IBankers don't make that much money?

Hi everybody,

I cut right to the case: investment banking has made kind of a name for itself when it comes to compensation, a lot of people believe all investment bankers make a lot of money.

I wonder however how much truth there is to that. Since I'm Dutch I would like to make the comparison with Big Law in the Netherlands.

Compensation first year associate Dutch Big Law: 48.000 euros which currently is like 52.000 dollars.

Compensation first year analyst London investment banking: 50.000 pounds which currently is like 74.000 dollars.

That's a 24.000 dollar a year difference but you have to keep in mind that London is one of the most expensive cities in the world.

Judging from the above information, isn't it fair to say that the stores about compensation in investment banking are at least a bit exaggerated?

Comments (43)

Dec 22, 2015

I don't know about European bonus structure but in the U.S. bonus is often 80%+ of base so a first year analyst can earn 130k+

Dec 22, 2015

What god awful Dutch biglaw firm pays $52,000 a year? Starting associates at big law in the US make like $150-160k before bonus...

Bonuses for bankers are far more substantial than bonuses for associates at law firms as well.

Dec 22, 2015

Lawyers spend three extra years in school and graduate with several hundred thousands dollars in extra debt. Investment banking analysts require no advanced degree.

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Jan 9, 2016

,..............

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Dec 22, 2015
User1233333:

You're leaving out a huge bonus first year.

I'll talk in terms of USD.

Banking at age 21 at a ~top bank you're going to see about 80+50 = 130k. Probably followed by 150, then 170, assuming you stick around.

"Big Law" at age 24 (after 3 years of unpaid law school hell costing you 80k each) 160+10 = 170k

More importantly, if one stays in either big law or investment banking and can be rise up the ladder, the economic benefit is absolutely huge.

74.000 is including bonusses in London.
Wtf can possibly justify that 60.000 dollar difference, I think its reasonable that US bankers make more but 60.000 makes no sense at all.

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Dec 22, 2015

This is not correct. First year analyst at BB banks in London make 50,000 GBP in base pay and the bonus is around 10,000- 40,000 GBP. So you could be earning anywhere between 60,000-90,000 GBP in your first year.

Dec 29, 2015

,............

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Dec 22, 2015
Jonathan Sidwell:

User1233333:You're leaving out a huge bonus first year.I'll talk in terms of USD.Banking at age 21 at a ~top bank you're going to see about 80+50 = 130k. Probably followed by 150, then 170, assuming you stick around."Big Law" at age 24 (after 3 years of unpaid law school hell costing you 80k each) 160+10 = 170kMore importantly, if one stays in either big law or investment banking and can be rise up the ladder, the economic benefit is absolutely huge.

74.000 is including bonusses in London.Wtf can possibly justify that 60.000 dollar difference, I think its reasonable that US bankers make more but 60.000 makes no sense at all.

I just got my contract today, I will be working IBD in London and I can confirm that by looking at my base, 74k USD is definitely not inclusive of bonus.

Dec 22, 2015

@cayo275 Loyens&Loeff, one of the biggest and best paying Dutch law firms.

You have to keep in mind that in order to become an attorney in the US you have to go through 3 years of law school after 4 years of undergrad contrary to the Netherlands where you're ready to go after just 4 years (3 years bachelor, 1 year master) and beside that, the tuition fee of all universities in the Netherlands is just a little above 2.000 so you won't have to pay off a huge debt first. And lets not forget about the costs of living.

Add to that the fact that it's a lot easier to get into a Dutch Big Law firm and I don't know if the American Law students are that much better off.

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Dec 22, 2015

First year pay doesn't matter. It is for this reason that I always get a bit annoyed when the media releases articles that rank colleges in terms of their graduate's starting salaries and engineering schools always occupy the top 5 spots (at least).

People who go into investment banking realize that there is huge upside potential. You're obviously not going to be making ~130k for the rest of your life so you shouldn't care about starting compensation.

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Dec 22, 2015

Investment banking pays a lot of money regardless of what industry you are comparing it against. Can you make more money other ways? Sure. But IB pays more than 99%+ of jobs out of undergrad. What other job can you get paid $140k+ your first year? Maybe some tech companies might pay some engineers that much, but more than likely in equity - not cash.

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Dec 22, 2015

@Sil And besides that? Because as I mentioned in my previous post, thats not the case in Europe.

Dec 22, 2015
Jonathan Sidwell:

@Sil And besides that? Because as I mentioned in my previous post, thats not the case in Europe.

