Are M/B/B analysts really earning less than IB analysts?
Folks,
I have a friend who is finishing up his 2nd year at a M/B/B. He told me his total comp for the two years, including base, bonus, sign-on, pension money, housing allowance, and 3rd year bonus (he's receiving 60k EUR in his third year when he does the MBA and he does NOT have to return to the firm afterwards; so effectively, the 60k is just a belated bonus that is added to 1st and 2nd year comp).
I've converted the EUR numbers to USD using the current exchange rate.
1st year total comp = 124,000 USD
2nd year total comp = 168,000 USD
As far as I can tell, that comp is on par with IB pay for analysts. Plus M/B/B people don't work weekends.
I find the numbers quite shocking.
Any comments?
You gotta compare apples to apples, belerophon.
What are comparable all-in comp numbers for bankers in London? You can't expect even comparisons with exchange rates factored in.
Also, most banking comp as people speak of is base + bonus. If you want to add in sign-on + allowances + benefits + other fringe benefits in your example, you gotta do the same for banking as well.
From your past posts, it seems like you're an MBB second-year who's trying to justify his own choice of industry.
Now, the comp may indeed be quite comparable. I don't know. I'd have to see more info before I can decide. But your analysis as it currently is basically skews it to say what you want it to say.
Why can't you use comparisons based on exchange rates? I mean, you need to convert amounts to a single currency to compare them.
Also, I am not including the benefits like meal allowances, airline points, etc etc I am only including cash components. And yes, base+bonus alone are lower than in banking but M/B/B consultants (at least in the country I work in) also get around 20% of their base+bonus in pension promise which carries interest of 3% and is paid out when they leave the firm. That's essentially another 20% bonus. Also, they get 60k in their third year when they are no longer working for the firm but are on leave to do their MBA or something else. I consider that another bonus. These are by no means "benefits" but components of total comp.
I think you can't just compare base+bonus at banks with base+bonus at M/B/B because the comp structure at M/B/B is different.
@Cornelius: what difference does it make whether I'm a M/B/B or IB analyst? I've done internships in both industries. I'm only trying to make a point here...
Cheers!
I may have no clue, but it is my understanding that most people at M/B/B don't just get $60k while doing B-school, not without committing to coming back and working for several years at that particular firm. If that is actually the case then your comparison wouldn't be apple-to-apples because you selected a unique situation and compared it to the norm in IB.
Additionally, the exchange rate point was mentioned because the fluctuations due to the market conditions can swing the results to one side or the other. Obviously there is a need to convert one to another so you can actually compare them but you must keep in mind that there is a chance that your results are 100% accurate.
Regards
..I think he is a banker, at heart.
I'm making it up as I go along.
HAHAHA
Dude MBB first years make like 75K after their 1st years, and they work 1.5x as hard as anyone in Sales/Trading/Research and .75x as people in IB and make like 70% less in a normal year (and like 40% this past year).
All in for a 1st year who started summer '08 at a BB for a mid-tier analyst was about 100K (10 signing/60 salary/30 bonus)in the worst year in investment banking's history
For an MBB consultant 1st year it was about 70K (5k signing, 60K salary, 5-10 bonus)
I know literally 200 people who work at a BB or MBB ...as do most people who live in NYC and went to a target
The biggest part of my life outside work is traveling, and I think it'd be fantastic to be able to go to literally any city in the world for free (with access to business class lounges etc due to frequent flier miles), and stay in a 5-star hotel there for free the whole time. It's an outrageously awesome perk and adds up to a LOT. Around 25% of my annual salary is spent on holidays. When you've already arranged for flights and hotel, there's really little else that'll cost you a lot.
That 60k MBA subsidy and a virtual shoo-in for a top 10 school is a fantastic perk too.
Agree with cphbravo.
Furthermore, you have to take into account cost of living comparisons to get a true picture. I hear that certain things in London, like food for example, are quite expensive even by New York standards.
Also, what is this pension money you're talking about? And is it really cash in hand? I'd be surprised if it were.
The way exchange rates have been moving, London isn't really as good of a deal these days. Analysts get around 40k base tops there, which is about 60k usd right now. Continental europe's a better deal as salaries are nominally closer to what you get in dollars here yet with an exchange rate close to x1.4. Since op is talking about someone making euros, those numbers make sense. And I'm pretty sure you need a masters to work @ M/B/B in continental europe.
GoodBread: yes, you do need a Master's and yes, I am talking about Continental Europe here, with EUR/USD rate of around 1,4 and low cost of living compared to NYC or London.
