Does GS blow for post-MBA associates now?

Seems like David Solomon is trying hard to ruin their IBD division

"Goldman discount" pushes seniors to other bulges and boutiques, with the pressure being higher the more of a rainmaker the MD is

No work laptop (lmao wtf is this shit)

No work phone 

No WFH stipend

Generally brutal hours

Generally shitty culture

Expansion into down-market products will dilute brand

If you're an analyst sure, it's still amazing. But for associates expected to stay, and from the bank's perspective, aren't they fucking up? Brand name will carry them, but for how long.

anyway sorry for the hot take but solomon is a moron and Goldman is heading towards the dumpster

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Comments (78)

  • Analyst 2 in IB - Cov
Mar 12, 2021 - 6:40pm

blows for analysts too unless you can land buyside offer on-cycle

Most Helpful
Mar 12, 2021 - 6:45pm

I have a couple thoughts on this that I will try and split out into different topics. Might get a little into the BB/EB debate but hopefully still adds to the discussion.

1. (Someone smarter than me (AM/Portfolio Manager) gave me this thesis on GS) - Stocks with more consistent earnings are rewarded with higher trading multiples. Investment banking is usually a pretty volatile business, at least compared to other revenue segments for these banks. I don't think GS is trying to wind down their IB business by any means but they are trying to aggressively grow other areas. Bigger wealth/asset management and consumer banking revenues will give them more consistent earnings and likely higher trading multiples, meaning better for shareholders. Solomon isn't trying to "ruin" anything but he knows his compensation will be driven by growth of other segments. 

2. The Post MBA experience - For this category I think you need to split up the candidates into two buckets. 1) The "IB = Stepping Stone" group and 2) "Career Banker" group. I think it is conservative to say that at least 75% of post mba associates fall into group #1, could easily be more. For this group going to GS post mba still makes a ton of sense. Yes the compensation is lower but if the candidate knows they want to leave after 2-5 years, the exit opportunities are still top notch. I think this will remain the case as long as GS keeps killing it, year after year, across almost any coverage group, in almost any product. So, in the short run, GS still makes sense for bucket 1. However, whether or not they continue to kill it year after year is largely attributable to how they handle group #2, the career banker. Compensation is much more important for group #2. Climbing up the ranks from associate to MD while getting lower compensation compared to your peers (BB/EB) is a really tough ask. MD compensation is pretty unknown but one thing that seems to be true is that EBs offer a better model for the "rainmaker." In 2019, 66% of the 465 MD promotes at GS were homegrown from analyst or associate classes. I think that number was around 85%+ 2010 but I can't seem to find the source I remember reading on it. Either way, they are having to hire more external MDs, I would argue it is because they are struggling to offer the same analyst/associate experience as their peers. One disclaimer though, the popularity of PE and EBs as alternative finance career paths cannot be stripped out of that 21% decline in internal MD promotes. I guess my conclusion for point #2 is that in the long run they cannot continue to provide the same or worse associate experience at lower compensation without diluting their brand.

3. The EB model - Lazard was pretty much the only real player in this industry for decades until the late 90's/early 2000s. Now this model seems to be taking home more and more advisory work every year. Regardless of how you measure it, number of deals or fee $$$, the boutiques continue to take advisory work market share from the BBs. When Steve Schwarzman left Lehman to start Blackstone he specifically decided to not enter the high capital/low margin business of capital markets and focus on advisory work (at least before raising his first fund). Robert Greenhill, Roger Altman, Ken Moelis, and others have all successfully followed this model. Bulge Brackets are trying to expand into middle market cities but I personally think they will continue to struggle to reverse the trend in advisory market share. 

I don't think GS is killing their IB department but I would argue they don't have the same recruiting advantages verse their peers they did 5-10 years ago. GS can easily compete with EBs on almost all of the things you mentioned. The only one they can't, or it will be hard, is compensation, the most important one. Right now the difference is maybe 50-100k a year for an As1. If that difference grows to 100k-200k over the next decade...I don't think GS will be getting top candidates anymore. Full disclosure, I will be at an EB this summer. I'm just a new kid coming into the industry so feel free to disagree. Just my $0.02. 

Mar 12, 2021 - 9:48pm

The difference is much closer to 100k than it is 50k. ~100k and less As1 bonuses are common and even the norm. Several EBs paid around 200k +/- 20k for AS1.

