Calculating the optimal time to quit your banking career
When you start out in investment banking there’s a definite upward trajectory with pay rises and promotions ahead of you (assuming that you continue to make the cut). But is there a point when your earning power starts to wane? Our research suggests that the optimal age to stop being a salary man in finance is around 35.
Bonus payments for bankers continue to increase until after 10-14 years in the industry, according to the results of the eFinancialCareers 2014 bonus survey. After that, with the exception of the U.S. market, earning power starts to wane.
The $96k figure for juniors in the UK data is an anomaly, largely due to a small sample size and a few respondents pertaining to have earned very large bonuses this year, but the data generally points towards a peak of 10-14 years. Assuming a candidate goes into banking straight out of university at 21, this means bonuses start to fall after age 35.
There are a couple of factors at play here. Firstly, there’s the fact that investment banking has long been regarded as a younger person’s game – if you haven’t made it to the senior ranks by the time you’re 40 it becomes increasingly difficult to make your mark.
There are numerous examples – Achim Beck, a 42-year-old CIBC investment banker who successfully sued his employer in 2009 because the firm wanted a “younger” person to do his job, or Tony Shiret who took Credit Suisse to court for age discrimination. His boss – 48-year-old former CFO for EMEA Chris Carpmael – said it was the “nature of the industry” in investment banking that few people survived beyond 50 (his services were later dispensed with).
Then there’s the fact that junior bankers have become the new must-haves, looked after by the firm while expensive senior employees are encouraged to leave. Barclays is cutting directors and managing directors, while Morgan Stanley did last year, while some banks are indulging in a second round of graduate recruitment to help juniors cope with the workload and pay has been on the rise.