$20K Bonuses at Goldman - We're now in the 99%!!!
The retrenchment has hurt morale among lower-tier workers. Young bankers and traders fresh out of Ivy League universities can no longer count on earning more than their peers in other prestigious industries, such as management consulting and law. Rounds of layoffs, which used to be aimed mainly at senior and midlevel employees, have cut through the junior ranks this year at firms like Credit Suisse, and bonuses are down for nearly everyone.
At Goldman Sachs, some young analysts — a group that could earn year-end cash bonuses of up to $80,000 in better years — were given as little as $20,000 this year, according to one person with knowledge of this year’s numbers.
Just not worth it. I'd be out!
It's all about the exit opps.
...and the presitge
...Is there still any prestige left?
And exit opps must be far and few now. This is somewhat a concern as I'll be starting as 1YA this summer at a BB in London.
$20K bonus after a year in banking in NYC is horrible. I would be livid.
ANT, this is the 6 month stub for first years... as usual, they didn't bother to get full detail in their reporting. That being said... a $37k full year bonus, which is what this would extrapolate to... is fucking terrible... this is why I was so frustrated in the other thread on compensation.
W/ all-in comp after taxes that has to be like $10-12/hr right?
Edit: It's like $20/hr Pre-tax. Damnnn. Managing a McD's is where it's at.
Not far away from that number if you're banging out 100 hour weeks.
Yeah, but would you quit?
this is depressing... i think some analysts will have a negative balance in their checking accts.
That's not the annualized number though, remember analysts start in the summer, so annualized that bonus would be 40k.
Also remember it's all leaked info, someone in the comments on dealbreaker said top bucket was actually 70k annualized.
Word on the street is that 1st year Associates over there at GS got double fucked - No base increase along with a shitty bonus.
Not good for those with families and/or needing to repay B-school loans.
I can't stress enough how shitty life as an IBD associate is
J/K, sort of.
lol hahah. Oh man, I hope telling the ladies at the bar that you work for Goldman helps you get laid b/c not being able to buy them any drinks surely wont!
So a company doesn't do well and its employees don't get large bonuses...sounds like capitalism.
LOL
well i guess it could be worse....
Thanks Rufio for clarifying it. Missed that part.
And we really should stop calling these bonuses, since they are really deferred compensation packages. They lure a carrot in front of you for a year, telling you to bust nut for the real reward and then shaft you in the end. I would be pissed also and look elsewhere for work.
If you want to retain talent you pay them.
Could not agree more... this was my entire point in the previous thread... Glad to hear others have a sane view of this bullshit
This.
Stop calling it a fucking bonus. No one works in this industry for the base. It's fucking year-end compensation. Get it right. I want to take my dick out and bitch slap all these reporters across the face with it for propegating the myth of the year-end "bonus." Want me to work 80-90 hours a week in a pressure cooker? Fuck you. The base ain't gonna cover it. Hand over the money.
I award you 50 theoretical points, and a SB as soon as I'm out of the hole.
Interesting point raised here - should end of year compensation be treated as "performance bonuses" or "deferred compensation"?
I've always concluded it was a performance bonus given the bucketing of bonuses, while else would a top bucket analyst / associate be paid more than a bottom bucket performer?
As front office employees, I find it hard that people still have the mindset that "activity = value". If the profit pie shrinks, you can only assume comp is going down with it...
And where will these folks go? Where will they make better money? Please do tell.
ibanking analysts have no special skills apart from working like dogs. However, working like a dog is not that much of a skill because if it was, day laborers would be wiping their ass with BRK.A certificates.
Where will they make more? Big Law? Nope. Go back to a top school and graduate at the top. Software devs for high flying tech firms? Oops no dev skills! Pro athletes? lol Petrol engineers? Kind of have to go back to school for that.
Where else will most of these folks go? If they leave their analyst gig, I can assure you that the vast majority will not earn six figs for the foreseeable future . In addition they will have less opportunity in their new career or job.
So barring any of them starting their own business and doing well, they're better of staying. Management knows this. If they don't like it, they can leave. In an era of wage and benefit deflation, there is no shortage of people willing to take 100k+/year even if they have to work 80hrs+ per week. It's not a game out there. People are scrapping for 50k jobs and many of those folks aren't any less skilled than 1st or 2nd year non star analysts.
Investment banking analysts and associates do not really constitute "talent" in that they are not producers and paying someone 20 bucks an hour to proofread spreadsheets and power point slides doesnt seem particularly unfair to me. As public companies that are supposedly beholden to shareholders it seems long overdue for banks to realize that they dont need to pay exorbitant salaries to 25 year olds with no skills that bring in business, virtually no job prospects, and dont even plan to be with the firm for more then a couple of years. Maybe now that the bailouts are over and the business has settled into the new normal in a lower-leverage world these banks can finally be forced by the market to become more efficient in many ways including comp. I say let the free market do its savage best and we can finally get moving in the right direction again.
