally 5-15%. junior guys can have revs over 5mm, easily.,
what is the comp ranges for S&T analysts in years 1-3? is it the same as ibanking or slightly less?
i already answered. they're the same
At the place I interned, it was from 40k to 60k.
Jimbo and others, How can S&T analyst bonuses be the same as IBD bonuses when IBD analysts slave around their cubes modeling, powerpointing and exceling all day long...
How do I get into S&T after two years of BB IBD experience?
Everyone here just chases the money.
Stick with what you can do well. Sales/Trading isn't for everybody. What's +/- 10k starting out? More important is the skillset and contacts you develop which you can leverage throughout your career.
b/c bonuses aren't based on hours worked. they are, in theory at least, based on revenue generation and/or value added, which an anlyst in s&t can do just as easily as an ibanking analyst. I agree s&t is not for everyone, and i wouldn't consider doing ibanking. i know it's not for me.
I do not think most people undestand this. S&T analysts are not hired into a two year program at many banks. They are hired to stay as long as they do a good job and produce. Also, most trading desks max out at around twenty people. Most desks I have been on are very top-end loaded with many a desk head, one other MD, a few directors/senior VPs, and then some VPs. You could be the only analyst on a desk that produces more than $100MM in revenue. How many groups do that in IBD with twelve people?
Still a lot of people act like S&T bonuses are lesser. I am not sure what the truth is. All I know is that those in trading generally degrees that are generally considered much harder to obtain than a BS in business. For example my trading intern class had many MIT math and CS majors. Additionally, I know that there are people at buldges making $1MM after four years. I do not know anyone doing that in banking or PE. Do you? Still, if I was in trading and worked hard to get an MIT CS or engineering degree, I would be PISSED if someone with a business degree got more than me in IBD, especially if my group made 100 bucks.
Anyone know how to get in S&T after 2-3 years of banking? Does IB experience increase your chance of getting into S&T?
Talk to HR, most BBs are good about helping you lateral after your 2 year analyst stint.
Unfrotunately I work for a middle market bank and I heard there isnt much mobility between banking and S&T in my firm =( Would biz school be a good transition in to S&T? I've wanted to be a sales person all my life...
any insights anyone?
S&T bonuses are NOT always less than banking. I switched from banking and my bonus will be the same as it would if I was in my old group. As said above, it's about revenue.
Also, MANY S&T programs are within the analyst program at a bank. At least I know mine is and so are those of my friends who work in S&T at other banks. Even the titles are the same at junior levels - analyst, associate, etc.
Trading is a very unique career that is way differnet than IB. Not as many people fit the mold for it. Also there is more risk you will fail and therefore will be out of a job. I do not spend more than 20 minutes doing a task at work, where before I spent hours on models, etc.
And yes, you are pushed out if you suck at S&T. But analysts are pushed out of ib too...I've seen it happen. I think the difference is it becomes clear very early on if S&T is not a good fit for you.
Is prior banking experience beneficial to u? would B-school be a good option to get on the path of S&T?
How do you know if you are a good fit for trading?
on that same note how do you know if you are fit for sales?
Weekend (Bonus) Wars: IBD vs. S&T (Originally Posted: 12/19/2010)
We had an interesting discussion earlier this week about bonuses and where they might be heading for future investment banking analysts and associates. But how about the intra-industry competition that has always existed between IBD and S&T?
Who will be the big bonus boys of the future?
Bankers VS. Traders
Once upon a time bankers were the glad handling baby sitters of the rich and old money cash hordes. A banker's career was long and prestigious. The Patrician posture of the WASP dominated the finance world. He wasn't the swashbuckling corporate raider of the 80's and 90's. He didn't jump to the Buy side. He was a very well secured worker bee. Apt to earn a far above solid wage, in exchange for providing a service tailored around relationships and involving little risk.
On the other hand the traders and salesmen of Wall Street's yesteryear were scallywags and rascals from places like Hell's Kitchen, The Bowery, Bridgeport and the South Side. They often lugged beer guts, hid brass knuckles and boasted a verbal repertoire which would have made a sailor blush. Their compensation levels were known to be insane. Many a non high school grad left Wall Street with tens if not hundreds of millions of dollars in tow. Those who couldn't cut it, often wound up shuffling their betters to and from the airport.
Out with the Old, In with the New
But then came the "Go-Go 80's", "The Tech Bubble 90's" and ultimately whatever you want to call the earlier years of the past decade which culminated with the Credit Crunch...
Wall Street changed and so did the faces who stomp to and from its trenches every day.
Today's bankers and traders are far more alike than their counterparts were.
The blue collar sedentary IBD has been replaced by a legion of Adderall chomping, Red Bull guzzling, Excel monkeys with their eyes firmly fixed on the Exit Opps prize.
The once gruff pit dwelling caveman with a natural born sweater vest on his torso has been replaced by the mousey, bespectacled straight A student with a C++ fetish.
