UK vs. US Salaries - Mid Career
I think the general perception is that the salary in US is much much higher than finance salaries in the UK (from what I've seen on reddit/WSO, it seems to be 1.5~2x?) but I'm really doubting this and wondering if it is true. I had to recently choose between a US and UK school and chose UK, but now I'm starting to doubt my choice.
My dad was front office MD at JPM and I always ask him for advice (while compare contrasting from WSO/reddit since he retired couple years ago). He always tells me that UK/US salary discussions are crazy since if it was indeed the case that US made 2x more, every MD would transfer from UK to US (which doesn't seem to be the case)
Is it the case that the base salaries are different and the bonuses are the same? I feel like the base salary could be different of course since CoL in NYC or SF would be bit higher than London, but the bonuses should be the same right?
Even for early career, is the difference in base salary still astronomical? Everyone seems to be saying US is so much better, but if that was truly the case wouldn't every Oxbridge/LSE grad try to recruit for US office instead of UK office?
Why are you trying to doubt what’s pretty much public info? US total comp on any level is much higher than UK, including bonuses.
MDs can’t really transfer from one office to another simply because they can’t take years of established relationships with them, they would have to practically start over.
US companies(in the US, not UK) don’t hire UK graduates and vice versa.
True and also because if you're a 40-50 year old MD, you're probably not going to uproot your wife and kids lives and established social circles just for 1.5x comp
So your argument is that your Dad gave you this one-line rationality thesis and this is supposed to disprove facts? A lot of people in the UK who are driven purely on compensation dream about a move to the US but it is very difficult. The guys who could theoretically move but don't do it because they just prefer to live in the UK. Culture between UK and US is very different - many people in the US struggle to fit in here and vice versa. Many people have family here and the US is a huge move. Realistically your Dad just told you this because he wants you close to home... In any case there is 0 evidence to show salaries in the UK are higher than in the US
O sorry I meant more like I know that the salaries will be higher in the US than UK, but like by how many orders of magnitude? Like lets say that as a HF Analyst I had a really good year in the UK. It wouldn't make sense for me to get half the bonus of my US counterpart. Wouldn't the same apply across all finance careers like IB/SnT? Like point is the base salary might be lower, but is the bonus the same? I'm asking this because I know that finance is a purely bonus driven industry rather than a base salary type industry, so it's more important how much bonus I'm getting for US vs UK rather than base salary
No, bonus is not the same. Bonuses are typically done in % of base salary in IB. Yes the difference is definitely noticeable. "Top of the street" compensation in the US is leaps and bounds above "top of the street" compensation in the UK at a junior level and I presume this only gets worse as you move up but maybe someone else can drop in
HF comp is the same*. Other than that, there's a discount.
*In theory. In reality its harder to scale equity books in Europe so in general, its harder to get 8 figure paydays or whatever.
On the private markets / buy side, comp is relatively similar in NYC vs. London. There will always be exceptions but I believe some of the big MFs (KKR, Apollo) pay the same USD amount in both cities. Second data point is comparing on Linkedin as some US jobs advertise the salary range; in most cases it's surprisingly even lower than London salaries (same absolute amount but in $ instead of £, and this is even more pronounced now given recent USD depreciation). Third data point confirming this is directly comparing with my US colleagues and it's pretty much the same (10% discount in London but I also work significantly less hours). In sum, on a LFL basis and given the CoL + quality of life differential, London wins.
However, when looking at IB, NYC typically commands a 20-30% premium, and in some cases can be 50% but I don't know if that’s LFL. Market is just much bigger in the US and fees are higher vs. Europe. Then again CoL in NYC eats that away so it’s probably a 15% differential.
For CoL part, as someone who's lived in london and currently in nyc, I can confidently say that CoL is pretty comparable between nyc and london and the city itself will somehow influence your lifestyle. For eg, lots of transplants in nyc live in Manhattan since they're very well paid but not as many people living in zone 1 in london as it's Manhattan price but people don't make as much money so if you want a pretty civilised lifestyle, then stay in zone 2-3 as most of your peers and hang out in zone 1 which makes the living cost cheaper.
Comp in the US being 2 - 5x higher is indeed an exaggeration no cap. For An1 in IB, the base salary is between £65 - 90k ($85k - 120k) depending on banks in London versus ($100k - 130k) in nyc, which shows that it's just 15-20% lower. Some banks in London even pay you NYC salary and some even pay better with the same company. But the bonus fraction in london is somewhat higher than nyc so the gap does close a bit. And the gap will get closer the more senior you are. Buy-side is pretty comparable between both cities.
People in the UK don't recruit in the US for a good number of reasons. Lots of people have families here and UK provides you a lot more perks compared to the States (free healthcare, proximity to other countries, better wlb, etc). US companies in the US only recruit kids studying in the US or Canada, which they do specify in every job requirements and barely any firms would be willing to sponsor work visas for international students unlike London. Also the biggest reason is that there's actually no point for UK students recruiting in the US as the job market is already big enough (there must be some reasons why nyc and london are the only cities that are ranked as Alpha ++ cities). Yes the market is smaller and shittier, but it's still much better than lots of other places.
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