If the average first year analyst makes $150k plus bonus but works 80 hours a week is that not a standard corporate job at 40 hours a week?
Or is it mainly about the connections, exit opps, reputation, etc? Do most Ibankers stay for more than 2 years? Sorry, im new to all of this, but it seems that at face value the job really isn’t as lucrative as it seems. Thanks
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Your first assumption is correct but it’s not about where you start. If you’re trying to maximize money, let’s say you stay in banking after your two year contract and get promoted in 2.5 years. Base jumps to 150 and then let’s say bonus is 90% of base so all in comp after 3.5 years is 285, and let’s say you’re still working 80hrs a week which you’re not since you should be much more efficient after that time and that comes out to ~145 a year. There is no corporate job where you start out at 80k a year and ramp up to 145 in a few years. PE pay can vary by fund size, but at the very lowest range it’s probably at 180 for a lmm firm in nyc and goes up to 400 for Apollo. Most mm shops fall between 200-300 so a slight haircut to banking but still well above their corporate counterparts.
The other real benefit to banking is that those 80hr weeks don’t go wasted if you move to industry, as you will come in at higher levels than someone who started out in corporate and your work ethic will far outpace your non IB/consulting counterparts. The trade offs are that finance is very competitive and working long hours is taxing on your body and mental health, especially if you don’t take care of yourself properly.
“There is no corporate job where you start out at 80k a year and ramp up to 145 in a few years.”
I don’t know if that’s entirely true. Tech companies do often pay that much, especially software engineer roles (or slightly lower perhaps for other roles in tech) with significantly better hours.
I don't agree with this. Personally, I think this has become a "fallacy of truth" here on WSO. I know plenty of software engineers that are nowhere near 145 after 15 years in the business. Do those roles exist, yes but its at the very top of FAANG engineering and not much else. Prior to Covid, most of those roles had to pay that much to attract talent to the bay area. But outside of that area and those companies, I don't think tech will ramp your salary up nearly as much as people on WSO think.
1) a software engineer at a top tech firm doesnt have the same rigid promotion cycles like ib. It's very much skill based and theres no guarantee you'll ever be a staff engineer or a lead
2) As comp increases the bulk of it comes in stock, which in banking doesn't kick in until vp level usually, and there are eb's/mm's that pay street or higher comp in all cash
3) comp is very high at a faang, starting at around 160-180 all in, but comp progression is slower than in banking as well as points 1 and 2 above. If you're not at a faang (or equivalent), there is a drop off in pay and can be quite significant.
The main point is that almost anyone who starts banking as an analyst has the intelligence to make it to vp, its just about the grind. Being a developer at that level of competition is about skill from the very start and you can't just "grind it out to the top". Not really a good comparison as most people aren't cross shopping the idea of working as an engineer or banker, since the skillsets are in no way comparable.
This question gets asked every other week and the answers remain the exact same. Wso needs to ban posters that ask questions that can be answered by using the search bar.
Use the search... It’s because the work is so fun that we never really have to work a day in our lives
Don't underestimate corporate working hours. Know juniors in Corp Dev/Strategy working 50-60+ hours regularly (and occasional IB hours). It's about all of the above: 6 figure salary, virtually double the work experience, and broad exit opportunities including to PE/HF where you have the chance to become very wealthy. It's also fairly straightforward to climb from Analyst to VP in IB, at which point you'll have made $2M+ before you're 30.
IB isn't for everyone and definitely has it's flaws, but people shouldn't lose perspective on reality. You're in your 20s making 6-figures with future earning potential in the millions. That's the tradeoff for working 80 hours, as is the case with most high-earning career paths (BigLaw, Medicine, Entrepreneurship). Hell, there's people working 2-full time jobs at minimum wage to support an entire family. FAANG is the only thing I can think of that generally has better lifestyle. Firstly, this opportunity is limited for people that know how to/are interested in coding. More importantly, the pay doesn't scale like IB/PE/HF and career trajectory isn't as favorable unless your the best of the best.
Went off on a tad bit of a rant...but to answer your question...yes. IB is really that lucrative.
And I know of someone in corporate finance who makes 70k (1yr analyst) working 35hrs a week at a pharma company (that person is literally bored because there is too little to do)...
My cousin works for a specialist tax firm that competes with big 4 and works 30-35hrs a week except for busy season when that number is 50.
Not saying IB isn't lucrative and worthwhile but a lot of other jobs out there are in a hilariously different league when it comes to work life balance.
I'm with you on that-- IB isn't the place to be for work life balance. Although, there are some shops out there that have "decent" hours (relative to sweatshops) where you're working on average 50-60 per week and ramping up during live deals. The top banks have worse hours because of deal flow, but there are plenty boutiques that are relaxed and treat it like a normal job.
If the banks steer away from FaceTime culture and include some flexibility to WFH on weekends/nights, then the actual hours at work would be much more similar to the rest of corporate jobs. Hopefully the COVID experience will be a catalyst for changes to the system.
It’s about the NPV of the rest of your career after banking
I'm BO so I won't comment on the IB aspects. But I am at a BB and can give you that perspective. The one thing I've noticed - and I think this applies to IB - is that most positions in banking reward loyalty and longevity. The way salaries are scaled, it rewards the top end and rewards your time in (yearly increase in salary, bonus, etc). I did the math on my end and being a Director at my BB can make you a millionaire in a handful of years (literally). It might take you 10 years to get there - and I'm putting in my time - but you can easily reach a level where the money just comes tumbling in.
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