I don't understand what you're saying. In your initial post, you clearly point out that bankers make more money. Even if we take the cost of living into consideration, bankers still receive a higher bonus. You are also comparing someone who spent extra time in school (the lawyer) to someone who did not (the banker). Taking that into consideration, the banker makes more money.

Dec 22, 2015

@Charizard Dafuq, are you serious? Do you have any source for that since that would be kind of an odd difference. And for the record: as far as I know that 74.000 in London is including bonusses.

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Dec 23, 2015

It seems pretty clear to me that...you have no idea wtf you're talking about. London analysts are on 50k GBP base, and another 30-50 depending on the bank in bonus

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Dec 22, 2015

I can always rely on WSO to show me just how distorted perspectives are outside of the real world. The average college grad will be lucky to hit 40K their first year. Only about 4-5 jobs (Pharma sales, IB, engineering, Computer Science) will get you over 100 right out of the gate from undergrad in the entire country and we're debating whether one of them "doesn't pay that much".

Dec 22, 2015
TheGrind:

I can always rely on WSO to show me just how distorted perspectives are outside of the real world. The average college grad will be lucky to hit 40K their first year. Only about 4-5 jobs (Pharma sales, IB, engineering, Computer Science) will get you over 100 right out of the gate from undergrad in the entire country and we're debating whether one of them "doesn't pay that much".

Lmao I actually laughed out loud because of your post.

You're right, I probably shouldn't have put it that way but my point was that investment bankers don't make that much more than lawyers but both make a lot more than the average person.

But it's not intirely fair either to compare a bankers salary with a teachers salary since bankers put in a lot more time and effort in college and at work.

Dec 22, 2015

@Sil The education system in the Netherlands is completely different than in the US, one of the major concequenses of the differences is that you don't have to put in extra time in school in order to become a lawyer.

A lawyer can make a decent career in the Netherlands but every self respecting Dutch investment banker has to leave the Netherlands but most of them do stay in Europe for as least the first few years.

First year analysts in London make like 74.000 including bonusses as far as I know (but correct me if I'm wrong) but as I mentioned before the costs of living however is a lot higher in London.

So I question if it makes that much sense to choose for investment banking if you're looking at it from a financial standpoint.

But ofcourse I have to add that investment banking is a lot more interesting than law and that counts for something as well.

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Dec 22, 2015

Then just become a lawyer. I don't see why you're arguing this.

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Dec 22, 2015
Sil:

Then just become a lawyer. I don't see why you're arguing this.

I'm not here to talk shit about investment banking or anything like that, quite the opposite to be frank. Just wanted to get a clear picture of both industries when it comes to compensation.

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Dec 22, 2015

I will LITT you up Sidwell.

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Dec 22, 2015
IBBanker:

I will LITT you up Sidwell.

We're not lawyers, we're investment bankers. We just call you for the paper work. We didn't go to Harvard, we went to Wharton and we say you coming a mile away, spank!

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Dec 22, 2015

Who cares? Do you want to be a lawyer in Amsterdam or a banker in Amsterdam or possibly London? They're very different occupations, have different career trajectories and offer different exit opportunities after you've done them for a few years. On average in nearly every country you'll make more in banking but I couldn't tell you a thing about junior legal salaries in Amsterdam. If I could be reincarnated as anything, I'd be a notary in Luxembourg-there are something like 75 notary licenses set by statute and they charge EUR25-75K for a stamp.

Frankly I've seen more bankers start in London then move back to their home EU countries like the Netherlands than vice versa, which in my mind would be a pretty sweet deal (I really like A-Dam, and that's outside of the red light district and coffee bars that most Americans think of) and if you could go back with a more senior level banker's compensation you could have a pretty decent quality of life. But Amsterdam's not exactly inexpensive so it's not like comparing London to Bulgaria.

One advantage of Dutch law firms is that most of them have an office in Curacao because of its tax advantaged status in combo with being in the N.A. (and therefore an EU country) so you could spend a couple of years on a tropical island while staying on a career track. Loyens & Loeff used to have an office there but I can't remember if they shut it down (I've used L&L there and in Amsterdam). But overall you'll have more geographic portability if you get into finance because if you're a lawyer you'll not only develop legal expertise in that country, you'll have to become legally able to practice law in another country (I know the EU's hazier on this than other countries however).

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Dec 22, 2015
Dingdong08:

Who cares? Do you want to be a lawyer in Amsterdam or a banker in Amsterdam or possibly London? They're very different occupations, have different career trajectories and offer different exit opportunities after you've done them for a few years. On average in nearly every country you'll make more in banking but I couldn't tell you a thing about junior legal salaries in Amsterdam. If I could be reincarnated as anything, I'd be a notary in Luxembourg-there are something like 75 notary licenses set by statute and they charge EUR25-75K for a stamp.

