I started banking in 2019, just before Covid, and I noticed something strange. Comparing 2019 to today, my group’s headcount is roughly the same and fees have been much higher in 2024 vs 2019. However, junior pay has been reduced relatively materially between these two periods. What gives?
A quick search shows $1 in 2004 is worth $1.67 today. So an associate making $300k in 2004 would be the equivalent of an associate making $500k today (I am not sure what associates made back then, but this is a rough example). Looking at the MS numbers this year and several of BBs last year, associates are not cracking anything close to this.
Assuming junior pay has degraded, couple things to discuss. Curious to hear from experienced folks who have been around the block to see a lot of this play out:
- What is driving the junior pay degradation? Is it the banks being greedy and hoarding more profits for themselves? Are the MDs taking more $$) for themselves, or have they been negatively affected by this as well?
- Are there any benefits that juniors have today that they didn’t have previously, that cancel out some of the pay degradation? Is headcount larger, WLB better, etc?
- With these new bonus figures, is it even worth it to work at a BB anymore, killing yourself working 80 hours/week? As was mentioned in another forum, there are mid level accounting managers working ~50 hours/week that are making TC on par with some of the senior associates at BBs. You could screw around at a state school in college with much lower competition, and make essentially the same salary vs killing yourself to get into an Ivy and grind like hell for an IB job.
- Do your MDs agree with this, or are they in denial? A lot of the current MDs started their banking careers in the mid-2000s, so it seems they have a hard time empathizing with the current generation when it comes to their work ethic and desire to do the bare minimum. It’s a lot harder to be motivated when your TC is barely enough to cover living in NYC.
From what I hear, it seems like every time there’s a down period (dot com bubble, GFC, post covid slump, etc) junior pay drops sharply, and then when deal activity subsequently recovers, junior pay doesn’t rise to the levels it did previously. Curious to hear others thoughts.
Much of the comp/structuring of IB changed post 2008, whether it be through direct or indirect regulation. Much of high finance has also become less profitable in general as more firms have started, competition has increased.
They money is gone
Where
And now the money go t
If I recall correctly, in Monkey Business, which was based on the authors joining banking as DLJ associates in 1995, their year 1 all-in was around $210k USD, which is $420k in today's dollar.
Confirming the number quoted from Monkey Business is accurate. Reading it now!
Please show me an accounting manager that has 3-4 YOE post undergrad (with just a bachelor degree) pulling in $200-250k...
In Due diligence at a firm like A&M this is definitely possible
That guy is not working 50 hours a week
A lot of it is being eaten up by higher pay going to MDs, who join on expensive guarantees ($2M+ per year for two years is not unheard of).
Another big pressure point comes from the fact that more banks are public now, and they need to please their shareholders before they please their employees. The public company (banks) versus private/partnership model (most law firms) is why lawyer pay has caught up to bank pay in the past few years.
Makes sense why EBs pay better and expect this trend to just widen.
Every EB outside of CVP is public (and they are rumored to be considering it).also EBs are the ones giving these huge guarantees to seniors
lol just look at the Lehman Brothers compensation documents that came out post-bankruptcy.
Yes you will be depressed.
Some of those ASO were making 400-500k in 2006/2007
Banking and finance, as a lot of people have said on here, are just worse jobs than they were 10-20 years ago.
Lower pay in real terms. Less sociable and less fun. And technology means you have to be on all the time.
I think it's just more grads competing for the same amount of jobs. And AI will make this worse.
My comp as a the single highest associate in the highest paying team on the street at the time
as1 (2004) - 250k
as2 (2005) - 375
as 3 (2006) - 525
thjs would be a cvp or PJT today
so def some inflation adjusted decline but those guys pay their associates a lot more than most even now
ib my view median comp for bankers is down 25-30% inflation adjusted at all levels but the top 10% of revenue producers are doing better than ever and in some cases meaningfully so I don’t think the comp pool has moved as much you think, I just think it’s realigned and as you got senior, a lot more performance based
I think ER suffered higher decline in pay vs IB due to regulation
Jesus Christ…your ‘05 is like 600K+ today
IB pay is not even close to what it was
I don’t think best paid associate in best paying group is a good baseline to judge all IB junior comp
PJT is $500k for assoc2, CVP may be higher. So not far off that given his datapoint is for the highest paying bank on the street. Yes pay has declined but not majorly to the point of it factoring in career decisions
PJT is $500k for assoc2, CVP may be higher. So not far off that given his datapoint is for the highest paying bank on the street. Yes pay has declined but not majorly to the point of it factoring in career decisions
It's negative jaws....declining real pay coupled with much higher rents/house prices in the HCOL cities where these jobs exist.