Also, my guess is that most of these banks would welcome employees leaving right now because they will save money on severance and benefits which they will have to pay when they fire them. In fact I think there is a bit of a race to the bottom going on where banks are trying to leak that nobody is going to get paid this year in the hopes that more people leave. Mass lay-offs are expensive.
I don't believe this isn't as bad as it appears. First of all, base salaries continue to go up compared to pre-recession levels. Back in 2007 a first year made $60K base. Now it's what, $70k, maybe as much as $80k? (Yes, I'm out of the loop). Second, the bonus number of $20k represents the low bucket. Notice how the article says "as little as $20k." I'm sure there are people pulling in higher amounts. Finally, if this is a stub bonus, the annualized amount brings pay back up on par with historical levels (adjusted for market factors).
Sure, it sucks not getting paid as much as the analysts who came before you simply because it was a bad market, but I don't think this news is bad enough to warrant quitting over.
Compbanker, sorry I respect your opinion on almost everything on this forum, but you're wrong about this. Have a best friend at GS, first year and he is top bucket and he confirms these numbers as their top bucket numbers. I wouldn't quit over this either, clearly there is still a lot of merit to the job, but the pay is pretty bad.
85k base usually.
Edit: I just saw that this was 2012
So we're actually looking at $100k all-in first year comp at Goldman Sachs - the "marquee" firm of Wall Street.
If you're racking up six-figure student loans to get into finance, you'd better pull your head out of your ass - and FAST.
I've seen this movie before.
Again, this is a stub bonus. Annualizing it to $40k is a bit unfair since the second half of 2011 was really bad because of the Euro crisis, and a whole year of that degree of crappy markets seems pretty unlikely, but even then it'd be a $120k all in first year pay.
Hate to break it to you, but when I got my stub it ended up being dead on point annualized to what the first year annual was last summer... Could be in for a very frustrating year end
$40k annual pretax --> $20k stub pretax --> $12k after tax? $65k annual pretax --> $32.5k stub pretax --> $19.5k after tax?
$7.5k difference from what they'd get in the bank had it been a great 2H 2011, not a huge deal in my opinion. If they get another $40k next year, then it'd be a real problem.
at least it's cash bonus. I won't say who I work for, but my year end is being paid out in restricted stock, 2 year vest. Cash is kind in this market, I can give less of two shits about getting stock.
Sounds like BAML, or maybe CS. I know that CS definitely paid some deferred, stock bonuses last year.
So first year base at GS is $80k now?
No. Still 70.
It was 70K + 10K signing bonus for last year's first year analysts, not sure about this year's.
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CompBanker, we are talking about Associates. So now it's 100k base + 40k (annualized from 20k stub) for first full year of an Associate = 140k. That's much much worse than "expected" 125k base (in the past there was always bump in the salary after first 6 months on the job) + ~100% bonus for first-full year = ~250k all in. Roughly 100k less!
The articles said the $20k was the analyst bonus and all of the comments above (except one) references analysts. You sure we are talking about associates? I agree a $40k annualized bonus for associates would be a royal kick in the nuts, but I don't think that is the case here.
I did two years in M&A of a bulge bracket and am in middle market PE currently. I have been sour about pay in the past...still am. However, when you are in banking, you shouldn't be doing it totally for the money. If that is the sole reason, any happiness will wear off real quick. That said, not to mean you can't be upset (as I said I have been) when you consider the amount of work you put in, etc. However, I don't feel bad for an analyst at GS, MS, etc. Somewhat said it earlier, its all about exit opportunities.
It's hard to remember, but its worth while to take a step back and recognize no one gets wealthy at 23-25 years old. I have never heard about an MD, partner, etc. reflecting on the wealth they created in their 20's...
When does 2011 Comp database get updated?
That's what I heard (but it's not official info). 20k stub for Associates seems indeed low, but is in line (roughly) with Associate stubs at other BB ~30-35k (and that's confirmed info). So, even assuming 35k stub and no pay increase, total first full year comp is ~170k (100k base + stub*2) vs. expected ~250k. Still, huge difference IMHO.
Goddamn. Shit better clear up in the next couple years before I get into the FT market. That's scary low no matter how you look at it. I'd still owe 100k on my undergrad degree when I started applying for B School.
Wait...just so I'm clear: you're a sophomore in college now, and you still want to go into finance and are willing to go $100k in debt to do it?
Are you out of your fucking mind?
Agree with Edmundo, going into further debt is not going to pan out like you anticipate. For a while I was applying to i banking jobs (a move from corporate finance) and had a couple companies tell me after they were going to hire me that they rescinded the offers. I suspect I wasn't the only one with that situation. I think M &A and compliance positions will be okay but everything else will shrink as finance moves more towards CS stuff.
