Why Bankers Don’t Make Bank: Where Your Paycheck Actually Goes and What to Do About It
If you want to be in finance, you probably like money quite a bit.
And once you break in and become a banker you’ll be making tons of cash – even if bonuses aren’t as good as they were in the old days.
But then you’ll waste it all on $200,000 sports cars, drugs, and alimony – right?
While that scenario applies to many seniors bankers and explains why some finance veterans don’t save much, the problems actually start much earlier – with your first paycheck.
The NYC Analyst
Let’s start with the base case of a newly minted investment banking analyst in NYC – after this, I’ll explain how it’s different in other regions, outside the US, and for associates on up.
If you earn a $70,000 base salary, that’s $5,800 per month (technically it is $5833.33333 but we’re using round numbers here).
Taxes are different for everyone, but with that level of income in NYC you’ll pay around $2,000 per month (34-35% rate) in federal, state, and city taxes – leaving you with $3,800 in after-tax income each month.
Manhattan is also the most expensive place to live in the US, and at the minimum you’ll spend $1,200 on rent (with a roommate) – but more likely you’ll spend $1,500 to $2,000 on rent.
So now you’re left with $1,800 – $2,300 per month of post-tax, post-rent income.
Models and Bottles Other Expenses
You’ll be spending a minimum of $1,000 up to $2,000 when you take into account food, utilities, transportation, dry cleaning, clubbing, student loans, and so on.
Why so much?
You can expense dinner each night, but you will have to pay for other meals, for going out on weekends, and so on – even if you assume a very low $10 per day, that’s still $300 per month.
And realistically you will spend more than twice that on food, so assume at least $600.
If you assume $100 per month for utilities, $100 for subway / taxi fare, and so on, that easily brings you to $1,000 – and we haven’t even taken into account alcohol, clubbing, and significant others.
Many analysts actually save nothing and end the year with credit card debt.
But let’s be optimistic and assume you can save $1,000 per month, or $12,000 per year.
That seems OK – but then there are non-monthly expenses like your end-of-year vacation, furniture, an HDTV, a new laptop, and so on.
Even if you’re extremely frugal and manage to save $2,000 per month – $24,000 per year – you will only be left with $15,000 – $20,000 once you take all those expenses into account.
And if you’re not so frugal, you’ll be saving well under $10,000.
Those Numbers Are Ridiculous – I Don’t Spend Nearly That Much Money!
That’s what you say now – when you’re still in school or working a normal job 50-60 hours per week and you don’t live in Manhattan.
But can you really save more money than what I’ve outlined here?
I’ll Live (With My Parents) in New Jersey / The Bronx / Queens!
You might save money if you do this but you will also want to kill yourself after a month of coming back at 3 AM and leaving at 6 AM every day – plus you’ll be spending more on transportation.
Pretty much all analysts and associates live in Manhattan – you need to be close to work to handle fire drills anyway.
I Will Never Go Out / Never Spend Money on Food!
Again, this one sounds plausible now but once you start working the picture changes.
If you want to get to know other people and build your network, you need to go out occasionally.
Maybe you won’t spend $500 on bottle service every night, but you will spend something.
And while you can use tricks to save money on food, you will find yourself buying lunch and other meals more often than not.
Don’t even think about cooking – that’s the last thing you want to do when working 80-100 hours per week.
I’ll Buy a Place Instead of Renting!
…except that would actually be more expensive on a monthly basis, at least initially.
Also, you will most likely not have enough for a down payment if you’re just graduating.
And if you want to move out of New York, buying a place straps you down and limits your options, which is not a smart idea when you’re just starting out.
I’ll Get a Roommate!
This one’s actually a good idea because you can save quite a bit on rent and other expenses.
Plus, it widens your social circle and if you have a non-finance roommate, you might get to know non-bankers (they exist, even in NYC).
Other Regions of the US
In other regions there are 2 key differences:
- Lower rent, food, and going out expenses;
- (Possibly) lower taxes.
So you might be able to save $30,000 if you live in Houston, pay a sub-$1,000 rent, and also have no state taxes (isn’t Texas awesome?).
You can get an estimate of taxes in other regions with this net pay calculator.
Houston is one of the cheapest places to be a banker in the US; if you’re in LA or SF, rent will be higher – though still less than Manhattan – and taxes and other expense will be higher, so you would save more than in NY but less than in Texas.
