Would you received an increased salary when you finish your first year as analyst and progress to your second?
I know that you get an increase when you matriculate into an associate, but was curious if I'll see an increase from A1-A2/3. Thanks
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This used to be pretty typical.
In 2007, I believe street was 60 Analyst 1/70 Analyst 2/90 Assoc 1. My guess is that everyone is now getting roughly a $10k pay bump. You also got 1 year of seniority for an MS.
At some point it caps out, but it's nice in terms of figuring out what kind of rent you can afford. Unfortunately, if you're trying to spend less than 30% of your post-tax salary on rent in NYC, it's still hard to find an apartment in Manhattan.
Yea, thats why I am asking due to rent purposes.
So I believe it's 70 Analyst 1/80 Analyst 2/100 Assoc 1. Over the long run these levels track inflation, although HR doesn't always credit you with the pay increases for people behind you. (CC all of the 2007 hires who complained they were getting paid the same as 1st years in 2008).
If you're in IBD, the best you can do is get a roommate.
If you're not working 80 hours/week, the best you can do is live in Hoboken or one of the outer boroughs.
The hard and fast landlord rule in Manhattan is still annual pre-tax income=40 months rent, so that caps you at $1750/mo and gets you a studio in Manhattan or maybe a small 1 bedroom in Brooklyn. However, there is a difference between 40x rent and what a person can actually afford. IlliniProgrammer's suggested maximum rent is really 50x rent or $1400/mo on $70K/mo.
So that means converting a 1 bedroom into a 2 bedroom and splitting it your first year. Your second year, at $80K (I'm pretty sure), you can get a true 1 bedroom.
Look, you're starting to discover that living/working in NYC is pretty darned tough. You're about to discover that it's tougher to find a place to live in NYC than to find a job. This is an adventure. You will always remember your first NYC apartment, but your first apartment is not your last.
Best of luck to you.
Great post. However, I would say it is harder to land an IBD gig than to find an apartment in NYC haha. It's really all about settling and realizing you can't get it all in NYC for the same price in a diff city.
I think the manhattan apartment is harder to get and involves just as much... "networking".
where can you get a studio for $1750 in Manhattan?
@"IlliniProgrammer"'s analyst numbers are correct. A1 $70k / A2 $80k / A3 $90k at the BBs.
Assuming this is for IB, I don't think the 50x annual rent heuristic is applicable, since your base is a fraction of your all-in compensation. Once your bonus hits, you'll be easily able to afford $1750/month. The only reason the 40x rule-of-thumb is relevant is because it's forced on you by landlords.
If you can't find a place to stay in Manhattan for less than $1750/month on a $70K salary, even with a roommate, then you can't afford to live in Manhattan IMO.
I mean, everyone is free to budget however they want. But budgeting for the 2008 crisis to eliminate your job in your first year out of school is pretty impractical. Even in this eventuality, drawing temporarily on a line of credit before landing a new job is hardly an issue. Anyone who isn't extravagant can afford 50x rent on their base.
There's always the chance that you are laid off in the first year of your career, which would be pretty hard for anyone. I don't think it's worth planning for that to happen. An IB analyst most certainly can afford $1,700/month without issue.
People in finance are too savings-conscious in their first few years out of college. My Ivy League friends in journalism, design, marketing, etc. spend every last penny of their earnings after contributing to their retirement. I'm not at all concerned about them not having the ability to make ends meet.
You're not going to be able to anticipate every twist and turn in life. While it's nice in theory to plan everything for the worst-case scenario, that's just not worth the stress in your first year out of college. Find an apartment for IB analyst. Don't go crazy buying watches and luxuries your first year. If the world implodes and you're laid off, you'll have plenty of cash in the bank to hold yourself over until you locate a new job. If not, I'm confident an intelligent person will be able to make things work.
Live a little. It's your 20s. Paying $1,700 in rent doesn't make you Evel Knievel, it makes you a 23 year-old investment banking analyst.
I am also pretty sure that we are inherently more risk averse the less money we have in the bank. CC: Prudence. So it makes sense that people would want to engage in more precautionary savings while they're young.
It's still nice to have a few months' savings in the bank.If I knew the economy were going to be OK for the next year, I'd be OK with someone going out and spending $1750/month. But the real dividends on having lower rent is that you sleep soundly during a recession. You stay calm and clear headed at work while other people are a lot more anxious. You don't need to worry about a layoff.