Incoming freshman. College is getting ridiculously expensive for target undergrad programs and it's not getting any better any time soon. Shit's fucked everywhere. At least with economics into IB, I'd get the exit opps after 2 years as an analyst, which puts me in a hell of a lot better situation than most people in paying off student loans. I'd like to get payed enough as an analyst to pay as much off as I can, but this is ridiculously low. 100k was an exaggeration, but it's gonna be more than I'd like. I'm holding out hope things will get better, or at least manageable enough in IB by the time I graduate to get me through B School into a long term career where I can pay off the rest. I'm aiming for CorpDev.
Are you at least at HYP? By the time you graduate, I think the economy and industry will be in a worse spot then it is right now. I would seriously consider a school change to something more affordable. 2015 will not be the same place as it is now.
To echo Eddie, WHY THE FUCK WOULD YOU GO TO B SCHOOL IF YOU WANT TO WORK IN CORP DEV??? IS THAT A JOKE?
You can easily get into corp dev after working for a year in banking, at worst 2... you wouldn't get any benefit from going to b school if that's your end goal. If they force you to go to b school or want to pay for it, then cross that bridge when you come to it. It's mind blowing to me how kids are willing to piss away 150k on an education to get a job that they could get by putting in a few cold calls... YOU are the reason you think you need an MBA, not the job.
Wow I can't stand the comments in this thread so I will comment.
1) THIS IS STILL A TON OF MONEY BY ANY STANDARD.
2) 1st year's got a sign on they factor that in in bad years. Same for associates
Let's go over numbers
1st year an: 70k (prorated 5 months = 30k) + 20k stub + 10k signon = 60k for 5 months of work 1st year asso: 110k (prorated 5 months = approx 45k) + 40k signon + 25k -30k stub
So let's not all sit there and say "OMG THIS ISNT ENUFF money" for fcks sake
3) Your friend confirms this is top bucket? How the fuck does your friend confirm that he is top bucket? My friend is in HR and I have other data points
4) Stubs are not ranked - everyone gets the same. Other banks had lower stubs and so did other banks for analysts
I digress ... but enough with the whining jesus christ. and for all the trolls / haters. I work at a BB, am not an analyst, and I got paid top but I've seen the good years and the bad years. All of this sht evens out over time
^^ Rufio Love - Most people do corp dev hoping to climb ladder to become next CFO / CEO. You still need an MBA for credibility.
It's funny how everyone thinks 2 years in banking is the magic fcking ticket to every career in life
Debunking you can still get in without an MBA, you shouldn't fork out money for an MBA till they tell you that you need one, thanks for the lesson though.
Only thing diff at GS this year is no pay increase.
Asso stub at other banks is 22k to 35k. JPM paid the most.
^ Agreed.
I've had many friends of mine leave as 3rd year associates and go to B school. Many have joined startups and their stock options are worth more than my next 3 years bonuses combined.
Don't knock it if you don't want to face the harsh realities
Trend this year seems to be no stub to Analyst 1 or Assoc 1 pay increase.
This thread is a fucking cluster.
You first need to determine whether or not this is talking about analysts or associates. It doesn't seem like the article is trustworthy but if you take it at face value, then we are talking about analysts.
We also need to figure out whether we are talking about stub or full year. The article doesn't specific say what time period the bonus is referring to, although it says 'this year'. What banks pay their analysts stubs? I didn't think this was very common practice, so if anyone knows for sure what's done at GS, maybe they can let us know.
Given the wording in the article it would seem that $20k is referring to a bottom bucket bonus. Which doesn't seem unreasonable if you are shitty 1st year. Obviously that would hurt a lot, but it wouldn't be the end of the world...in fact, you should probably be happy you weren't fired, lol.
My guess is the article is poorly worded and/or the author has been research it for a few weeks, thus the 'this year' comment.
Does it really seem that far fetched that a 1st year analyst received a $20k bonus if he was bottom bucket?
Regards
cph see my post above. I have direct info from my friend at GS and he was paid slightly under $20k as his stub. GS pays first years a stub.
How much of this can be attributed to many GS prop desks winding down?
the spreads are thin
I understand that cash is king, but stock isn't terrible to be getting at these levels (assuming the market for bank stocks ever recovers).
and you don't get diluted with equity raises
Im starting to think that being a consultant is way better than the stuff i've been reading here.
^ awesome fucking avatar dude
http://www.hetemeel.com/haha/44457.Why+do+you%20SUCK%3F!%3F.jpgkhara 3alekon, you are forgetting about the models + bottles.
We're like 3-4 years from a depression so don't expect things to get much better.
Interesting that in 2008 when threads like this were posted the consensous was that "things will be better in couple of years", "wall st always over-fires", and "things will come back"....now here we are in 2012, stocks are rallying with financials leading, the economic data is better then its been in a long time, and the consensus is "we are on the cusp of a depression".
