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Ex-Goldman trader runs calculations, says young bankers now living hand-to-mouth

What young traders eat for dinner

Last time we said that mid-ranking bankers were struggling to live in Central London, we received a barrage of outraged comments from members of the public complaining that anyone on a six figure pay packet should have no complaints about their lifestyle.

Now, however, Anton Kreil, the ex-Goldman trader who set up the 'Institute of Trading and Portfolio Management' (and is no stranger to controversy) has run some calculations which suggest that below VP (vice president) level, most bankers are indeed far less well off than everyone thinks.

Kreil's calculations, included in his university tour are provided below. As an analyst (the most junior position in an investment bank) working in a trading role, Kreil says you'll make up to £50k in your first year and will effectively be a contractor for two to three years with limited job security (he says that only 20% of an analysts get an offer of a full time place). You won't be able to live in Central London and you won't be able to pay off your student debts.

As an associate in a trading role, Kreil says you'll earn up to £180k, but that some of your stock will be locked up and out of reach for five years. You'll just about be able to live in central London, but you won't be able to save and you will live on your salary on a month to month basis.

Only when you become a vice president or managing director earning £300k plus will you be able to comfortably afford to live in central London according to Kreil. And then a large portion of your pay will be deferred and you'll be 'locked in' and unable to leave your job even if you want to.

Kreil says he derived figures for traders' pay in banks from 'off the record conversations' with three managing directors at U.S. investment banks in September 2013.

How much traders earn in investment banks:

Anton Kreil 1

 Source: Institute of Trading

Kreil says young traders in investment banks are even worse off when their long working hours and income tax payments are taken into his consideration. Below are his calculations for net hourly pay.

Net pay per hour for traders in investment banks:

Anton Kreil 3

 Source: Institute of Trading

Kreil's findings echo our earlier into investigation into the lifestyles of young bankers today, most of whom spend long years living in shared accommodation with other banking juniors. Then, Muzaffar Khan, a former trader and hedge fund strategist who coaches young bankers in the City, said it was mainly young operations professionals who suffered - they only earn £50k a year and need to live close to work and are expected to spend money on socializing, said Khan.

However, Kreil suggests young traders are struggling too - or that they are at least struggling compared to their expectations. "I speak to hundreds of students who want to work as traders in banks and their expectation is that they will have to work very hard for two to three years but that when they reach associate or VP level they will start making money and living a good life in Central London.

"That's no longer the reality," says Kreil. "If you work in trading in an investment bank, the reality now is that you'll be flat sharing for the first six to seven years. You won't be in a position to buy your own place in London aged 28 - wake up and smell the coffee."

What are aspiring traders to do? Needless to say, Kreil says they might want to attend his trading academy instead of going for banking jobs.

There's no point in training as a trader in an investment bank now, Kreil says. You don't get paid - you won't make the money that will allow you to leave and become a trader in your own right. You only get taught how to put orders into a trade management system and to monitor them using an algorithm. And you get no chance to develop the kind of audited track record that will allow you to move into a hedge fund in future. Banks' contracts include stipulations that they own traders' track records, says Kreil.

"The notion that you go into a bank as preparation for moving into hedge funds is wrong and perpetuated by what happened in the past," Kreil adds.

AUTHORSarah Butcher Global Editor
  • me
    26 November 2014

    you must listen to the seminar to understand, he specifies living in central London because of the hours that bankers work. Most other professions do not keep those kind of hours as standard therefore they would not need to live in central London. Net of living standard living expenses professionals who dont work those kind of hours on the same pay will enjoy more of their money and possibly a higher standard of living. Mind you living in canning town will get you into Canary Wharf pretty quick but i don't know if they could get there for 6 bad it wont be nice.

  • po
    10 January 2014

    The Bankers! Keep getting fined for poor behaviour that the rest of soceity finds unacceptable (except the government which exacts only the most modest of reprimands). They should be paying us per hour. Regardless, why would we believe anyone who suggests bankers are overpaid. It is one of the most rediculous suggestions ever made. All it really would mean, if true, is that the rest of society, which does not transfer net liabilities to the rest of the public, are very very very very underpaid.

  • No
    27 November 2013

    "You need to be quanty now a days… if you're a software engineer with a graduate degree in math, I'll hire you on the spot. Finance/Econ grads… not so much."

    I'll believe it when I see you offering more than 180k total comp to such people in their first couple of years.

  • lo
    27 November 2013

    what the heck?? Then what about rest of the professions in city eh? So you can't afford to rent in west-end posh area? Well tough that's the life, you can still live in canary wharf. Don't get this contractor bs.... you join a grad program and its not 20% survival to be associate or full time analyst after rotations. The writer has no clue, not everything is algo trading order management either in banks. The pay looks off the scale as well in certain parts, anyways its not exactly 2006 is it. Besides banks are deleveraging, euro zombie economy for long time and uk growth from high debt...while US and Japan keeps printing press hot. what a world we live in duh.

  • oS
    27 November 2013

    It always depends... if you're trading cash equities or spot FX, yeah... any high school graduate can do that. It really isn't hard.

    If you're managing an illiquid exotic derivatives flow book and still have enough rope to swing it around a bit... trust me, the opportunities are still there.

    You need to be quanty now a days... if you're a software engineer with a graduate degree in math, I'll hire you on the spot. Finance/Econ grads... not so much.

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