So if you can find a little 4th floor studio for $1500 walking distance to work, go with that. Don't spend more than you have to on rent your first year.
I agree with pretty much everything you've said, it's just this part where we hold different principles. You prefer deferring spending during your 20s to retire a couple months (?) earlier or with $8,600 more in the bank in your 30s/40s; I'd prefer to enjoy that $3,000 (7.25% discount rate work for you?) in my 20s, and work a bit longer in my 30s/40s (when it will likely take me less time to earn the $20k anyways). And all of this talk is assuming the world collapses and you're laid off in your first year! If that doesn't happen, the entire discussion is moot because you're covered 70x+ rent.
The Spectrum:
@"IlliniProgrammer": - $1,400/month (50x covered)
__
| | | | | | | | __
Average Analysts: $1,650/month (42x covered)
__
| | | | | | | | __
Heavy Spending Analysts: $2,000/month (35x covered)
And, quite frankly, in almost every case, all three of the above are totally fine. Especially since many who spend heavily on rent cut back in other areas.
I make my case that the it's better to just make reasonable plans for risk, don't worry about running the Fed stress test on your personal finances for your first year out of school. Enjoy your 20s, you're already on a steep income trajectory - you'll have plenty to save, even if you spent every last cent of your base.
After all, we all know how this movie ends:
Sure. But the ultimate value in the rent is that you don't worry about it.
I lived through 2008. I saw people age 3-4 years between August 2008 and August 2009, including young 22-year-old analysts. But I was living in Jersey City and paying $980/month in rent. I took the PATH train home every night. I had mountains of cash in the bank. I slept like a baby. I aged a year during that period.
I am a 28-year-old grad student right now. Undergrads at my school routinely just assume I'm an undergrad. Apparently I kept all of my hair and have not become some grizzled survivor who's 28 but looks 40 as has happened to most of the analyst class that survived.
That's where you can't put a price on financial security.
If only I had a dime for every time you reminded us of this, then we all would sleep easy earnings...
Money doesn't stress me out. Sounds like your friends were pretty unreasonably stressed; they are alive, and I suspect they are doing just fine, their "expensive" apartments and all.
When I started in IB, I had, like most IB analysts, >$15k in the bank from internship earnings, signing bonuses, etc. I paid in the $1,600-1,700 range and easily saved much more with every paycheck, even accounting for 401k contributions, taxes, expenses, etc. Had the world imploded during my first year, I, like the average IB analyst, had at least 6 months living expenses in the bank (forgetting about severance). I am wholly unconcerned about my ability to find another job in that time frame to pay my bills. Barring that, I would move back home, work on an entrepreneurial venture on the side, and live frugally until I was able to find a new job.
Losing your job is stressful, no matter how much money you have in the bank. Grounded people get over it and move on. Ironically, I find it is precisely those who stress nonstop about sparing every last penny that react the most negatively to uncertainty. Their mountain of cash offers them no solace, because it's uncertainty that bothers them.
This whole conversation is silly. An IB analyst can afford $1,700/month. If that number stresses you out, then find something cheaper, as @"IlliniProgrammer" suggests.
In everything but the 2008 crisis, those of us who pay a reasonable amount (~$1,700) will happily walk our 10 minute commute to work while you jump on board the PATH every morning, and we'll stay out late, not worrying about missing the last train back. If 2008 happens again, you'll have another month of living expenses in the bank - I'm confident that this math is E(V) negative, others are welcome to disagree.
And FWIW, I've had a friend laid off as 1st year analysts paying >$1,800/month for rent. He sublet his apartment, took three months off on his savings, and started a new job in corporate - has never been happier. Everyone here is intelligent, hard working and resourceful; you have nothing to worry about in life. Being laid off in your first year on the job will not ruin your life, even if you're paying $2,000/month.
Enjoy life and do what you think is right, OP.
Yes to answer the question.
Stay in a few nights of the month or spend less when you go out and save a few hundred. Boom. Problem solved.
Base salary bumps (Originally Posted: 04/13/2013)
Traditionally investment banks have followed a formulaic base salary raise system on an annual basis. 1st year analysts: 70k, 2nd year: 80k, 3rd year: 90k, Associate 0: 100k, Associate 1: 125k, etc.
We all know bonuses have plummeted. But ever since the early 2012 pay review, I've heard some chatter from folks across various investment banks that banks have either lowered the A0-A1 bump, or even suppressed it altogether.