Outside the US
The major differences:
- (Potentially) lower taxes or no taxes at all.
- (Potentially) a housing stipend, so minimal or no rental expense.
- (Potentially) a much lower cost of living.
- …but your base salary may also be less if you’re at a local firm rather than a global bank.
I wrote “Potentially” above because if you’re in London, for example, it’s not much different than the NYC scenario and may be even more expensive.
But if you’re in Dubai, Saudi Arabia, or other emerging markets then you can save a ton of money thanks to no taxes + generous housing allowances.
In other regions like Hong Kong there are still (low) taxes , but you usually get a housing stipend which saves you a lot.
So what’s the downside to working elsewhere in the world?
If you’re working for a small, local firm you will often get paid a fraction of what you earn at global investment banks.
In China and Japan, for example, local banks might pay you almost nothing compared to what US and European-based banks pay; that’s because the cost of living is theoretically lower in China (even though in big cities, it’s not really) and because of corporate tradition in Japan.
Associates On Up
If you’re starting as an Associate, you’ll get a higher base salary – more like $100K – but you will also have higher expenses, like $150K of business school debt and potentially a family to take care of.
If you don’t have those expenses you might be able to save more than analysts, but you will still not be amassing a fortune just from your base salary.
If you’re more senior – VP to MD level – your base salary actually doesn’t increase that much relative to your seniority.
You might make $150K-$200K at the highest levels, but your tastes will also increase and you won’t want to settle for a $1,500/month studio apartment.
So despite the higher base salary, you still won’t save much until bonus season.
Summer Interns
As a summer intern you’ll get a pro-rated salary based on what full-time bankers earn – so let’s just assume that you work for 3 months and earn $17,500 ($70,000 / 4) to get a round number.
You can save quite a bit of this if you get cheap student housing (at NYU in NYC, for example) – and you’ll get a large tax refund the next year because you only worked for 3 months.
Even with all the other expenses, you might save around $5,000 – $10,000 as a summer intern, after the tax refund.
Signing Bonuses, Relocation & 401(k) Contributions
I didn’t take these into account above, because I’m assuming that you use most of the after-tax signing bonus and/or relocation bonus to actually pay for things and relocate.
You can make contributions to retirement savings plans that save you a bit in taxes, but these don’t result in a dramatically different picture – and you still have to pay taxes when you withdraw money.
What All This Means
This was a long article with a lot of numbers – here’s what it all means, and what you should do as a result:
If Your Primary Goal in Banking is to Save Money, Do Not Work in New York or London
Thanks to taxes and the ridiculously high cost-of-living in these places, you will save far more of your salary in regions like Dubai, Saudi Arabia, and Hong Kong.
Just make sure that you’re not working for a local 3-person firm or your salary might also get cut by 75%.
The other downside to these places is that you’ll gain a much wider network somewhere like NYC or London and have more options afterward.
…But If Saving Money Really Is Your Main Goal, You Might Have the Wrong Idea
No matter what you do, you’re not going to save a fortune as an analyst or associate.
You do investment banking because you want to invest in yourself and have access to much better opportunities in the future.
Doing it to save a lot of money in the short-term isn’t a wise idea because you probably won’t save that much – and your hourly rate may not be much better than at McDonald’s.
Your Yearly Savings are Heavily Dependent on Your Bonus – So Don’t Blow It
Even a “modest” bonus of $50-$60K (after taxes, $25-$30K) is more than what you save during the entire rest of the year.
That’s why – despite recent legislation – banks are unlikely to raise base salaries and lower bonuses: psychologically, we are more motivated by a one-time infusion of cash vs. an increased trickle over time.
And we’re also much more likely to spend a sudden infusion of cash foolishly (see: lottery winners).
So whatever you do, do not do anything stupid or risky with your bonus – put it all in the bank or in conservative investments so you have a cushion.
As a VP once told me, “You can piss away your salary on coke and strippers, but save your bonus.”
Keep Your Investing Plain, Simple, and Boring
Even after reading all this, you might still be convinced that you can defy the odds, save $100K+ in 2 years, invest in the next Facebook, and then retire as you cash out for $10 million.