Frankly I've seen more bankers start in London then move back to their home EU countries like the Netherlands than vice versa, which in my mind would be a pretty sweet deal (I really like A-Dam, and that's outside of the red light district and coffee bars that most Americans think of) and if you could go back with a more senior level banker's compensation you could have a pretty decent quality of life. But Amsterdam's not exactly inexpensive so it's not like comparing London to Bulgaria.

One advantage of Dutch law firms is that most of them have an office in Curacao because of its tax advantaged status in combo with being in the N.A. (and therefore an EU country) so you could spend a couple of years on a tropical island while staying on a career track. Loyens & Loeff used to have an office there but I can't remember if they shut it down (I've used L&L there and in Amsterdam). But overall you'll have more geographic portability if you get into finance because if you're a lawyer you'll not only develop legal expertise in that country, you'll have to become legally able to practice law in another country (I know the EU's hazier on this than other countries however).

I think some people misunderstood the reason I opened this thread which simply was to shed some light on the actual differences between the two occupations since there tends to be a lot of misconceptions about it and I wasn't sure what was true and what wasn't.

I definitely rather want to become an investment banker than a lawyer but I think starting in London as an analyst is more realistic than starting in the US since I don't know any Dutch people at all who started in the US. I would like to move to the US eventually and you have a good chance of doing that if you do well as an analyst, I know mutiple people who have gone that road. Amsterdam is not a really an desireable city for banking but its ok if you want to persue a career in law but I have to say that I like the US better than I like Amsterdam mainly because of all the shit that goes down there. As a tourist the coffeeshops and all the other typically Amsterdam stuff might seem like fun but living in a city like that is a completely different ballgame. There are a lot of nice and decent cities in the Netherlands though but I'm not sure if I would count Amsterdam as one of them.

By the way, are you Dutch yourself and do you work in banking or law?

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Dec 23, 2015

I'm an American in PE currently US based but I lived in London for a few years and have done business all over the world, including a few times where we invested in companies based in or with operations in the Netherlands, or we had some sort of blocker entity in the Netherlands for tax reasons and I went often. The latter, which was more often, primarily to meet with our attorneys and people like that but I was usually in charge of the tax structure so met with Dutch attorneys primarily. I really like Amsterdam and think it's easy to get away from the US/UK stereotypes of smoking pot and red lights, at least from what I could tell from the Amsterdammers I knew. The good thing was that, even though it may not be and probably isn't an everyday thing, if they wanted to smoke it was an option. Big fan of that personally. But most people just kind of lived there lives. Overall it's a great city though. Great architecture, central city with all bikes (saves you money), great culture, centrally located, not too cold, etc. I'd say it's a Boston to New York as Amsterdam to London. I've been to other Dutch cities like Bruge, Maastricht, Leide and a few others but I suppose it depends on where you've grown up.

Your assumption about starting in London then somehow transferring to the US in IB is absolutely correct. I'm sure one person has otherwise but that's by far your best bet to get to the US. Getting a US Visa is nearly impossible without a big company sponsor.

Dag

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Dec 22, 2015

Do you guys really think money is going to be enough for you to last in this industry? But more importantly, Do WELL in this industry?

All the people I've met that have gone into finance for money have been heavily disappointed, not because finance isn't a well paying career (it is, duh), but it's because money isn't enough to make them happy. If you're driven, and relatively smart (which most of the people on this site are), you can make money in pretty much anything that you EXCEL in. Waking up at 2 am the third time in the same week to make changes to a powerpoint a client won't even give a fuck about will give you an idea of whether or not you'll actually last in this industry.

Be curious, and find what you like. Finance is a broad industry, and you're bound to find you're niche. And if finance isn't for you, then there's no shame in that. One of the happiest guys I've ever met works as a consultant for famous museums like the Louvre...Definitely not as prestigious as Blackstone, but a hell of a lot more exciting.

I think- therefore I fuck

Dec 22, 2015

@worklikeamachine You have a point, If money is the only reason you choose to persue a certain career you're going to have a though time but that doesn't mean people shouldn't discuss the subject because eventhough it shouldn't be your only reason, there is no shame in admitting it does actually matter.

Dec 22, 2015

Most certainly!

I think- therefore I fuck

Best Response
Dec 23, 2015

It's all relative. Personally, I've never really believed there were many Wall St "Ballers." It's just a high paying profession with a strong culture of outward displays of wealth.