Top bucket at GS is usually mid bucket at best at an EB from a comp perspective. It is very hard to ever make up a gap like that if you stay 4-5 years.

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Mar 14, 2021 - 11:08am

Most of the MBAs I know (myself included) who are going into banking want to pursue a long-term career in IB. Those who don't want to are primarily thinking about CFO-type roles or leaving finance altogether, a minority want to do PEVC. PEVC is doable but to your point it's not a linear path like it is for analysts.

  • Business School in PE - LBOs
Mar 12, 2021 - 10:31pm

I dont think that the top MBA associates care about WFH perks or what crappy ThinkPad their bank gives them.

GS has a real shot at winning any given mandate they show up for, they are on a good majority if not the vast majority of the major m&a deals of consequence, and the "alums" as they call them look out for their own when it comes time to leave the firm. Not to mention the brand and network of your peer associate class follows you into every interview you ever take again and they have the best recuiting class year in and year out. Imo these are a big barrier to entry for any other firm to unseat them as the #1 firm post MBA.

The GS discount is annoying, but it is ultimately pretty immaterial in a 40 year finance career to lose a few thousand the first couple out.

  • Associate 3 in IB - Gen
Mar 13, 2021 - 2:46am

A few thousand? It is literally $100k or more each year and grows from there. Dismissing the size of the gap of compensation is doing a tremendous disservice to people trying to make a decision.

Mar 13, 2021 - 9:59am

Thats a bigggg exxageration.

EBs pay +10k more base and bonus +20k better for the first few out. Not to mention that it is really really hard to be a rainmaker MD from an EB associate start, most of their MDs are laterals from top BBs and they sell the heck out of that BB credential when the go boutique. You just get a more versatile training program and can speak across products coming from BB. Plus outside of one or two of the EBs, they rarely have the pole positions on the biggest M&A deals - thats reserved for GS, MS, JPM.

On the flip side you do get a restructuring looks at EBs which could be cool.

EDIT: For posterity and anyone who reads this thread in the future. Clearly OP is an associate at and EB and is using this thread to feel better about something going on in their own life. And it's pretty weird imo. They are comparing a top 5% EB pay to their random bottom bucket AS friend. In an average/normal year for the Top EB (EVR imo) vs. Top BB (GS imo)...

  • Top bucket: EB 160 + 180 vs. BB 150 + 170.
  • Middle bucket: EB 160 + 165 vs. BB 150 + 130.

So yes, MS me to hell. But my point stands. Read the CVs of EVR, PJT, and Centerview MDs and thats all that you'll need to know. Ultimately its your life.

Funniest
  • Associate 1 in IB - Cov
Mar 13, 2021 - 1:35pm

work phone is whatever. Laptop is a big deal. I don't want firm spyware shit installed on the same device I use for porn and for peddling far-right conspiracy theories on shady internet forums

  • Associate 2 in IB-M&A
Mar 13, 2021 - 4:46pm

Anecdotally looking at my peers, it's not a BB vs. EB thing when it comes to promoting more associates to VP. For most of the street, that promotion is a given, as long as you meet a baseline of competency. Most of the difference in VP yield comes from self selection. BBs will get a lot more people who think of banking as a stepping stone towards another industry than EBs. That doesn't make BBs worse at promoting than EBs just because they have more associates leave

If you're looking at outcomes for better bankers, the real test is making it to MD but that's not really straightforward. Pay is the other proxy: EBs will pay more and have lower variance in pay across buckets. For example, top bucket at BB isn't really that far behind top bucket at EB (~$170k for JPM vs. ~$180k for Evercore).

However, below that top bucket, the gap is huge. Mid-bucket at Evercore is $160k but at BBs you can be anywhere from $100-160k. Also, the gap tends to widen as you increase in rank. EB As2 will clear $400k as mid-bucket vs. low $300k for mid-bucket BB. What was mentioned above is no joke: As3 in EB will likely make more than VP1 at a BB

  • Associate 3 in IB - Gen
Mar 13, 2021 - 5:14pm

These numbers are still wrong, at least for this past year. Most EBs paid $200k or more for top bucket. 220-240k not unheard of. Top bucket for BBs was $150-170. Mid bucket EBs $150 is the floor and most were $170-200k. Mid bucket BB is, and i am not exaggerating at all, $80-$110k. 