But doing investing at all is very difficult as an investment banker because:
- You don’t have time to day trade or research stocks in great depth.
- There are many restrictions – you need to get permission for every single trade you make to ensure that you’re not pulling a Gordon Gecko and using insider information to profit.
So go with something simple and set up automatic contributions from your paycheck into your retirement accounts (or into your brokerage account), and then invest in a boring, diversified portfolio.
Save and invest what you can as a banker, but realize that you won’t have that much available until bonus season – unless you’re in a tax-free zone.
And in case that doesn’t work out and you end up with $30K of credit card debt, you can always hope that bonuses return to 150% of base salaries one day.
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Wow! What a great article…Guys this is the reality, I have seen this exact case with my brother.Correct from top to bottom of this article.But please,I wanted to know the scenario in India.How much does an investment banker ends up saving in India(Mumbai).Both in case of Boutique and a Bulge Bracket??
Depends on what kind of firm you’re at it; if it’s a global bank you will save a lot, on par with the other emerging markets quoted above because the cost of living is so much lower. If it’s a local Indian firm you might make 10x less and so your savings will be more limited.
From what I know, even if you work for a global bank, you ll be paid less than what you earn in NY. Mumbai is an expensive city with crazy rents but lifestyles cheaper so you ll end up saving a lot.
http://amitklein.com/2009/07/09/cost-of-living-comparison-mumbai-vs-nyc/
Thanks Brian, insightful as always.
Are there any opportunities in New Hampshire? I heard the taxes are pretty low there and cost of living not very high.
The problem is that you still have US federal taxes, which are only going to rise and rise under Obama. Not having state taxes helps a bit but the overall rate isn’t dramatically different. I don’t think there are too many banks in NH, they’re more concentrated in Boston with lots of HFs and asset management in Connecticut.
Great article again! I wanted to ask which is the most profitable investment banking division according to You?
Prop trading was, but the US government banned it in 2010 so going forward it will probably be investment banking… very low expenses so compensation can be high.
Thanks! But could You be more specific? Which division? Like M&A or Asset Management etc.
Investment Banking = M&A, Industry Groups, DCM/ECM, and so on. Asset management is far less profitable because expenses are higher and fees are lower.
A very good article, as always. On Dubai though, it is true that you benefit a lot from no income tax, and cost of living went down due to the crisis/crises but expenses might easily get out of hand. Also, I am unsure about housing allowance nowadays, for two (slightly contradictory) reasons; rents in dubai got out of hand due to low price sensitivity since your company was paying the bill, and now rents have plummeted after Dubai was hit hard by the crises so it is not incredibly expensive anymore (circular reasoning, but this is my understanding of it all). I might be able to give more comments about IB in Dubai later, if it is of any interest to you.
/Some Joe
Right, I was just going off a few reader interviews on Dubai; housing allowances might not be as common anymore.
Hi Joe,
Can you tell a bit more about the investment banks in Dubai, is the kind of work significantly different from that in London or NY….is it more of a back office job or its equally to london and NYC.
I want to apply to Dubai but I am not sure if the kind of work would be same as in London etc.
Thanks
Great and insightful article. Can you please provide a view on Sydney Australia? Thanks.
Probably about the same as regions of the US outside NY – I am not familiar with the tax situation there, but like most developed countries I think it’s in the 30-40% range. Cost of living is lower than NYC but there are no housing allowances, so similar to other regions of the US.
What I was trying to say was that I’m not sure that housing allowances are the standard anymore in Dubai, or atleast not one that covers the greatest part of your rent. I re-read what I wrote above (printed it and made mark-ups…) and realized it wasn’t very clear. I guess I’ll have to blame it on the hours I’ve been pulling. I hope you accept my apologies.
Hello Joe,
Hope this message finds you well.
I am currently in the US and will be heading to Dubai early October, I was wondering if we can catch up for a coffee or something as I am interested in knowing more about IB in Dubai and I believe your insights would help me a lot.
I am not sure if you’re residing in Dubai but I assumed so from your post.
Regards
Boy am I glad I’m setting up my business in Florida, a tax haven much like Texas. I decided to go the entrepreneurship route, and trust me, you want to set up shop in a state that makes it as fast, cheap, and easy as possible. Maybe I won’t make as much as a banker in my first year, but I can still make a very nice living for myself.