My thought is that we are finally seeing the capitulation in compensation and employment that would have occured in 2008-2009 had there not been a ridiculous boondoggle of a bailout that prolonged the misery. I see this as a healthy correction and I think those that survive the purge will be well-positioned in a lean sector in a couple of years.
I m not saying that being an inestment banking analyst is going to get better in the near future, but I think we are finally seeing the healthy correction that is neccesary for the finance industry to move forward.
Glad to hear the positive side of things
@Bondarb Great perspective, as always.
My only counter to that would be that it took Wall Street 30 years (1975-2005, roughly) to go from utility-level compensation to absurd stratospheric compensation levels, and now that there is a confirmed downward trend I have a hard time seeing bank management increasing comp any time soon. I guess I'm saying that a 30-year pendulum swing takes more than 5 or 10 years to correct.
that is a fair point, and I generally agree. I am not saying we are going back to the boom times when comp was massive and paid immediately in non-deferred, spendable cash. I am just saying that a healthy blood-letting and a capitulation in sentiment around the industry is needed for a true bottom...this is true in any market.
It is also notable that most of the people who got rich on wall st in the 80s, 90s and early 2000s did not do so with cash comp...even the CEOs rarely made more then a couple of million bucks in actual comp prior to the late 1990s. In the "go go 80s" if you made a million bucks in a year as a salesman or banker that was very serious cash. Most of the guys who got rich did so because they were paid in stock at places like LEH and BSC (that was the ticker for bear stearns for the kids) and saw that stock double every couple of years. Had one collected an annual $125k bonus in LEH stock in the early 1990s and not sold it (which in many cases they werent allowed to do anyway) by 2007 they were very very rich indeed, even with that poor bonus that they probably bitched about at the time.
Point being that I dont think cash comp at banks is going to return to the late 2000s insanity in the near future, but that was not normal, it was the final parabolic phase of a massive bubble. I just think that 5 years later we may be seeing a bottom (especially for shareholders who are a huge beneficiary of firing bad people and cutting comp) and those who manage to survive may look back at this as a very good time to be in the industry. Even if it may not be readily apparent for some time.
You do goldman banking analyst for the exit opps. Yeah, 20K isn't that great given the hours, but they need to just suck it up. 2 years at goldman>buyside>HBS>do whatever the fuck you want after that.
Yeah, or do whatever the fuck you want and just skip all that misery before it.
But then how will I achieve greatness???
I guess IBD is no more for me time to be a stockbroker and tell people to buy low......
Wow.. could only imagine what that comes out to hourly
I would be thrilled to get a 20K "bonus" in my line of work.
Your corporate employers are telling you that you aren't wanted... Why don't you get this?
Find a spot where the lifestyle/passion/money trade-off works for you. If being an employee at a financial supermarket is not longer that, so what? There are other options within the industry and outside of it, not to mention opportunities abroad.
You have every right to be angry about not getting a good bonus. The question is, what are you going to do about it?
Open question: Do you think this is going to affect pay on the buy-side, or at top tier boutiques? I think not so much for the former and quite a bit for the latter at the junior levels (analyst / associate). Thoughts?
I dont really see the correlation between attracting top talent and attracting banking analysts. If Harvard graduates dont want to come prooof-read the pitch books then so what? I think we are talking past each other because you equate the quality of analysts with the bottom line, which I dont. They dont recruit the secretaries or janitors from Harvard and pay them 6 figure salaries, so I dont really see why they need to do it for analysts who add about the same value (not much) in my opinion. I have no problem paying up for actual producers, but for analysts I think cost trimming is very positive for these banks.
This is so much fiction I don't even know where to start.
The product of true investment banking sells itself, you don't need Slick Biff from Princeton to sell it. When it makes sense for Company A to take over Company B, Company A will know it and will seek out their financing through investment banks.
You only need an Ivy League huckster who's slicker than snake snot when you're trying to convince Minnow Inc to take over Whale Co with massively leveraged debt and other asinine scenarios that would never take place organically in the market and generally only serve to generate banking fees.
You know what else an Ivy League egghead at the top is good for? Financial innovation. You know, like toxic CDO's and other shit the market does not now and has never at any point needed.
I have the benefit (drawback?) of being a little (ok, a lot) older than most of you, and I remember what the business was like 20 years ago. I can tell you that even then it was the kids who came up from the street who were running things more often than not. It's only in the past 20 years or so that this idiotic fixation on the silver spoon crowd has taken over Wall Street.
But at least they haven't done any damage, right?
good point...don't need to be a genius to be a banker.
The industry is cyclical - things will rebound. Also for people saying that outsourcing will occur. Highly doubt it - why would a company outsource if it is only suppose to be 10% more profitable within the next 10 years with the spread shrinking
.