Dec 23, 2015
ArcherVice:

It's all relative. Personally, I've never really believed there were many Wall St "Ballers." It's just a high paying profession with a strong culture of outward displays of wealth.

Whats the difference between someone who makes a lot of money and a true 'baller'?

I don't know if you watch Breaking Bad but if you do: would you categorize Gustavo Fring as a baller?

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Dec 23, 2015

When money becomes no object in the thought process vs someone who just spends way more than they should. Sure, I'd categorize the leader of a fictional billion dollar crime syndicate as a baller... Kind of an asshole for poisoning that Tequila.

Dec 23, 2015

Jonathan Sidwell?!! You mean the guy from Suits that calls himself an "Investment Banker" but works at a hedge fund and participates in hostile takeovers?!

Dec 25, 2015
IBBaboon:

Jonathan Sidwell?!! You mean the guy from Suits that calls himself an "Investment Banker" but works at a hedge fund and participates in hostile takeovers?!

Yeah, what about him?

Dec 23, 2015

You are comparing apples to oranges here. It is true that 'Big Law' pays around $50,000 to first year associates in the Netherlands, which is significantly lower than their US counterparts. This is because in the Netherlands (i) you can go straight to law school after high school, (ii) your billable hours target is lower than in the US and (iii) salaries are on the low side (and close to each other) in every profession. Unless you progress to partner, your salary will be approximately $100,000 (on the lower end) and $150,000 (on the higher end) as a 8th - 10th year associate. I believe the same holds true for consulting, including MBB. Investment banking is - to my best knowledge - virtually non-existent in the Netherlands. A few BBs and EBs have a satelite office, but I would be surprised if you are compensated in line with the US / UK counterparts.

Total compensation figures for IBD BB analysts in London depend on your bonus. None of my friends there pull GBP 100,000 as (first year) analysts. Compensation figures in here always seem disproportionately blown up.

Comparing IBD in London and NYC seems more fair. I do not think that compensation for starting levels (analysts and associates) differ significantly between these cities. Purely from my own reasoning, I would think that salaries for VP, ED and MD are higher in NYC, given the strict regulations in London (I believe that bonuses cannot exceed 100% of your salary). You can only increase London salaries to a certain level. Curious to hear @Dingdong08 on this.

Figure out what you want. Banker in London couldn't be more different from lawyer in the Netherlands.

Dec 25, 2015
LiamNeeson:

You are comparing apples to oranges here. It is true that 'Big Law' pays around $50,000 to first year associates in the Netherlands, which is significantly lower than their US counterparts. This is because in the Netherlands (i) you can go straight to law school after high school, (ii) your billable hours target is lower than in the US and (iii) salaries are on the low side (and close to each other) in every profession. Unless you progress to partner, your salary will be approximately $100,000 (on the lower end) and $150,000 (on the higher end) as a 8th - 10th year associate. I believe the same holds true for consulting, including MBB. Investment banking is - to my best knowledge - virtually non-existent in the Netherlands. A few BBs and EBs have a satelite office, but I would be surprised if you are compensated in line with the US / UK counterparts.

Total compensation figures for IBD BB analysts in London depend on your bonus. None of my friends there pull GBP 100,000 as (first year) analysts. Compensation figures in here always seem disproportionately blown up.

Comparing IBD in London and NYC seems more fair. I do not think that compensation for starting levels (analysts and associates) differ significantly between these cities. Purely from my own reasoning, I would think that salaries for VP, ED and MD are higher in NYC, given the strict regulations in London (I believe that bonuses cannot exceed 100% of your salary). You can only increase London salaries to a certain level. Curious to hear @Dingdong08 on this.

Figure out what you want. Banker in London couldn't be more different from lawyer in the Netherlands.

You're right, the two professions are very different from each other and the differences only get bigger if you keep in mind that you have to go to London if you want to be an investment banker since (as you mentioned in your post) investment banking is virtually non-existent in the Netherlands.

But management consulting doesn't have much in common with investment banking either and het those two get compared all the time so I thought 'why not?'.

The outcome however is different than I expected since I thought that first year analysts in London make 50.000 GBP including bonusses, which turnt out to not be the case.

Ofcourse I prefer investment banking but its a lot tougher to get into BB investment banking than it is to get into Dutch Big Law.

I heard however that in the US it it just as hard to get into Big Law as it is to get into BB investment banking. Is there any truth to that and if the answer is yes, does that apply to the UK as well?

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Dec 25, 2015
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