Otherwise, I do think disciplined financial management is achievable once you set your mind to it. You just have to avoid the models and bottles!
:-)
Yeah, in regions outside NY there is also less of an emphasis on spending recklessly so that helps…
Hi Brian,
We have been talking for quite some time about the Bankers’ salary and bonuses. Do you happen to know what’re the revenue reserve rates for the Banks in general? Lets take Boutiques, size from 20-30 staffs. Usually, how much in percentage will the bosses take out of the Banks’ revenue to compensate their staffs?
50-60% of revenue goes to compensation at pure-play investment banks; at commercial banks it’s more like 30-40%.
Brian,
Great article always.
Wanted to ask for some career advice. Last April I started working in the Debt Capital Markets department in a Japanese bank in Tokyo (I wanted to be in IBD but Japanese companies place their employees by themselves and ask us to move around over a long period of time).
Due to Japanese culture and what not, I get very little exposure to clients and am learning very little in terms of deal origination or execution.
I eventually plan on returning to the states, so in order to be an effective and attractive asset to banks, PE shops, schools, etc. I am planning on moving laterally to a European or American bank by this time next year (hopefully being able to start over as a 1st year analyst). I will try for both in Tokyo and the states.
My question is what difficulties would I face moving from DCM to IBD, and what steps I should take now to facilitate this process.
Sorry for the lengthy message. Big fan.
It’s not that difficult, the key thing is to prove that you know enough about non-debt deals and accounting/finance outside of what you use in DCM. All you can do right now is start contacting people in the US but you can’t do much aside from emails / calls due to location.
Much appreciated.
If you can ever find time in your schedule, please shoot me a line to my e-mail. I would love to discuss your experiences in Tokyo (poor JSDA exam translations, Roppongi chronicles, etc).
Thanks again. Cheers.
What is the general base salary and bonus for a analyst in Chicago?
Thanks.
Same as NY
I assume NY salaries range from 60-70k still, and not all banks have raised base salaries to 70k.
If this is correct, than Chicago is on par with NY. Received an offer from a smaller bank in Chicago for 60k.
Im sure BBs have raised to 70k, even in Chicago, but I have nothing to back up that claim.
I think most banks have raised to $70K but not sure, might be a few left that haven’t. Probably more common in NY than other regions.
Hi Brian,
I sent an email to one of the MDs of a particular office (not in NYC) of a MM and was told that he would forward this to Sandra (i am guessing HR?), who would revert me to the next few steps.
Few days later I got this email. How should I proceed?
———————————————————–
Hi John,
I hope you’re doing well. We will get in touch with you as and when we have opportunities in DisneyLand, which fit your experience.
Many thanks for your interest in the Bank of Universe. Lets stay in touch.
Regards,
Sandra
All you can do is follow-up and check back periodically with the MD and the HR person – there is a lot of ambiguity with networking and no clear answers with most of your interactions.
hi brian
any views on salary, taxes and living expenses in south africa. will be moving down there in a few months.
quite excited actually.
See the latest article http://www.mergersandinquisitions.com/investment-banking-south-africa/
Hi Brian,
Thanks for your insights over the past few months. I have learnt a lot. I was wondering if you could provide me with some career advice?
I am a big four accountant but am dying to break into investment banking after my stint in accounting. I have done CFA level 1. From your experiences, do you find that investment bankers would look at 3 years spent in accounting (financial services audit) as a deterrent or would they be willing to take many on board? I want to get into Equity trading in particular.
Thanks, K
The issue is that 3 years makes you overly qualified to be an analyst but not enough to be an associate… so at this stage business school or possibly a local boutique and then moving to a larger bank are better options.
Thanks for getting back to me Brian. What are the chances of going into a bank as an associate without having been an analyst? Especially after having come from an accounting background? Thanks again
Not that difficult to get in without having been an analyst, but you do need a top MBA to have a good shot
In such a case, how would an Masters in Finance from an Ivy league do? I am not interested in an MBA as I already did my Bachelors in Business Management. I have 3 years of work experience in Financial Services.
I am doing in MS in Finance from LSE and needed to know if I have to apply for analyst roles or associate roles.
Since I have 3 years of experience, what would you suggest?
I wanted to do a finance related masters as my exposure to finance was not enough during undergrad.
