Scared
Hi everyone.
Let me introduce myself: I'm a senior at Wesleyan and I will be joining a Bulge Bracket in July 2007.
I have a few questions regarding bonuses for analysts. I know a first year analyst at a different Bulge Bracket and she says that bonus numbers should increase this year. Correct me if I am wrong, but bonus numbers were 60,000-80,000 for first year analysts a year ago right? She said she is expecting 70,000-90,000 this year.
I'm very happy for her, but a little worried for myself (selfish I know). I don't want to come off as being too greedy, but I hear a lot of talk about the market slowing down very soon.
In your opinion, what do you think bonus numbers will be for my first year and my second year? Some people I have spoken to have said that high bonuses are here for good for analysts, and that only MD's and VP's will get lower bonuses in recessions. Others have said that bonus numbers could be 10-35k again very soon.
Please provide some insight. Thank you!
So you're saying that you think that the lowest people on the totem pole will be the most protected in the event on a slowdown?
That doesn't seem very plausible.
it's like risk-reward. Cutting an MD's bonus 5% saves a bank a lot more money than cutting an analyst's salary 5%. There needs to be justification to get an analyst to work 100 + hours a week as well.
I tend to beleive that analyst bonus cycles will follow the same trends as the economy / senior banker bonus trends. I've never lived through a down cycle tho, so I'm just guessing.
To the original poster - you should be more concerned with being a top performer so that you don't face the guillotine when it falls.
To NoTears- Really? I was under the assumption that analysts don't get fired, instead bonuses just drop.
To WestCoasting:
A lot of people whom I have spoken to have shared your opinion. Is it just a 5-10% cut in bonus we are talking about? Assuming its 70,000-90,000 this year, I would not be scared of a 5-10% cut in bonuses. It is going from 70,000-90,000 to 20,000-40,000 that I am very worried about. I know anything is possible, but is it likely for bonuses to drop like that?
I'm pretty sure the last big churn was around 2001, when the reality of the tech bust finally sunk in. Who knows when the next bust will be, it could be in '07 or '08 for all we know.
God there must of been like four rounds of layoffs back then. If the market turns out to be like that I would be happy with a job period.
I've been reading what so-called experts and economists are saying about 07' and 08' and what I hear is that the near future will be pretty stable.
They could be wrong though heh.
I agree with Slams here. No doubt the economy will slow down in the near future, but I don't think we'll see a "bubble burst" like we saw in 2001. Maybe a pull back in growth rate, but not a fall off the cliff.
In terms of your bonus, I think you'll be just fine. I think for your 2007, it'll be a banner year- you might pull in 70-90k. And for 2008, I'd venture out and say you won't go any lower than 60-80k as a second year.
I think of it this way - if an MD gets $2.5M, instead of an expected $3.0M, he'll probably bite his tongue and wait it out for hopefully a bigger bonus next year. However, an analyst getting $60,000 instead of an expected $80,000 hurts his/her ego a lot more and that analyst is more likely to jump ship for the next firm/career that will pay him/her more. Lateral moves at the analyst level are simply easier than at the MD level.
Agree with Slams - 2007 M&A activity will be off the charts.
I can't remember which economist said this, Keynes... but prices are sticky, esp. going down.
"I think of it this way - if an MD gets $2.5M, instead of an expected $3.0M, he'll probably bite his tongue and wait it out for hopefully a bigger bonus next year. However, an analyst getting $60,000 instead of an expected $80,000 hurts his/her ego a lot more and that analyst is more likely to jump ship for the next firm/career that will pay him/her more. Lateral moves at the analyst level are simply easier than at the MD level."
yes, but the average analyst is a lot more replaceable. i remember the 10-30 type range. we were grateful because we didn't know different. it's still a lot of money. one day the slowdown will come.
curious if you've read the Dollar Crisis? Some pretty scary macroeconomic trends (credit bubble)... and its primary thesis is that a massive devaluation of the dollar is inevitable which will create a massive and protracted global recession (w so many net exporters dependent on the consumers on this country). opinions? the CA deficit, geopolitical turmoil and many other troubling macro trends point to a big slowdown...prob in the next 5-10 yrs. opinions?
The current account deficit thing is overblown in my opinion. People have a fixation on the stock measure but they forget the following : America earns positive net returns on negative net foreign assets. This is because american assets held by foreigners are mainly treasuries, yielding 4.5-5% while foreign assets held by americans yield 20-30% per annum. This is why the CA can stabilize/decrease without a massive/drastic devaluation on the dollar. It is not me who is saying this, but many leading macro-economists.
The american economy is the strongest in the world structurally. Inflation is controlled. Growth is strong. We are in for 5-7 more years of strong economic growth.
Come on, let's show a bit of enthusiasm.
60-80 and 70-90, the ranges are too thin and I know that there were a good amount of "bad" bonuses gave out last year in the 25-40 range.
If you have any econ background you should know that the market tends to behave according to majority of people's expections. So if everyone has a gloomy economic outlook for the future, chances are, the market is gonna have a downturn. So just cheer up, things are looking great at the moment and the market is so diverse now (Energy collapsed, but sectors are still thriving) its very unlikely to repeat what happened during the tech bubble and in 2001. Plus we have Bernake(the inflation hawk) to help the nation stable our economy, things will work out fine.
Bonuses will go back to 10-35k at some point. It has happened, and will happen again, we just don't know exactly when yet. Just be happy that you landed a BB job, and that you will still be making more than most of your classmates. You are unqualified and under-educated. You'll make more money, eventually, if you are good.
If you think MDs are going to take a hit so that analysts can continue to live high on the hog, relatively speaking, you don't stand a chance in this business. People go into business to make as much money as possible, not just "a lot" of money. They aren't going to go into their pockets for you. They will pay you exactly the lowest amount they possibly have to to keep you from leaving. Nothing more.
I don't think bonuses will go down to 10-35k if they do the payoff is less than consulting.
"I don't think bonuses will go down to 10-35k if they do the payoff is less than consulting." everything will take a leg down. and besides, there won't be a shortage of analyst even if consulting paid better.
Thank you all for your responses.
I have one more question. Are analyst bonuses group-dependent? I will be entering an industry group. If my industry group does not produce a lot of income for the bank, will we have lower bonuses than other analysts who are in better groups?
A poster above said that while one sector recesses another picks it up. What happens if you are in the group that recesses, for example healthcare. Are you personally affected regarding bonus numbers?
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