Senior bankers at middle market firms - what's the typical comp look like?
I'm currently at a BB in NYC but considering settling down back home and lateraling to a middle market firm in the area (Raymond James / Stifel / D.A. Davidson / etc).
Assuming I don't get burnt out and the money is right, I can see myself making this a long-term play...very curious, what does the typical comp look like for a director or MD? i.e. what % of the deal do you typically take in? What's the average comp a director or MD might expect to bring in per year?
Is lifestyle typically better than BB or EB banking in NYC? I'm sure it depends on how many deals you're bringing in, but curious as to whether the culture is more supportive of WLB etc..
Thank you in advance!!!
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Based on the most helpful WSO content, here's what you need to know about senior banker compensation and lifestyle at middle market (MM) firms:
Compensation:
Director or MD Compensation:
Long-Term Compensation:
Lifestyle:
Work-Life Balance (WLB):
Culture:
Additional Considerations:
For more detailed insights, you can refer to the following WSO threads: - https://www.wallstreetoasis.com/forum/investment-banking/psa-consider-r…</a">PSA: Consider Regional Boutiques. Good Comp + Lifestyle - https://www.wallstreetoasis.com/forum/investment-banking/qa-md-in-ma-an…</a">Q&A: MD in M&A and Capital Markets with Bulge Bracket and Boutique experience
If you have any more specific questions or need further details, feel free to ask!
Sources: BB vs EB total compensation, https://www.wallstreetoasis.com/forum/investment-banking/qa-md-in-ma-and-capital-markets-with-bulge-bracket-and-boutique-experience?customgpt=1, Q&A: MD in M&A and Capital Markets with Bulge Bracket and Boutique experience, Ask CompBanker, PSA: Consider Regional Boutiques. Good Comp + Lifestyle
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At RJ. Comp structure is super favorable for rainmakers. Based on my own calcs, I think top MDs / sector heads make 10m+ with the top 3 probably getting north of 20m. That being said, average fees are lower vs. BBs so won’t be a chill job (need more deal volume).
How’d you arrive at your calcs?
RJ analysts aren’t known for their calculation ability that’s for sure
Interested in how you came to these calcs. Please do elaborate.
Most MMs and BBs pay MDs as a % of their Fees earned. And then take deductions for headcount over the assigned normal.
My understanding is that many of these firms typically pay 15-20% of fees completed in year. So earning 10m at a MM where most fees are priced at 1-3m per deal is pretty tough ask.
Most MDs that are decent will earn a few million. Very few will clear 10m+
The people who clear 10mm+ (and there are a couple at my bank) are those who run groups of scale and generate 20+ of fees so they benefit from economies of scale.
Think of these economics
You have 10 MDs who generate 10mm of fees on average and the group head generates 20 so total revenues of 120mm
At a 45% comp ratio that’s 54mm of comp dollars to the team
That team would have 15 analysts (3mm), 10 associates (3.5mm), 7 VPs (4.2mm) and 5 Directors (4.0mm) - 14.7mm of comp for support
Say the 10 MDs make an average of 2.75mm a year, that’s 27.5mm
Total of 41.7mm
That leaves 12.3mm of comp for the group head
I know of a couple of RJ bankers who clear $10+ a year every year. Plus no state income tax.
Which group?
For a typical middle market bank, I think the compensation is generally as follows:
- $250k annual cash salary (which is a draw against bonus)
- [30 - 35]% of attributable net revenue (this is from memory, but I think directionally right. Don't think it is always gross revenue - believe they net out some stuff). If you just originate the deal and are not the executing MD, then this will change the split as well. This is also for advisory revenue - capital markets is lower since bank may be taking risk, using salesforce etc.
Bottom line is if you can generate a few million of fees, then you should be able to comfortably clear over a million in comp. Easier said than done as this probably means you have to close at least 1-2 sellsides plus some financing work per year (depending on deal size).
Thank you, this is helpful. Could you elaborate on what the $250k annual cash salary being a draw against bonus means exactly? I think I have an idea but just want to ensure I'm not missing anything here. Also is that for directors, MDs, or both?
It means that you don't earn incremental comp dollars above $250k until your bonus calculation is above $250k. (Bonus calculation less salary = actual bonus paid out). Not sure about directors vs. MDs (probably somewhat firm dependent).
this feels spot on + you feel the impact more in down years when deal flow dries up.
incredibly comical that somebody at RJ thinks there are multiple MDs (or group heads) clearing >$10mm each. I am close with the former #1 MD at RJ and he was poached immediately after closing major deals.
MD salaries are the same as VP salaries? That seems odd...
Do BBs credit salaries against revenue? Because MD salaries there are $400-500k.
It's not odd because MDs have more control/visibility over bonus. A VP's bonus will effectively be capped and be driven by group performance so a higher guaranteed salary relative to their position is justified. I'm surprised the BB salaries are so high (I know MM MD comp from selling MM IBs). However, revenue split is lower at BBs for MD bonus so maybe a higher salary is justified.
Congrats on DA Davidson
I’m an MD at a UMM firm and I run an old economy group. We run our business to a comp ratio, pay our analysts, associates and VPs and then leave the rest (typically 25-30% for the MDs)
Since I’ve been in the seat, my base salary is 400k and I’ve averaged c5mm a year. High watermark of 8mm and one year where I got no bonus and was in fact paid less than my VPs. That said, even in that year which was terrible it was my decision to do that, I didn't want to screw my team on comp and didn’t want to lay people off either, and I can take that hit.
No complaints at all about my comp, but it’s definitely true that if I had the same seat in tech / healthcare I would be making 2-3x because of greater deal flow, and hopefully the growth vectors come to my sector as well.
You’ve averaged $5m a year take home or revenue?
Total comp
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