  • Associate 1 in IB-M&A
Mar 13, 2021 - 3:44pm

Short answer is yes. Everyone from my M7 has or is trying to jump ship after getting ~100k As1 bonuses. They had 60% yield on their Summer Associate offers this past cycle at my school as well. Horrible hours/ culture/ compensation on the junior end and have heard senior bankers want no part in cross selling their new efforts I.e transaction banking, corporate lending off the BS, cross markets/ MM mandates

Mar 13, 2021 - 8:49pm

Whats depressing is being at a bad bb(ubs db) that claims they pay "street" bonus, when in reality they are using goldman as the standard.  Except you don't get the prestige.  Ubs or db discount blows.

Array
  • Analyst 2 in IB-M&A
Mar 13, 2021 - 9:58pm

If DB/UBS can still be ranked as BB by that, you gotta put Jef in BB and RBC/WF in mid-tier BB

Edit: mid-tier is unjustified given the current rank, but point is about the first half.

Mar 14, 2021 - 1:10am

I really don't know anything about this but is the pay difference at other BBs, namely JPM/MS/ML/Citi significantly better than GS? Do they have a better time growing career bankers there?

Dayman?
  • 1
  • Analyst 1 in S&T - Equities
Mar 18, 2021 - 2:28am

Went thru associate recruiting this cycle...the pay just doesn't seem to be there for GS compared to the other places I was interviewing at, so it wasn't a priority of mine. At this point in my life, coming out of school, I need to make as much as I can. 

  • Intern in IB - Gen
Mar 18, 2021 - 2:41pm

They started running a respected, close-knit institution as a normal corporation and are somehow surprised that it resulted in employee attrition and disenchantment. 

Mar 18, 2021 - 9:46am

As much as the goldman discount hurts, i've seen 5 laterals from firms like JPM / MS / BofA in the past month to goldman, all were post mba associates. PM me if you don't believe me and I'll share their linkedin profiles

Array

  • Summer Associate in IB-M&A
Mar 18, 2021 - 4:11pm

the prestige definitely opens doors. especially if you want to do something outside of finance. depending on when you lateral over, you may have to start over from scratch though (also depending on the bank you're coming from). 

  • Associate 1 in IB-M&A
Jul 14, 2021 - 10:52am

Within the BB space, absolutely. Haven't seen much (if any) from EBs to GS though, have you?

  • Summer Associate in IB - Gen
May 1, 2021 - 5:02am

Currently wrapping up my last semester at M7 school.

We had 6 in our class who interned at GS last summer.

All 6 got FT associate offers but 3 decided to go through recruiting again this spring for FT due to pay gap.

  • Associate 1 in PE - Other
May 1, 2021 - 6:34am

Makes sense. I would only go with GS if you want to have the best (as in broadest) exit opportunities post MBA. This might still be relevant at the Associate level, but you should focus more on building a long-term career and maximizing comp as you likely don't want to exit (or simply cannot as easily in the case of PE) - GS simply is not competitive enough at any stage (already ~50k difference at AN1 level vs EBs, think about it), experience and pay is much better at the EBs. Also don't underestimate the fact that your subordinates are being worked beyond capacity being pissed all the time - this leaves Assocs and VPs at GS in some cases to do a lot of BS work they really should not be handling.

Don't get me wrong, I still think it is worthwhile to go with GS at the Analyst level (and in some cases post MBA) - they still produce among the best exits and manage to attract the best talent because of that (this is the classic recurring GS phenomenon / playbook / attraction principle). One reason GS does not change anything really is that they are aware of this. Literally every fellow analyst at my class only joined GS to GTFO as quickly as possible. GS capitalizes on their analysts for two years by grinding them and paying below street and returns the favor by sending them to top shops and lifelong value of the GS brand. 

  • Associate 1 in PE - Other
May 8, 2021 - 3:37pm

In a (simplified) nutshell: There is not much they can do at this point other than Corp Dev (buyside is only occasionally possible) and, more importantly, VPs have golden handcuffs and are often subject to complacency of switching banks given hassle of leaving network within current employer. However, VPs do frequently leave to other banks if they are promised to make MD earlier than at their current firm.

  • Associate 1 in IB - Gen
May 8, 2021 - 9:21pm

Yeah...giving up the goodwill that you have already earned, as shown by the VP promotion, to start over from scratch. It's a tough pill to swallow unless your path to MD is blocked.

  • Associate 2 in IB - Gen
Jul 20, 2021 - 4:03am

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  • Associate 2 in IB - Gen
Jul 26, 2021 - 8:17pm

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