Not all princeton 3.8s are smart and banking is not exactly full of geniuses
Banking is still one of the highest paying professions for college grads. Banking pays what it does because it has to compete with other sectors for Ivy grads. They aren't paying for talent as say an Oil company for an engineer or a tech company for a top MIT grad.
The cost of that competition has decreased so pay for entry level bankers will decrease. Banks can pay lower and still attract the same folks since opportunities in the general labor market are simply worse. Even for Ivy grads.
As far as talent goes, it's a crap shoot. Especially for something that isn't particularly IQ driven such as banking. If you take 100 college grads and 100 Ivy league grads and put them in analyst roles, 20 years down the line the disparity between "stars" from both of the groups will not be that great.
There are many ex-lawyers (partners) from BigLaw who come into I-banks straight as MD's. Partners at law firms already have existing book of business and clients, and hence they come in as MD's. An MD is essentially a sales job. Much different from an excel/ power point analyst monkey
If anything, the pay cut in finance will bring more non-Ivy league kids into the game. $100-120K, all in, with solid exit ops is still enough to attract people day in and day out. Just wait until outsourcing gets more prevalent.
Is outsourcing really coming to IB analyst positions? If so, many of college kids will get fucked, really hard.
There are VERY few jobs where a recent graduate can come in and contribute in a meaningful way on day 1. This is true of engineers, lawyers, etc. Any firm that hires a new lawyer is effectively trying to identify the future of their firm. They still get paid because it does take a combination of talent and effort to develop into a contributor and you can't attract talent and motivate effort without paying.
I have a very different opinion of most on this board. Every entry level job has taken a hit and this is true in banking as well. Things will turn around, eventually. Those who are able to make it through the tough times will be in a vacuum and will be in a good position to be promoted quickly. You will see an exodus of senior bankers who no longer need to work and an annual "cleaning house" in the junior levels. If you are left standing, you will be in good shape. Pay will rebound as a function of even leaner operations.
The vast majority of analyst aren't future "top producers." The picture is different at the Associate level but there will always be people from industry that can be hired at the VP and up level who will be able to wrap their head around how a pitchbook and a DCF work in a couple of weeks.
For people who deal daily in the markets, most of you seem to be oblivious to their workings.
Comp levels will find the"right" place to be in general. Banks don't pay people out of the kindness of their hearts; they pay them based on how much value they provide and how much that same person could get by leaving. This enormously complicated concept is known as "supply and demand". The demand for people is lower than it was in 2006, and barring a change in supply, comp will be lower too. It is useless for you guys to idly speculate on whether or not wall street pay is deserved in general, when the market has already spoken.
That being said, in individual years, individual firms may be above or below where they should be by some amount. They have imperfect knowledge of the marketplace for talent or what the demand for their services will be in the future. One thing to note is that the differential between comp per head at GS and comp per head at JPM and MS shrank substantially this year. The general view on the Street is that people at GS generally work harder and are paid more than people at JPM and MS. I don't know if comp at JPM/MS was too high this year or comp at GS was too low, but I do know that a 5% difference between JPM and GS in comp cannot sustain the reputed 15% difference in hours. Also, it should be noted that buy side firms have not dropped their pay by anything like the amount that the banks have, and at any level below MD it remains pretty easy to switch from a BB to the buy side (as I did recently).
Well spoken BB Quant. Bondarb too. I think expectations for many of analyst and associates are ridiculous and they need to get their heads out of the place that sun doesn't shine. You should be willing to work for close to free at an investment bank or hedge fund, and even offer to pay tuition so you can learn the ropes and some day maybe (just maybe) become a master of the universe. I know you went to top schools, studied hard, got good grades, 'networked', but please check that all at the door. You are not really 'worth' anything in particular, and it's all constrained by 1. supply and demand (even at the higher levels) and 2. profitability of the firm. Right now supply is much higher than demand for mules of the industry, and firm profitability is low. There are no bailouts on the horizon for your crappy levered up barely-profitable banks with flawed business models constructed around the principles of thuggery and everyone in America hates you. In no other industry anywhere in the capitalist world and at any no other point in time has there been a greater scam than the Investment Bank of the last decade. If you lose money in other industries, guess what happens? Layoffs, reduced pay, benefits cut. Profits are meant to be for shareholders, not employees who risk OPM with no real downside themselves. Why are you allowed to pay out such a massive portion of the firms revenue as 'compensation'? Because you went to Harvard? Cry me a river. Because you are smart, work hard and special? Think hard about this. There is nothing special about you or the work that you do. 90% of the kids with far more special skill-sets and smaller egos are getting by and thriving on lower wages around the world. You can only bend the rules of capitalism for so long, mixing in socialist policies. There is a reason people in this country are angry and its not just because you make more money than them or went to HYP (lame acronym). So pretty please, take your 20k bonus and be happy that you got something for producing close to no real tangible value for your marginally profitable firm!
