Bulge bracket bankers slay boutiques in bonus war

While boutique banks typically offer a better work-life balance than larger bulge bracket competitors, come payday, they tend to fall short. At least they did in 2013.

Despite facing stricter regulations, big banks last year doled out larger bonuses than boutique firms, according to an eFinancialCareers survey. In the U.S., the average bonus for bulge bracket bankers stood at $108k. Boutique firms, meanwhile, paid an average bonus of $91k. The narrative was similar in the U.K., where bonuses at bulge bracket banks nearly doubled those distributed by boutique firms ($75k to $40k).

This pay structure was the norm for decades, although not recently. “Post crisis there were a few years when the boutique banks experienced disproportionate growth as the bulge bracket banks began their slow recovery,” says Adam Zoia, CEO of Glocap, a Wall Street search firm. “This temporarily lowered their bonuses relative to boutiques.”  Things have now recalibrated back to normal, he said.

However, not all bulge bracket bankers had a happy bonus season. Unlike in previous years when the pool was shared fairly equally, in 2013 only top performing bankers took home a hefty bonus check.

“One point I have seen over the last several years is that bonuses are being used more strategically, rewarding those you really want to keep and giving the marginal players – or those you don't mind losing – very little or nothing,” says Anne Crowley, managing director at Jay Gaines and Company.

Our numbers tell the same story. In the U.S., the median bonus for 2013 was just $15k, meaning half of all respondents took home a bonus equal to or lower than that figure. Over the last two years, the median bonus as a percentage of the mean, or average, has fallen from 33% to 21%. There is a similar movement in the U.K., where the median bonus was also just 21% of the mean for 2013. It was 26% in 2011 and 30% in 2010.

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