What's the Current State of the Base Salary?
It's frightening to think that IB, which is one of three or so career paths, that you can become "rich" in is losing that status.
The ability to move upwards in America is shrinking at a freighting pace.
WTF are you talking about. IBD was never a path to being "rich." It's a path to being very comfortably upper-middle class. It still is and likely will continue to be over the next 10-20 years (probably longer but I'm not going to say something silly like "always"). Yes, the heady bonuses of 2006-07 are gone, but let's not kid ourselves -- people still make a shitload of money, and this may only be a cyclical change.
IBD only makes you "rich" if you excel and run a division or become CEO. But by that measure, you can become "rich" in any industry.
CHOO CHOO here comes the freight train @ a freighting pace !
to answer the OP's question, it hasn't changed.
Actually, some banks have changed it. From first hand experience, I know of at least one BB that did not give the associate 0 -> associate 1 pay bump. That said, bonus time made up for it.
This is what I thought. Between 2012 and 2013, I've heard grumbling at CS, GS and Barclays. Anyone else?
It has changed. More realistic expectation should be 115 to 120 with ~30 stub.
Base salaries are actually increasing more now that bonus rules coming sooner rather than later... .
hahaha investment bankers are so "middle class"
at least upper middle class that shit bro come on
you did get two answers, and I'm stuck debating semantics with people who can't even read properly.
honestly, if you are still in college and think bankers are rich:
1) I envy you 2) You will probably burn out when you realize that you won't actually get rich in banking anytime soon
Mate... 500k+ per year is quite rich and as a banker you can make that at the tail end of your 20's. With proper investing you can retire at 40 as a banker, maybe even earlier.
Athletes, movie stars have very limited timeperiods they can draw major money and an elite banker can earn 20m per year, the same that an elite athlete or movie star will pull in. In most cases once they stop earning they go bankrupt, even the elite one's.
Rich is relative & subjective but bankers are surely rich by nearly any logic.
agree with mrb87.
"very comfortably upper middle class" was a pretty accurate term. i think being truly "rich" is a binary proposition...either you have fuck-you money or you don't. we are in a thread discussing bumps on salaries of $70k and $100k...that's fuck-me money.
the vast majority of investment bankers are neither "rich" nor upper class. it's a path to "high income" and the ability to spend more money on roughly the same goods and services as your non-banker friends. this is very different from the quantum improvement in lifestyle and the nature of consumption experienced by the "rich" (large business owners, premier athletes and celebrities, etc.)
To the actual point of this thread. I have not heard anything except for the thread a month or so back where people said they heard rumblings.
$70-100k for people who are in entry-level positions...
I typically would prefer to stay on-topic, but the extent to which these posts calling senior bankers "upper middle-class" express a warped worldview is truly astounding. There is no world in which someone making >$1mm per year consistently is anything other than upper-class. If you honestly believe that kind of pay qualifies you as "upper middle-class", you need to spend more time getting to know people who live in this country (outside of the Hamptons and West Hollywood).
As for base salaries, I haven't heard anything indicating that policies have changed.
Can we talk about the original topic: what's going on with base salaries? Really the wrong place for demographics and socioeconomics.
Lol at anyone who thinks making 500k+ = upper middle class. Upper middle class = 200k+ salary
From Wikipedia:
"Sociologists Dennis Gilbert, Willam Thompson and Joseph Hickey estimate the upper middle class to constitute roughly 15% of the population. Using the 15% figure one may conclude that the American upper middle class consists, strictly in an income sense, of professionals with personal incomes in excess of $62,500"
A lot of people just like to make up definitions and statistics when they engage in a conversation.
Thank you for your sanity.
My MD's restaurant got SIX Michelin stars!
This thread sucks.
Let's get back to topic. Anybody know if analysts will get a bump in base pay? Heard rumors about the 70k ---> 85K bump for 1st to 2nd year.
I think it's still the bump to 80K after 1st year...
LOL at all the people speculating on MDs salaries...until you get to that level you won't know, no matter what people tell you. No one in their right mind will tell you their all-in salary, at least truthfully.
Let's face it a MD cannot buy a decent yacht even if he works 20 years and earns a $m each year. Upper middle class is the correct term.
All BS aside..
If you work for money you're not rich If your money works for you.. you're rich
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