I have also cleared CFA L1 and 2.
You’ll probably qualify for Associate roles.
Well this article is an eye-opener.
If an 100+K salary gets whittled down to less than 10K, may I ask when in the world do i-bankers start making bank? After their 2-year stint when they move on to bigger and better things? Are bankers going to be broke for a long time?
How are people making less than 100+K surviving in NY?
That’s why I raised the point about bonuses… your savings is almost 100% linked to your bonus, so if you get a solid bonus you can still save quite a bit. But in general people in finance do not save much because they spend money so stupidly – $500K sounds nice, but if your expenses are $450K per year it’s not much. If you have more restraint you can save more.
I think that Toronto is the optimal city to save. Basically the same salary and bonus, with lower cost of living? Would I be correct to state this?
Sure, but what about the models and bottles?
I live in Saudi Arabia, which is much cheaper than Dubai, specially with rent, and firms are still giving housing allowance(it’s a government rule for non-Saudis, so no chance of firms cutting on that!)
compared to other people in the same firm in Dubai, we save much more money here in Saudi.
Just thought i give my two cents on this.
Hello Zaid,
Would you be willing to share some of your thoughts and experiences in Saudi Arabia! Is there a way I can PM you.
Regards
Brian, many thanks for every post on this blog. I read through a lot of them these past months. Quick question ;) Are you happy that you did Investment Banking ? If you could go back to being 18 would you do something different ?
It was ok to get the experience but honestly no, I would have started / kept running a business at 18 and not even attended college if I could go back.
Housing allowances for analysts in Hong Kong have been killed this year at most bulge brackets to conform to “industry practice”, although this is still under review. Analysts are receiving their offers right now without housing benefits, the decision of which will be finalized at a later date.
I believe this new policy may be applicable to offices in other parts of Asia as well, since many of these offices are headquartered in Hong Kong.
I completely enjoyed this one-so true. Some of my friends have gone down the same route pre-recession and in 2008 they were left without a job but with lots of credit card debts.
Another question I have. I can’t make sense of this…If your ultimate goal is to be a long-term investor should you become a trader and trade first or go ibanking – PE route ? I have huge interest in the markets but I feel like banking can give a better understanding of fundamentals.. What should I do ?
Banking because trading is mostly focused on short-term investing
Great article. By way of some empirical evidence using numbers that are real:
I just finished up my first year. I made $4,000 a month with a 70K base. I paid $1,500 in living expenses and another $1,500 in other expenses – food, random purchases and going out included. The $1,500 in expenses would have some variability but it really would average out – one month I would get crushed at work and have a $600 credit card bill. Another month I would go out a couple times extra and spend $2,000. I’m not a huge spender but never held myself back and I always managed to save $800-$1,000 a month.
At the end of the year I had just over $10,000 saved. Add in my bonus for another $35,000 and that’s $45,000 in a year. Next year living expenses stay largely the same but base salary is higher. I expect to end the year with $15,000 in savings and a bonus of $40,000 on top of that. That’s $100,000 in cash (using very round and conservative numbers).
I know your article above focuses mainly on base salary, but I want to point out: What other job can build $100,000 in cash in your bank account in 2 years, right out of college? That sounds like ‘making bank’ to me. All the while living extremely confortably, never thinking twice about saving (or spending)money and getting a great (though tough) work experience out of it.
That’s true, but if you’re an engineer at a company in Silicon Valley, for example, you might make around $100,000 per year and only work 40 hours per week… so you might save less overall but you would also have time for a social life. You can save more with banking vs. any normal job, but there are ways to increase your free time or increase your savings above that (if you want to take more risk)
No offense to anyone.. but do we really think engineers have social lives? How much money does a WOW account really cost? lol
Umm all good points, except you forgot to include the most important factor of compensation- the year end bonus. If you can save $10k from your salary, and earn a $60k bonus, then you can have $40-$50 of savings at year end. That’s $80-100k of savings after 2 years as an analyst.
My bad I didn’t notice that last paragraph haha. Ignore me.
Brian,
What is the starting analyst salary and bonus for BB Investment Banks in Dallas?
