Unpopular Opinion: Relative Value of IB Pay Isn't Great

Everyone on here talks about how great investment banking is on the junior level (below VP) but compensation is always thrown out in absolute terms. A much more relevant metrics is an hourly basis adjusted for the cost of living. Many of the people working are probably in one of the highest COL place like NYC which is 30 - 50% higher COL than many primary / secondary and even gateway markets in the US.

You are also working ~80 hrs per week and I'm assuming pulling in ~$250K avg. salary for a senior analyst / associate level position.

On a hourly basis (80 hrs. / week) at say $250K / Year at an adjusted cost of living (+40%) you are only making $43 / hour at the sacrifice of having literally no life outside of work and a unhealthy lifestyle. People I know in another industries, say commercial real estate, corporate finance or tech in a primary / secondary market are making a lower absolute amount amount with same amt. of experience @ 50 / hr work weeks, at say $140K comp but are making a higher col-adjusted hourly rate ($54 / hour). They also have a life outside of work.

Please enlighten me how investment banking makes sense from a relative value perspective from other industries?

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Comments (9)

Apr 17, 2020 - 11:56pm

wow, no one's ever thought of this before on wso; congrats you pioneer of intellect

  • 13
  • Summer Associate in IB - Gen
Apr 18, 2020 - 12:01am

yea for sure only investment bankers live in NY. people in other industries do not live in places of high COL at all

Apr 18, 2020 - 12:39am

you aren't wrong, but

  • COLA of 40% might be a bit high - NYC is 30% higher than average and other metropolitan areas are probably costlier than average as well so the differential should be smaller.
  • tech may easily exceed $140k but I don't know if corp fin or CRE average salary few years in is $140k. $140k may be generous.

but yes, banking has much higher opportunity cost of shitty lifestyle.

Apr 18, 2020 - 12:45am
  1. You get much more experience / exposure in banking than the other industries you listed in >90% of situations (the main outlier being Tech, specifically FAANG)
  2. Banking promotions are much faster / lucrative than those industries
  3. Yes when you boil it down to hourly wage of course it's less, but it's a sacrifice you make for better opportunities in the future

  4. Most of those other jobs are also in high COL places

  5. You can still definitely have a life outside of banking

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Apr 18, 2020 - 3:45pm

As someone who grew up in the suburbs of the Midwest - I'd rather be an analyst putting in 80 hours in a top city like NYC than doing a CPA / FP&A in some Midwest city like Indianapolis

Apr 19, 2020 - 3:43pm

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