Could anyone provide insights into the compensation progression for roles in london(I’m starting in IBD next year) ? I've noticed these salaries seem lower compared to similar US positions. How long does it typically take to earn substantial income in London(300/400+)? Also, would you recommend moving to the US for higher earning potential?
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From my understanding, the gap in total compensation between the US and UK grows wider as people become more senior, except when it comes to MDs, as their compensation is purely based on individual performance.
The US is simply a much bigger market for banking as the pool of investor is larger, just think about how many companies with a mkt cap over a billion are based in the US, besides corporations in the US are more willing to pay larger fees compared to stingy European companies.
In the past the gap wasn’t that big, but as the dollar has appreciated over the past 5 years, what used to be a 10-15% difference, now is close to a 40% gap, if we adjust for CoL, then the difference is not that much as living in NYC, LA, or SF is way more expensive than living in London. The good thing about London and Europe is that culture tends to be healthier, and hours are not as bad as in the US, plus London bankers have 20 or 25 days of PTO, while in the US is weird to take more than 1 week off per year.
Anyway, as long as you work in IB, you will be a top 10% earner whether you work in the US or in London, so I wouldn’t move to the US just because of the money differece, because it will not make any substantial change to your life.
The notion that exchange rates explain the differential between US and UK comp is a common misconception - the real exchange rate hasn't changed very much; most of the movement in exchange rates can be explained by the differential in money supply growth.
I run a group out of NY with an equal number of MDs in NY and London. In our case, Europe and the US are similarly profitable and there is no comp difference.
That said, I’ve interviewed a lot of MDs in both places and have a good sense for comp. I’d say median MD comp in the US is 20% higher at current exchange rates (I’d guess 1.75mm UK and 2.25mm US), and when you factor in cost of living, quality of life, very few MDs in London would move to NY absent a big promotion (more the other way actually).
Where there is a difference is at the very top. There are very only a handful of banking MDs in London making 10mm a year; it’s rare in NY but a lot less rare.
Thanks for answering, appreciate it.
Are there actually MD’s making 10mm/year?
Why are they paid so much? Are the specific sectors or industries where this is more prevalent?
I’ve seen salaries of MD’s in London ranging around 600-700.
Base salaries are an increasingly small part of comp over time
10mm a year is pretty uncommon in the UK. 20-25 MDs in total is my guess who are:
- head of EMEA investment banking or co heads of global investment banking in US bulge brackets in a good year
- the top UK rainmakers at GS and MS
- rainmaking partners ar CVP / PJT / PWP / EVR
- the three or four top people at Roths
- a few people at JEF and other middle market firms on a revenue share
6 years IBD experience in London as a VP and my comp still hasn’t reached £300k ($375k).
pretty sure you can reach that in 2 years in the US at some elite banks.
one of the reasons our earnings are so much lower is in the UK we charge much lower fees, our fee on a deal can be around 0.75-1% in the US fees can be much larger. There’s also more deals there.
Out of curiosity about the fees, is that the rate across EMEA, or are these UK-only deals?
Are you at a HSBC, BNP, SG. Credit Agricole sort of institution? No way a BB would pay that little. You are pretty underpaid as a VP my man.
I live in both the UK and the US. Ideally, you would create a spreadsheet or calc where all realistic costs are listed for your individual situation. Nobody here knows how many kids you have, how many you want, what your rental/living situation looks like, and more.
Regardless of what your income in the US would look like, always calculate for expenses you wouldn't have in the UK or Europe. Where a nursery might be subsidized or free in Europe/UK, it might be a private facility in the US and they could charge you a lot. And just see which of the relevant items are more/less compared to your current situation.
Unless you are very senior or in specific/in-demand roles, my salaries in the UK or the US weren't that different.
Employment in the US is also "at will", meaning you don't have as many rights compared to what you have seen in other countries.
While we are all young and beautiful, we don't care that much about health coverage. This may change going forward and the overall cost for individuals in the US is absolutely higher than under NHS. Stateside, in many cases health coverage also stops without employment.
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