I disagree... This (like the "track") is the kind of Kool-Aid businesses try to sell their employees all the time. I'm not drinking and neither should WSO people.
People enter finance to make money. Whether its at an investment bank, private equity / hedge fund or any other compensation scheme. If you are willing to give up your 20s for free, while making money for others you have demonstrated that you don't have what it takes. “If you sit in on a poker game and don’t see a sucker, get up. You’re the sucker.”
In your comment, you seem like you're telling the sucker (the guy who works for nothing) to stay at the table... This is bad advice and a dumb trade... He'll be bled dry.
people in this thread are retarded , advising people on career decisions because stub at one firm was bad in one year at entry level.
I was shocked when I read the article, but reading this thread makes it seem not as bad
[quote=jimkimdog]The retrenchment has hurt morale among lower-tier workers. Young bankers and traders fresh out of Ivy League universities can no longer count on earning more than their peers in other prestigious industries, such as management consulting and law. Rounds of layoffs, which used to be aimed mainly at senior and midlevel employees, have cut through the junior ranks this year at firms like Credit Suisse, and bonuses are down for nearly everyone.
At Goldman Sachs, some young analysts — a group that could earn year-end cash bonuses of up to $80,000 in better years — were given as little as $20,000 this year, according to one person with knowledge of this year’s numbers. from http://dealbook.nytimes.com/2012/01/19/the-new-normal-on-wall-st-smalle…]
It's just the nameplate and the network, don't worry about it bro.
If you guys could finish b-school with virtually no debt, would you still consider a job/career at a bulge bracket?
I'd personally prefer good firms on the buyside or the better boutique banks (Perella, etc...), but I wouldn't rule out joining the bulge bracket banks if I couldn't get into those firms initially. I would need to get paid though. I don't work for free.
My rationale is to position myself to be able to run my own fund, my own advisory firm or become partner at such a firm in the mid/long-term. I think I would be able to build more of a marketable expertise or relationships at those firms than at a bulge bracket bank.
Read: http://www.amazon.com/Spent-Evolution-Consumer-Behavior-ebook/dp/B0023S…
Quite frankly people don't give much of a shit about who has the most money. I don't make friends on the basis of "O, he makes $xxxxx / yea, he's cool". Money is simply the only way we have to differentiate ourselves in a world that is anti-segregation. Because I can't start a community of Ron Paul loving people only, I have to fight on the corporate ladder to get enough money to move into a big enough house to get away from all the others and live in the right neighborhood.
Chase your dreams, not the money. If you want GS and the "prestige" (tip- no one really cares too much where you work) then go for it. If you don't, then live life the way you want to. It's not who dies with the largest bank account, but who dies leading the most interesting, fulfilling life. We developed millions of years ago in a world that didn't have BMWs or mansions. We learned to judge people face to face, and that is still how we judge people on the whole. The only reason we judge people based on objects is because they are proxies for other things (security, intellect, conscientiousness, etc.) We wouldn't be able to buy a BMW if we were a annoying, loud, dull, stupid human being. Sure, money matters to some degree for security, but girls and friends and family, the people who really matter, don't care if you make $70,000 or $100,000 out of school. No girl I know ever liked a guy because of his bank account (unless she had ulterior motives), and no friendship I know was ever created out of money alone.
Here is another data point for Post-MBA associate comp at GS vs MS & JPM comp
2011 GS (A0) Stub Salary 50k over 6 months 2011 GS (A0) Stub Bonus 20k 2011 GS (A1) Full Year Bonus 60k (down from 120k last year) 2012 GS (A1) Yearly Salary 100k over 12 months (down from 120k last year) GS Total Comp for fist 18 months = 230k
2011 MS (A0) Stub Salary 50k over 6 months 2011 MS (A0) Stub Bonus 35k 2011 MS (A1) Full Year Bonus 120k (down from 125k last year, last year 60% was deferred, this year was cash) 2012 MS (A1) Yearly Salary 120k over 12 months (flat to last year) MS Total Comp for fist 18 months = 325k
2011 JPM (A0) Stub Salary 50k over 6 months 2011 JPM (A0) Stub Bonus 35k 2011 JPM (A1) Full Year Bonus 120k (down from 125k last year, last year 30% was deferred, this year was cash) 2012 JPM (A1) Yearly Salary 120k over 12 months (flat to last year) JPM Total Comp for fist 18 months = 325k
GS screwed their Associates out of 95k to "beat the street" and post revenue numbers. To even the score at PV Goldman would have to pay a bonus that is $104.5k above the next closest competitor (simple 10% discount rate) just to make their first year associates whole. Thus the long slow decline of GS continues, folks will bolt over this.
http://www.youtube.com/embed/_UTGh5iMXtc
This is what happens at public companies. You have to find ways to keep that stock up in the market or shareholders will be punished. I feel terrible for all the poor Ivys that will think about their empty fridge as they buy bottles to try to keep the prestige going.
