Former bankers who’ve left the industry have taken to issuing warnings to 20-something students who are thinking of joining. Banking is boring, they say. The learning curve is steeper elsewhere. The jobs are all disappearing as the things banks used to do fragment and are taken over by technology firms. You can do better deeds as a socially-minded entrepreneur. You can be more sexy working for a tech unicorn.
Right, but you can still earn a lot of money working in banking.
By averaging the latest total compensation figures for investment banking division (IBD) jobs (ie. jobs in M&A and capital markets) from Dartmouth Partners and Arkesden and combining them with figures for sales and trading and more senior roles from pay benchmarking firm Emolument.com… we’ve come up with the compensation chart below.
It shows, roughly, how much you can expect to earn in a front office investment banking job throughout your career. As you will see, it is a lot – and it increases exponentially.
Between 22 and 25, as you go from analyst 1 to associate 2, you can expect your pay to rise from £60k ($77k) to £101k ($130k). Between 25 and 30, as you go from associate 2 to vice president (VP), you can expect your pay to rise £206k. From 30 to 35, as you go from VP to director, you can expect your pay to rise to £338k. And 35 to 40, as you go from director to managing director (MD), you can expect your pay to rise £494k. If you stick it out and manage to become a senior MD and head of department, it could rise higher still.
Of course, it might not happen this way. These figures are for front office investment banking jobs only – you won’t get anywhere near these numbers if you work in, say, risk. This is the fantasy compensation trajectory. Firstly, the figures from Dartmouth and Arkesden are for top tier banks, and therefore skew the numbers on the upside. – You’re going to get less if you’re working for a tier two or three player. You also might get chucked out in your late 20s or early 30s and either way you probably won’t get promoted to managing director. Goldman Sachs employs 12,0000 VPs and promotes around 400 of them to MDs biannually. If this is the case, your pay might stick around the £250k, or less, until you leave.
There’s also a chance, however, that you might end up earning even more than the charts below suggest. Goldman Sachs, for example, paid its 512 most senior bankers in the UK an average of $2.7m in 2015, the last year for which figures are available.
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The banks paying juniors the most are not the ones you thinkU.S. banks pay their analysts and associates the most, right? Actually....
Photo credit: City of London, London, UK by Paco Romero-Ferrero is licensed under CC BY 2.0.
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