Higher Pay = Higher Quality?
IBD attracts bright people because it pays well. Simple. Needless to say, were the salaries to go down, the numbers applying would plummet, as would the quality of the candidates applying.
From what I've heard, the work done isn't particularly hard; I always assumed the wages were high merely because of the sheer volume of work done as well as the competition.
If it were to become a regular paying job* with lower quality employees, would the quality of the service provided by analysts and associates go down that much?
*Starting salary 40-50k with no bonus, assume regular hours with the workload of 1 person shared between 2 or 3 people to bring it down to 40/hr weeks
Do you really need to have graduated from Harvard to format Excel and PowerPoint? After a BB training program, I think you would get similar results from a high school grad than you would from a target university grad (holding intelligence, drive, effort, etc. equal).
I think the "quality" of associates would matter more than analysts. They have responsibilities managing analysts, interacting with the client, feeding information down the hierarchy, and making sure the work completed is up to par.
I don't understand your point. What are you arguing with me about?
The reason why they get smart / stellar grads in IBD is because of its prestige and pay. The work as an analyst is not difficult by any measure.
I would argue that regardless of the pay, if you are getting exposure to a large network and have the chance of finding attractive exit opportunities then a 2-year analyst job is worth it.
I have been thinking a similar thing. If there is so much demand for these entry level IBD positions, why don't banks lower the wage? They would still have high quality human capital because a lot of the attraction to these jobs is based on prestige and exit opportunities.
Perhaps the banks want to acquire top quality human capital from target schools to maintain their image and brand?
Anyone have any thoughts on this?
There are a few reasons for this. The first is, as you said, branding. Banks want to be seen as "elite". If they have a bunch podunk U grads, they seem less qualified...even if those grads are as smart as target grads.
Next, you are working 100+ hour weeks. Even at current salary levels, a 1st year analyst analyst might make $25 an hour, including bonus. Then consider the taxes and cost of living in Manhattan...you can't decrease salaries much more. A first year analyst would be going into debt on 40k per year.
The quality would stay about the same but the point of attracting people to these positions to to later hire them for a higher ranked job and have a working sense of the people they're hiring.
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