Also, concerning the pension money: at the end of each year, you get 20% of your base+bonus allocated in a pension pool. This money usually carries a guaranteed minimum interest of 3%, though it can go up to 5%. When you leave the firm (e.g., after 2 years as a analyst) you get the money paid out in cash (both the nominal and all the interest). So while you get the money only after 2 years, I consider it to be practically a bonus for each year you work because you're earning good interest on the money.
Fully agree that London is not a good deal, but continental europe provides a pay/cost of living combo that is clearly better than IB in either London or NYC - or at least that's what those numbers make me think.
Many of these items just aren't paid in the US at a bank or a consulting firm.
The MBA stipend in the states is always contingent upon returning to the firm.
Also, that whole 20% of base+bonus sounds like what you get in EUR in place of a 401k (it also sounds a lot better). In the states you can tax defer up to 16k per year and your employer will match up to certain amounts. They will also just throw in a certain amount of money based upon tenure. However, most companies have these matching amounts vest over time (so you have to stay with the company to get money).
In the states you also wouldn't be getting a housing allowance. So, if we strip out a housing allowance of 15k, a sign on bonus of 10k and the pension money (which is about 20k as well) suddenly that first year on a comparable basis is making 60k base + 15k bonus. For the second year he's getting 70k base + 15k bonus. The rest of it is just a discrepancy between the states and Europe.
Also, if you want to throw in everything that a first year analyst gets in the states at a bank (to look at it the other way). Recently it would have been 70k base + 40k bonus + 10k signon + 16k 401k matching = 136k total comp in a bad year. Of course in '07 those numbers were 60k+90k+10k+15k = 175k.
Enjoy your job, just understand the differences.
PowerMonky - I agree; your number of 136k sounds reasonable. I'm just making the point that a M/B/B analyst in Europe is (on a common currency basis) making around the same amount of money as a IB analyst in NYC. Of course, it's easier to compare US M/B/B analysts to US IB analysts, but that was not my intention. I'm just saying that the numbers I got shocked me b/c M/B/B analysts in Europe (just as in the US) work much less than IB analysts in the US but still receive around the same pay and very likely face much lower cost of living. Sure, exchange rates can change but they can change in any direction...
Obviously, as the other poster mentioned, if you're in IB in Hong Kong, you're apparently making more than anyone else.
LOL yeah .. I mean let me add some perspective
In Hong Kong at Credit Suisse a first year makes (this year)
20k sign on 70k base (60k base last year) + 30k housing + 30k MPF (401k) match + 30-50k bonus
so in HK ... you'll make 180-200k all in as a first year .. lol
or 10k sign on and 60k base last year
Housing in HK is about 25% more than NY ... apples to apples kids :D
Even at the lowest paying IB in HK
you get
10k sign on - 60k base + 25k housing + 25k MPF match + 30-50k bonus :D Still higher than most schlubs in Ny
CS hk is paying 20k sign on this year??
most banks has cut out their housing allowance already though.. damn that CS package is a sweet deal.
Wait are you guys talking about London or something? I'm getting all confused with this housing and pension talk.
In US, MBB 1st years make 5K + 62K+5-10K = 75K-80K In US, Sales/Trading/Research 1st years make 10K + 70K + 30-40K = 110-120K In US, IB 1st years make 10K + 70K + 40-50K = 120-130K
This is for this past year, for mid-tier...I'm guessing MBB has sweet perks for housing or something in Europe based on what I'm seeing above but...there are no such things in the US
I'd be careful before assuming cost of living is lower in mainland Europe. Cost of living in Europe's biggest cities (where MBB offices are) is now in the ballpark of London's, or even higher in Zurich, Geneva, Milan or Paris. The crisis/drop in exchange rates has definitely taken a toll on CoL in London. I remember getting a meatball sub at Subway there for 2 pounds last Spring, which is like 3 dollars now. Too bad they don't have 3 pound footlongs.
Illo sed ducimus quaerat ipsum eligendi fugit. Consequuntur magni qui modi provident quia saepe. Incidunt iste cupiditate eaque soluta. Impedit et sequi quis eveniet enim non natus quisquam.
Delectus fuga et nostrum deserunt. Eligendi laudantium vitae doloribus porro animi. Ullam eligendi ea quisquam nostrum quia et. Eaque sequi expedita exercitationem enim voluptatibus rerum. A aut tenetur officiis dolores sed. Voluptatum minus ex odio laborum. Est alias pariatur ut nisi voluptatibus sint.
Blanditiis dolorum excepturi deleniti aut. Eius libero minus corporis rem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...