Theres a lot more supply (demand is a little harder to generalize given cyclicality, secular growth in some biz lines and secular decline in others)
Therefore, less pay and more competition
Dont think this gets fixed anytime soon - finance probably just continues trending towards less comp (but still good comp relative to other things you can do)
I think most white collar jobs have degraded pay over time (with inflation in mind). Have seen it first hand with one of my parents in a non-finance field. With adjusted inflation, jobs paid more in the 90s.
a simple search of WSO from 2006-7 bonus threads show analysts and associats easily making 200 to 300% of base. It was not uncommon for a first year in 2006 to get like a 300k bonus or a new non stub associate to get a 400 to 600k bonus (in todays dollars, thats pushing a million dollar bonus for an associate....).
I am close to a senior banker who told me he cleared 1 million total comp as a VP1 at a lower tier BB in the early 2000s.
Same thing in the 90s.
Even threads from mid 2010s show associate and analysts easily clearing close to 500k a year.
Now...we have mid bucket VPs at MS making 175k bonuses (in 2006 dollars thats like 100k lol).
Its gone WAY DOWN. The bases havent budged since 2021 and we have had the highest inflation since the late 70s since.
Any insight into how this plays into PE? Seems pay and career progression has declined
Sorry - this just isn’t correct
i was an analyst and associate starting in 2000 at the top paying boutiques in my time (one of them is still a top payer) and other than my first year was top bucket
this is comp progression
An 1 2000 / 2001 - 100
An 2 2001 / 2002 - 120
An 3 2002 / 2003 - 130
As 1 2004 - 250
as 2 2005 - 375
as 3 2006 - 525
vp 1 2007 - 700
vp 2 2008 - 800
vp 3 2009 - 800
d 1 2010 - 700
d2 2011 - 630
d3 2012 - 700
d4 2013 - 860
md1 2014 - 1.5
md 2 2015 - 1.6
md3 2016 - 1.8
md 4 2017 - 3.0
i was promoted to group head then and have averaged a little over 5
there were no VPs making 1mm. Our top guys were 700-800.
the difference was you had a lot more money on your pocket at bonus time. My base salary as an associate was 105 / 115 / 125, and as a VP was 150 so the bonus checks felt astronomical in comparison.
I also posted the full comp progression to show things are not linear in life, I felt pretty stagnant for a while.
(1) if you inflation adjust the $700-$800k VP years it’s comfortably over $1mm in today’s dollars. (2) if you look at the comp threads (GS/C/Canadians) you will see that no VPs that have reported are making $700 today - even ignoring inflation. They are making $550 at top bucket
Those nominal amounts are higher than 2025 and we've had rampant inflation in those 20 years. You seriously can't be that slow and be a "group head"? My God, this is why this industry is going to shit. It's being led by people like you that have their head in the sand.
Been around little over 10+ years. It’s not as bad as it seems.
- The above MD was highest paid at highest paying bank at a great time - almost all of you aren’t there
- Before 2013, weekend exception, etc. didn’t exist. To give you some rough idea, my then very busy BB group used to hire 6-7 analysts for 20 MDs. Now they hire 25 for maybe 15 MDs doing mostly cap market work. You send more work to India and get Saturdays off
- 2006 was like 2021 - one of the greatest years ever until things blew up. Ask people about 2009 bonuses (was $40K for top bucket 3 year associate)
- 2014/15 analyst salary was 60K. Bonus was 55K for upper middle at a good group at a good place. So $115K and today our first years make $180-200K. When I started stub associates made 90K going to 100K and you got 30K stub and 80-120K full first year bonus. That’s how much analysts almost make now
- There was no 2 year A2A so you lost another year
- Do we make more fees? Maybe? But I would say no especially on M&A side. Deal fee run still goes back 10-15 years, there is no inflation attached to it. Arguably there is more competition (all the boutiques, BBs digging into MM, co advisory, private credit eating up easy money in lev fin, KKR giving away active bookrunner to their own ECM - so many factors). To give you some idea - all fairness fees are $3-4mm, exactly what they were when I started
SB - what has your comp progression looked like?
I think the biggest thing that complicates this analysis is the cost of rent. Another commenter addressed this above; a 40% cost of living increase since 2019 (pre-COVID) makes it staggeringly obvious that financial career wages are declining on a real basis. Few jobs pay more than they did 5-10 years ago on a real basis, and even the tech industry is paying the same nominal level but much less real.
Capital is eating an increasing share of the pie, and labor’s share of the pie will continue to decline. This isn’t an eat the rich argument, but it should serve as a wake up call to young kids that being a banker is no longer a guarantee of success. Does it open extremely unique doors? Sure. But is it a guarantee? No longer.
