You Could Make More Working at a Boutique than at a Big Investment Bank

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When considering your next career move, or even your first financial markets position after college, it could be a mistake to put working at a large investment bank over a small boutique firm, especially if salary is one of your main considerations. And what financial pro doesn't consider compensation among his or her top motivators?

Would you believe that the average compensation for boutique banks and alternative asset management firms saw a salary increase in 2011 that was close to five times more than those at bulge bracket banks?

Results from our Salary and Bonus Survey found that the average base salary for all financial professionals rose 6 percent in 2011, with boutique banks and alternative asset management firms recording the strongest increases, +14 percent and +13 percent respectively. In the same period, large investment banks trailed far behind, with a low single-digit increase of 3 percent.

It therefore comes as no surprise that satisfaction levels reflected compensation increases. Nearly half of surveyed professionals (47 percent) were "very" or "somewhat satisfied" with their salary in 2011 – this compares to 43 percent in 2010. Over a third (37 percent) were "very" or "somewhat dissatisfied" in 2011, compared to 38 percent in 2010.

Over a third of respondents (35 percent) reported an intention to change firms this year. Better opportunities and increased compensation top the list for the reason to change firms. But when asked what their current employer needed to do for them to stay, over half of surveyed professionals (55 percent) felt that "increased salary" would do the trick.

"While finance professionals insist on higher salaries, or threaten to jump ship, what might be different this year, though, is that firms may be willing to call their bluff," said Constance Melrose, Managing Director at eFinancialCareers, North America.

"Willing or not, what is clear is that base salary is becoming a more critical part of the compensation conversation, a trend that began with the tightening of risk-adjusted standards for incentive compensation," she added. "While most of the headlines focused on bonuses, salary has started to creep into the conversation. The intended consequence of greater uncertainty around bonuses has predictably led to greater focus on the less variable component."

The online survey of 2,860 financial professionals found that 54 percent of them received salary increases, not including performance bonuses.

"With their ability to pay higher performance bonuses constrained by public opinion and regulation, major Wall Street banks are looking for alternative ways to compensate their employees," noted Melrose. “Banks have had to institute new pay for performance models that are targeted in how they reward employees,” she told MSNBC in an interview, noting that greater uncertainty around bonuses has led to greater focus on base salaries.

One important finding that eFinancialCareers uncovered in its Bonus Expectations survey, published in October 2011, is that roughly 60 percent of Wall Street employees say pay is not the most important factor in their compensation, although it is still very important, Melrose said. “Compensation structures are changing,” she said. “Banks are looking at a more comprehensive view of how retain talent.”

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