How to get properly paid in IBD on Wall Street
Want to get a high salary for an investment banking division (IBD) job on Wall Street? Avoid non-bulge bracket and middle market investment banks and stick to big banks and boutiques. So say salary figures from recruitment firm Options Group.
Shown in the chart below, the Options Group's salary figures (for 2017) suggest there's a salary discrepancy of up to $25k for associates in mid-market firms vs. associates bulge brackets and boutiques. This rises to $200k when you hit managing director level. If you spend your career in the mid-market, you'll be losing out when it comes to salary.
How about if you spend your career at a boutique? Here, Options Group's figures suggest you'll lose out compared to a bulge bracket bank at vice president (VP) and director level, but you'll be back up there when you reach MD. This makes sense given that boutiques tend to be lean organizations which prioritize "rainmakers" who can bring in deals.
Of course, salaries are only one side of the equation. Getting paid in IBD is also about bonuses. Mike Karp, Options Group CEO, said bonuses across IBD were generally good last year. Carol Hartman, managing partner in the global financial services practice at DHR International agreed. However, Hartman said that at many big banks frustration with deferred compensation is increasing. At the same time, she said banks are trying to scrimp on MDs and are looking to pay directors and executive directors to do what are effectively MD level roles.
In this sense, working for high paying boutiques may make sense: cash bonuses are typically higher. Boutiques are also having a great start to the year: both Evercore and Moelis & Co. achieved record earnings in the first quarter. If you want to get paid a lot of cash for 2018, you might want to jump into a boutique now.
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