Why is IB comp stagnant?
Not interested in IB, but why has comp stagnanted since GFC. Why would Basil-III/D-F have an influence on MD comp, if that is really indicative of M&A dealflow?
Also, is the fact that MD comp is the same as 20 years ago a secular problem?
As far as the sellside vs buyside debate, the strongest argument I could see is that your comp doesn’t gain against inflation at all.
IB comp is not stagnant, senior MDs make more than 20M
lol maybe the top 1% of them
years ago there were 9 figure MDs. I’m asking why comp is lower/ the same over a 30-40 year period against inflation.
Now there are still 9-figure MDs, they just don’t show off their wealth on the news or social media. More low-key —> less public envy for bankers
NW or TC lol because I don’t think there’s ever been a 9-figure MD who isn’t an equity owner in their own shop.
>Also, is the fact that MD comp is the same as 20 years ago a secular problem?
no, it is a religious problem. There was a contingent of Wiccan goth girls at the OWS protests who put a hex on both base pay and bonus.
You say you’re not interested in banking, yet your post history is full of advice (relating to a professional environment) to those in banking
I don’t give advice about banking I don’t know anything about it. I’m just curious about what macro factors affect a bankers wage, and how bank regulations fit into that.
Good point. I remember the Lehman salary leaks that date back to ~2007ish. Must have been crazy to clear 200-300k GBP back then in LDN with drastically lower COL. Can also imagine with less focus on ESG, social media, outrage culture etc. that times have been way more lavish.
Basel 3 & 4 capital requirements lowered the amount of leverage in the system. This resulted in smaller balance sheets and lower returns on equity. If you think of the classic DuPont decomposition of ROE (profit margins x asset turnover x leverage), lower leverage means lower ROE. The reality is that pre-GFC comp wasn't "real" and was just leverage driven.
Bankers have taken a double hit (negative jaws) as headline comp numbers are lower but the cost of living, and especially real estate, has gotten out of control in almost all major financial sectors where these jobs are located.
Is it stagnant tho? I remember the starting salary was $70-80K when i started about a decade ago. (checks notes: yep i'm old). I'm obviously out of the 1st yr IB recruiting market for a while now, but from reading the comments it sounds like first yrs get $100-120k base? The CAGR is about 3-5% if my starting & ending salary assumptions are correct. It seems to me the long-term growth rate it's on par with the typical growth rate, I guess maybe people are expecting 7-10% growth in salary, stagnant is the comparative word to use. (Also i'm not including bonus and other comps just to keep things apples to apples). Curious on other thoughts.
All in comp is all that matters and most analysts are making the same as pre-GFC (15+ years ago)
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