I wouldn’t be surprised if in 5 years associate pay caps out at $250k total and VPs are $300-400. Bleak, but entirely predictable
p.s. I didn’t even mention the ridiculous increase in higher education tuition that is often table stakes for jobs like these.
Not disagreeing with that, but I think the fundamental difference was that when I started out there were still commercial banks, retail banks and investment banks and there was a clear pay hierarchy amongst those (which is why firms like Lehman and DLJ and Bear while not top tier were great payers).
Today, most BBs are really commercial or retail banks with investment banking arms and comp has come to reflect that. Sure, they have to pay same group heads well (but so did a Chase or a BofA back in the day) but the reality is they can call it Morgan Stanley but really it’s Dean Witter / Paine Webber and they can call it JPM but it’s really Chase. If you go work at those places, you should know you’re not really joining an investment bank (don’t get me wrong I still think you get good training so I don’t think it’s a bad idea) and you shouldn’t really expect to get paid a ton of money.
GS stands out as the exception but GS always screwed its non partners to pay its partners and that’s the pot of gold for being good there.
Now the real heir to the old investment banks are the boutiques (although it’s ridiculous to call a place like CVP or Evercore a boutique when they make more M&\A revenues than Lehman) where clients go to when they need real value add.
CVP pays very well, PJT pays very well, EVR is still more than decent, MOE is decent and some of the small places pay through the roof the way a Lazard or Wasserstein used to. Lazard has lost its way from its golden age. Some of the ether specialised teams with their own revenue deals at the MM firms pay very well too. They talk about it less,
Im sorry to say this but banking is a hierarchy. And the names at the top of the hierarchy have generally changed. Even back in the day, only the best got paid well (and that hierarchy is even more skewed today). Ask yourself, if you’re analyst number 20 in random BofA coverage group doing profiles all day, should you get paid well vs the analyst on a lean deal team driving real outcomes for important clients. It’s the same job title but it’s not really the same job.
I do not remember any BBs or large MMs at 60K in 2014, I was at 70K at a regional MM as an An1 in 2013 and 75K as an An2 in 2014. 60K would have been significantly below market at that time.
This is purely anecdotal, but something that's starting to piss me off is how much lawyers are getting paid these days. for the first few years, finance salaries are clearly more attractive. an MBA associate makes maybe 350k their first year on the job compared to a first year big law associate who is pulling in closer to 250k (and the MBA degree is super optional), but salaries in finance just don't keep pace once you get to your early/mid 30s. I'm 30 years old and a jr. VP in private equity making about 550k/year. My gf, who granted is a couple years older and works in big law, made more than I did this past year, which feels pretty lame! Her hours are far worse and the work is far less interesting.. lawyers are basically very well paid assistants, but the crazy thing is that as we get more senior the delta in comp is only going to grow. I feel like I have line of sight to be making ~$2-5 million/year by the time I'm 40 years old not including carry, which you really can't bank on. Meanwhile there are literally hundreds of big law partners across dozens of firms making $10 million +/year. What gives? I'm pretty sure this wasn't the case in the 90s and early 2000s.
I feel like it's on us to start pushing back on these ridiculous legal bills. There's no reason it needs to cost $5 million in legal fees to get a deal done. It's highway robbery. Part of the issue is that most funds only work with 1-2 law firms and so they're pretty captive and not really thinking about fees when selecting a law firm whereas when we have bakeoffs to sell a portco, I'll negotiate down the banker fees as part of the process. Need to start diversifying the work across a larger number of law firms if not just to humble these non-equity partners at K&E. lol
This is true. You wouldn’t see a Rob Kindler or George Bilicic leave their law firms today like you did then. These things go in cycles though. I like my job prospects more than a law partner over a 10-15 year period because LPs will get wise to it.
And in your case, you can’t bank on carry I agree but it’s a huge perk of the job. It’s nice to make money every year but nicer to wake up one day to a 20mm check.
Totally agreed on lawyers. Top law firm PPP now much higher than GS partners’ comp.
PE now pays partners $2m-$5m excl. carry? Wow that’s definitely higher than I remembered. Thought $2-2.5m cash pay is more like upper limit for most and big paydays need to come from carry.
$2m to $5m cash comp for a pe jr partner (at 40 yo) seems way higher than market tbh.
Also consider how much a dollar in 2005 would be worth invested in just SPY and QQQ (even accounting for 08/09 market drop) Multiples much lower then (19x vs 30x and tech stocks had more runway) compared to now so the asset purchasing power of banker bonuses are down precipitously since pre GFC
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