How much will you earn if you go into banking and financial services after you leave university? More than in most other industries remains the answer. But can you really earn a near-six figure bonus after just two years in the industry?
Results to our recent bonus survey suggest you can - or that a few very high earners can. After 1-2 years in the industry, our survey suggested that mean bonus for financial services employees in London came in at £96k ($158k). However, the median bonus (the bonus at the mid-point) after 1-2 years was just £6k.
The mean bonus number in London was clearly skewed by a handful of very high-earning juniors.
How realistic is the notion that 24 year-olds are earning bonuses alone of £100k+ in the City of London? We may not be completely off - One Search, a recruitment firm, said recently that juniors in London are earning £100k in total compensation (salary + bonus) one year out of university. After three years, One Search said junior bankers can earn £280k.
However, our results may not be infallible: our sample size of juniors in London (84 people) was comparatively small and the highest mean bonus we recorded previously (in 2011) for people with 1-2 years' experience was just £28k.
Recruiters working at the junior end of the market say the £96k figure looks very "toppy".
"Pay for junior bankers is not necessarily as uniform as it once was," says Jason Mellors, a partner at search firm Shepherd Little. "It all depends on the bank you work for and your rating within it - you have the extremes of poorly paying British banks, to high paying American firms, but a £96k bonus does seem very high. That's more likely to be your total compensation - bonus plus salary - after two years."
The most recent M&A salary and bonus survey by search firm Dartmouth Partners, based upon analyst bonuses awarded last year, found that even after three years in M&A, analysts were receiving bonuses averaging only £42k. A few people working in hedge funds might receive £96k+ bonuses after two years, says one senior recruiter, but they're absolutely not the norm.
Barry Seath, managing director at Mirage Recruitment, a hedge fund specialist, says a bonus of £96k+ is eminently possible for hedge fund traders four years out of university. Two years is a bit rich, however, says Seath. "As an analyst with two years' experience in a bank, you'll get £40k-£50k tops as a bonus and that won't rise immediately when you join a hedge fund," he adds.
The Dartmouth Partners 2013 analyst bonus survey
Who earns more in investment banks? Traders? Or salespeople?
Pay for new graduates in banking rises to £100k