Both the banker and the trader are bonus based beasts, today. Chasing the next dollar with greater fervor, as spreads and opportunities continue to tighten.
But how will compensation change going forward, if at all?
Who will see the bigger prizes come bonus season?
The banker or the trader?
Which camp are you in?
Which division do you see attracting the best and the brightest of wannabe financiers over the coming decade(s)?
Trading camp and its getting tough to make a strong pnl
Did you mean 'white collar sedentary IBD?' Not sure how IBD is blue collar, heh.
Is he referring to how bankers like to wear blue shirts all the time?
Oh. That makes sense I guess, I just thought of the stereotypical white collar "educated" labor vs. blue collar manual work.
Honestly, the hoarders of the Wall Street bonuses will likely go to the top revenue generators. From the 1990s and up through 2007 I understand that at most BB firms tailored their business-models to focus on revenues primarily driven from trading activities. Going forward I think it's safe to say that with Frank-Dodd, Basil III, and an overall more prudent outlook on credit that S&T revenues could be hurt---particularly the guys working in structured products.
That being said, financial markets are still obviously going to operate and they need players who facilitate the processes which means S&T is still going to be a worthy business segment: but will S&T be able to turn as impressive of profits in an environment with so many restrictions and oversight?
I recall a report released by the BCG back in 2009 about how investment banks will likely see fewer revenues from trading: futures, options, equities, forex, and the big obvious one ABS. The report did not cite huge increases in i-banking revenue but it did suggest that i-banking revenues stand to gain as banks attempt re-center their businesses around more traditional operations. I was unable to find a link... :(
Depending on how the financial reforms work in practice as opposed to theory I think traders do stand to lose out a little, especially with the 3% prop-trading restriction. On the other hand do I think that corporate America is going develop a new thirst for M&A when the concepts of synergy and shareholder-value have almost become laughable opposites? I'd be surprised if such an event occurred.
In the end I think it's really going to come down to how pending regulation affects Wall Street's revenue generating ability---and of course---the degree to which Wall Street innovates financial products and services. At this point, it seems that reform is primarily aimed at S&T operations. Who knows how long it will be before the jocks of Wall Street feel the pain.
I say point goes to "team xerox" on this subjective matter.
Thanks!
I stopped reading after this paragraph, I think you are horribly wrong.
That's nice... Why is that?
First, I agree that that's not what "blue collar" means. But second, the Excel modeling/PE-dreaming banker isn't comparable to the old-time banker you described. The Exit Opps guy is an analyst or maybe an associate, no older than 30. The old-time banker was the SENIOR guy, and though the stereotype has evolved, MDs don't pull all-nighters, play in excel, or dream about PE.
2009 IB/S&T Analyst Bonuses (Originally Posted: 01/24/2010)
Since banks have started to give out bonuses and will continue to do so for the next few weeks, I was wondering what everyone has been getting at each of their respective banks. If you know the ranges for several years of analysts and/or associates, feel free to submit as much as you know. The format below would be the most informative because banks are changing around salaries and cash/equity proportions for bonuses that aren't 100% cash:
1st-year IB Analyst:
Base: $XX,000 Bonus: $XX,000 Percent Cash/Equity: XX/XX Salary for 2010: $XX,000
Analysts get their bonuses in JUNE/JULY, not in JANUARY/FEBRUARY. Ask that question in six months..
SOME BANKS GIVE THEM IN DECEMBER/JANUARY.
Sales, Trading, and Research get stub (half-year) bonus in Jan/Feb.
Clarification: For the analysts who got their stubs, what was the annual amount before it was pro-rated. Associates, feel free to post your bonuses.
Im in S&T and unless t varies at banks, my analyst clas doesnt get stubs
-
Goldman: 1st year IBD / S&T Analysts: $70k prorated 2nd year IBD Analysts: $70k - $100k 2nd year S&T Analysts: $40k - $100k
1st year IBD Associates: $100k prorated
Anyone have numbers for S&T prorated stubs for other banks across the street this year?
Thanks, any idea about GS's 1st yr associate in S&T?
Sorry, not yet. Would assume they are the same as IBD
I find it odd that the first year IBD analysts get 70k and the first year IBD associates get 100k. Shouldn't there be a bigger difference between these numbers?
I've heard GS 1st year analyst stub (S/T) is 25K - anyone confirm? Figure its the same for MS/JPM
I don't think GS S&T got 35K, i've heard 25K across the firm.
Which leads me to believe they aren't sharing in the riches of their MDs...
How much have starting salaries for 2nd and 3rd year associates increase by? I heard that UBS and MS did it last year, but have all other major banks followed?
Bump
How much is the industry standard for stub? 25k is really tiny.....
How is that really tiny? That's $50k for the full year, or 70%+ of salary, and if you count the signing bonus, 85% of salary. No, it's not great like it was in 2006-7, but we're operating in a different sociopolitical environment now.
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