![]() However, not all firms raised the base amount for analysts and associates in lock-step. This was largely in response to how much attrition there was (due to long hours, etc.) throughout 2021. One interesting wrinkle thrown into the mix this year - that will have ramifications for years into the future - is that base pay across many bulge bracket firms for those in IB, S&T, and equity research was raised significantly. ![]() ![]() What you won't know until the end of the meeting is your bonus. So when you go into your compensation meeting - where MDs sit around a table, tell you how valuable you are, and give you your total compensation figure - you know what your base salary will be this year and what it will be next year based on your rank. During the VP years it can get a bit more variable, but before then everyone across the floor will more or less earn the same base amount based on their title (e.g., analyst 1, associate 2, etc.). While it can become a bit more variable as you enter into the vice president (VP) years, it will normally go up to at least $500,000 a year when you get around the MD stage.įurther, your base salary is quite predictable and rises in lock step. Unlike in other industries, the base salary within sales and trading does not really cap out at a low number either. As demonstrated by the case of a former Goldman Sachs trader who sued because his over eight million dollar bonus wasn't big enough (to be fair, he actually had a good case to be irritated over it). This is because your bonus will be quite variable (although probably less variable than you may imagine until you hit the MD level). One of the things you'll be told by more senior people as soon as you enter the trading floor is that you should always live off of your base salary, and try to save your bonus. This stands in contrast to other roles - like private wealth management, proprietary trading, or sales roles outside of high finance - where you'll be given a base salary for your first few years before moving to an entirely variable-based compensation structure. Whether you're in a trading, sales, structuring, or quant role your base salary will never be reduced or go away. Your base salary will be predictable and will rise in lock step over time. Within any large investment bank, your total annual compensation will be composed of a base salary and then a year end bonus. While this will cause grumbling among those in sales and trading who think they should be rewarded for having heightened revenue and ensuring the bank's overall revenue didn't decline too much, ultimately bonuses are partly a factor of a bank's overall performance. Practically, from a compensation perspective, those in banking have or are going to see sharply reduced bonus pools whereas those in sales and trading will see them largely flat or slightly up. In the end, this is why bulge brackets have both sales and trading and investment banking divisions - because sales and trading revenues tend to increase during times of heightened volatility whereas the opposite is true of investment banking. Therefore, S&T has the effect of smoothing out a bank's overall revenue and acting as a counter-cyclical buffer during times of stress. Rather, it reflects the bulge brackets I've worked in (like Goldman Sachs).Ģ023 Update: While 2022 saw a sharp reduction in investment banking (i.e., M&A and capital markets) revenue, there was a sharp uptick in sales and trading revenue at almost all banks (across both FICC and equities). Just to be clear, what I'll be discussing in this post is not the kind of compensation structure you'd have at a proprietary trading shop like Jane Street or Jump. However, there are clear distinctions that need to be understood. ![]() The reality is that the true compensation structure resides somewhere in-between these two - depending on how senior you are - but that at the junior levels it's most closer to the latter than the former. Others think that sales and trading operates under a similar compensation structure to investment banking, where everyone more or less moves in lock step and where there are "bonus buckets" that you are placed into. Some are under the impression that sales and trading operates under an entirely variable compensation structure. For those not yet in the sales and trading industry, there's a lot of confusion and misinformation about the salary and bonus structure. ![]()
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