All booms come to an end, and if your company loses money, well, you don't get a huge bonus if we're operating under a capitalist system. The only way you make more than 5x the median income in the country if your company loses money straight out of college is under fascism, and well, 290 million voters don't like that idea.
One of my friends went to work as a rig engineer for Shell back in 2007. She studied Mechanical Engineering and minored in geology at the University of Illinois.
She's now making more than most bankers. Working on an oil rig in the gulf.
She bought a helicopter last year. She might earn like she works in finance, but she spends like a drunken sailor. I worry, but I'm happy for her. She loves engineering challenges. How do you pull oil out of the ground? How do you get an aircraft to hover in place and land on an oil platform?
You choose your industry not for the prestige, not for the money, but for the fun of playing the game. If you like being able to ask, "There's oil 10,000 feet down there. How do we (safely) get it to the surface?" You can have a lot of fun as an oilfield engineer. If you enjoy watching marbles crashing into each other and figuring out where they're going to go, finance is your game.
The key is to keep a good attitude about everything, do something you enjoy, and save money like crazy so you don't have to worry when the going gets tough.
If I got a $20K bonus at Goldman, I'd be thrilled. I get to stay working in finance. And that $20K buys me an extra $100/month in dividends. At some point, I would decide that I would be a lot happier earning $50K/year in Cedar Rapids, Iowa as a financial advisor instead of $70K/year working 80 hour weeks in Manhattan, but you do finance because it's fun and you enjoy it and you like watching the accruals and the pricing and marbles crashing into each other.
So for those of us who were going to stick it out anyways, we knew this day was coming, we make an amused grin as folks panic and yell around us, and we know we'll be just fine.
As someone who knows the real numbers first hand (as opposed to from Dealbreaker, Dealbook, a best friend, etc.), I must say I'm dismayed by the amount of misinformation in this thread.
Care to elaborate? =)
Also, do you guys (the real bankers) think this relatively poor bonus season has any implications for incoming analysts? Quite frankly, if things stay this bad, I really would be grateful just to have a job past the first year... that is, with the hope that the economy turns around thereafter so that I won't be busting my balls for what amounts to a fairly abysmal hourly pay.
As somebody who knows the "real numbers" as well, the info has actually been pretty on.
I have a lot of friends in GS at assoc level. Stub/A0s were basically given the shaft. 100+20stub for everybody, no bump in base. Top performing A1-A2s were flat to slightly down.
This is in S&T, but the word is it was the same in IBD and back office. Not sure what happened in GSAM.
Top performers being flat to slightly down is accurate. To me, that's the most important part. Shows that you still have the potential to do quite well. If you go in shooting for bottom bucket, then you don't deserve anything better.
oh noes, 1st year goldman bankers are only going to make 6x the average american's pay instead of 8x. better be smart and buy that 328i instead of the 335i.
Can GS lose the first IB status? What do you think, guys?
@Illini - +1
IMHO I don't think anyone with a liberal arts major (Ivy or not) deserves six-figures pay to change the colors in a PPT, but who am I to judge - and I'm sure I'll get a lot of hate for that comment.
Now if you can innovate, create products people want to buy, and have a stronger work ethic than your average Chinese teenager, that might get our economy out of the doldrums. And someone might just pay you 6x for doing that. (Not that life is about that anyway.)
For crying out loud, kids on this site complain because they might need to drop a Calc class to boost their GPA for a banking job - that is exactly the train of thought/sense of entitlement that's wrong with this country. Just got back from China - these kids study and work 6am-10pm, daily. They are working so they can afford to take English classes to push all of us entitled Americans out of Western schools.
Gotta beat 'em or join 'em... wake up and smell the coffee people. The fact that you even make $80k out of college is pretty insane anyway. Just be happy you still have a job. Life is all about choices anyway. If you don't like what you're doing, quit. If you're doing something to get you 8 stepping stones from now, maybe you should reval...
Cheers
illi, can you introduce me to your helicopter female friend?
@whatwhatwhat are you a born-again Christian?
no but i like helicopters...
I'm not friends with anybody but top bucket.
Then you should know how misleading that article is, especially for someone with no other data points.
Great post Illini. Incidentally, I might be a good fit for your helicopter friend.
1) MS Stub wrong 2) GS total comp wrong
dude - where the hell did you get this. I have the 2 comp sheets from BOTH those banks (as well as CS and JPM) since my roomates work at these places and you're dead ass wrong
a) GS just didn't raise base - all the other banks did b) GS don't give sign-on - all the other banks do (or most) c) MS stub was ~24K USD d) GS is NOT on the stub system ... GS associates get full year bonuses ... (and the full year bonus is down 10-20% last year) e) MS asso bonus is not 120k ...
However, note, GS asso is 1/2 year shorter than other banks ... so it makes up for it
Anyway, the difference is not as big as you claim ....
To add, an associate at MS made abotu $300k in the last 18 months.
The bonus associates got in July was July 2010 to July 2011. Then they got a stub base salary for 5 months + 40k sign-on. Then they got a stub bonus for those 5 months and then their base was bumped from Jan forward.
So they got base for 18 months, bonus for 12 + sign-on + stub
The total is around 300k
Unrelated comment... Do people really share accommodation while making $300k p.a.? I mean, apart from being related to or sleeping with the other person. I find this odd.
ROFLMAO!
Bro, it's hard to bro out by yourself, bro.
Rarely post, but this was comedy. LMFAO.
I'm bad at math, but I'll take a stab at this one. The post you were responding to was $300,000 over 18 months, not 12. $300,000 x 60% for take home pay after taxes (comprised of federal, NY state, and NYC) comes out to $180,000. If you were making $2,500 per week and needing to pay Manhattan rents, would you find it odd to have roommates? Especially when you're working 80 hours per week so you aren't home much anyway, and are with finance roommates who also work 80 hours per week so they won't be home much anyway either.
Fun Fact: $2500 / 80 = $31.25 per hour take home pay. And this to live in a place where the cost of living is 100% of many other cities within the same country. (Financial) models and (shampoo) bottles, baby!
Sucks for the BB's...boutiques are killing it, rumor has it that Qatalyst is paying 500K for 2nd/3rd Year Assoc, which you can then extrapolate for what the 1st/2nd year Analysts are getting.
Bullshit.
Oh really? Why don't you total up their aggregate deal value for 2011 alone, then factor in a 0.5%-0.25% fee structure, then split that among 35 bankers...the numbers more than work out.
multiple 1st yr analysts broke 200. An associate is pretty much 1.5x analyst. With a couple years of raises, can easily see 400k, more for top performers. but it'0s an artifact of Quattrone's ungodly ability to mint money and the hiring environment in the valley.
This is why you never give people numbers.
Know for a fact that Qatalyst did not pay anywhere near that amount. Their kids aren't even that good. Frank brings in the deals and makes all the money. Stupid math above is just utter utter bullshit. Ask any recruiter. There is no evidence, and no reality that Q pays like that, so stop propagating a lie.
"Know for a fact that Qatalyst did not pay anywhere near that amount. Their kids aren't even that good. Frank brings in the deals and makes all the money. Stupid math above is just utter utter bullshit. Ask any recruiter. There is no evidence, and no reality that Q pays like that, so stop propagating a lie."
Then what are the numbers? If you know so much please enlighten the rest of us. I also count several summa cum (>3.8) and magna cum laudes (>3.6) from Wharton, where things are curved to a B with only the top quintile getting solid A's. Please do tell how their kids aren't that good. Then browse around top VC shops in the Valley and they've got a significant presence at NEA, in particular.
Bonuses at all banks are based off of fees that come in, which in turn are based off of deal size. True my math was very quick and dirty and not all bankers get an equal share, but 500k of 200mil (which is .5% of 40bn) = .25% of the total fees, they have like 6-8 associates, in aggregate they won't take more than 2% of the total fees. We don't even need to talk about the tiny slice analysts take. But then let's assume they need 50 mm for overhead/salaries/etc. That leaves 146mm for the VPs, MDs/Partners, for even Frank, Boutrous, Dollard, & co. that is a ridiculous amount.
I mean that's good and all, but (1) what have they done lately and (2) what does that have to do with your ability to produce?
Honestly, it's still pretty hard to get summa or even magna if you are serious Wharton kid who isn't just doing one concentration in like finance, marketing, real estate etc. and I definitely agree that GPA is not the end-all-be-all of how a person actually works in the real world, but ultimately let's face it, keeping all else constant (number of degrees etc.) a person with a 3.3 versus a person with a 3.8/3.9 will probably not work as hard nor as well. If I had to bet on who would produce better, I'd bet on the kid with the 3.8/3.9.
The newest set of 1st years have all been around to work on the major marquee deals. I know one of the previous interns turned full time was on the GoDaddy deal and another first year was the point person on the Goog/Moto deal. They may not have brought in the deals, but I'm sure as hell certain that they did 80%-90% of the work on those deals like it would be at any other bank. Qatalyst in general has been staying pretty busy judging by the pending deals they've got up on their website, since January and I really doubt that pace will fall for them in 2012, but there's no way to dispute that their 2011 was ridiculous.
Agreed- fucking idiot. Your gonna get hit like a sandbagger and not get on the field.
Damn it's good to be a consultant.
Sure, but what does it matter anyways? It's just money, after all. I don't see why people make bonus season out to be a life or death thing every year.
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