Same as NYC
I’m still a sophomore in college, and I plan to pursue a career in investment banking. Should I strive after a major in finance or economics? Which one would be more suitable to land a position as a junior analyst after graduation?
http://www.mergersandinquisitions.com/investment-banking-major/
I am currently a first year in a top business school and am trying to decide WHERE to do banking. Why would a person NOT want to work in Houston over NYC? The taxes and cost of living are ridiculously low. Are the exit opportunities worse? Is it possible to go from Houston to NYC? From NYC to Houston? Can you also touch briefly on the other hubs (Chi, SF, LA)? Thank you for your help!
Because you have a more limited network in Houston and you are pretty much limited to energy. Whereas in NY it is much easier to move elsewhere, there are plenty of other industries, and so on. The other hubs have similar issues, SF is tech/biotech, Chicago is industrials, LA is gaming/entertainment.
I just accepted an offer from a non-bulge bracket universal i-bank. To give you a hint, they are located in a major southeastern city.
I am now starting to think about industry coverage groups vs product groups (syndicated finance, M&A, etc).
Have you ever thought about doing an article on the differences between industry coverage groups and each of the product groups? For example, how will day to day differ and how do the exit opportunities differ (again, keeping in mind we’re not talking about bulge bracket).
Any advice would be appreciated!
Thanks!
Whoops…should have mentioned I accepted a post-MBA associate position.
There are articles on specific product groups (M&A, ECM, Restructuring) and industry groups (Industrials right now, more are coming). There is a minimal difference for most of them so I’ve thought about it but feel it would be a waste to go in-depth when there is not a tremendous difference anyway.
Are the starting salaries for first year analyst the same across the U.S? For example are they the same in NYC and LA?
Yes
Does it make a difference what type of degree one has for example bachelors vs. masters?
Bachelors and Master’s are the same because you still start as an analyst, as an MBA it’s different but that is a different degree
Hi,
Just a thought that has been killing. How would one initiate a conversation with a banker given that you don’t know him? How can we start the discussion with the ultimate aim being that I need a banking job? Also, would like to have a few advices regarding cold calling.. How do we initiate the conversation?
http://www.mergersandinquisitions.com/investment-banking-informational-interviews/
http://www.mergersandinquisitions.com/turn-cold-calls-warm-follow-up-alumni-conversations/
Does a specialized (orthopedic for example) or investment banker at a bulge bracket bank more money? I think specialized surgeons can make about $350k per year.
I have no idea because I don’t know anything about medicine, but overall the ceiling for bankers is way higher. Normal Managing Directors make in the millions, whereas the other type of MD does not unless he’s the best doctor in the world at a specific type of surgery.
Just trying to work this all out.
I understand that a first year analyst will start out with a relatively low income (higher than other jobs), but when do bankers start to make the big bucks!? Investment banking is renowned for being an area where people make millions, but your article doesn’t really imply this.
I suppose what I’m trying to say is, can a “normal” person in this area of occupation make a real stack of money?
My initial thoughts were: you earn a decent amount in your first 2-3 years as an analyst (though with a lot of work), after about 5 years it becomes extremely financially rewarding (if you can get into it all) and when you become an MD at a reasonably reputable firm, you were almost rolling in it.
Sounds all pretty superficial, but I suppose I just want the bottom line on whether it is extremely financially rewarding to stick with IB and make the amounts it is known to produce?
Thanks for help
http://www.mergersandinquisitions.com/finance-investment-banking-jobs-tradeoffs/
You may make a lot but you will not save much due to a) High taxes b) High cost-of-living expenses on cars, houses, trophy wives, etc. and having to keep up with co-workers. You can make a good amount in IB but you will also be bald and fat by the time you get to enjoy any of it.
Thats Alot !!!
Brian, your article has truly been an eye opener!!
I am a senior in high school and am debating between two schools, NYU and IU. Assuming my research is correct, both schools offer prominent networks for investment banking. However, the two main differences between the schools are costs and location. Indiana offers a 3-2 program, which I can receive my bachelors and MBA in finance and accounting within five years. Unfortunately, it runs an economic cost of $197,000. In comparison, NYU offers a bachelors degree within four years, running up an economic cost of $180,000. Is an additional year of school at IU, worth getting my MBA? While at NYU I will be able to enter the work force after my fourth year and gain experience?
-Small Fry
Um NYU beats IU by about 5000000000x in terms of recruiting (assuming you’re at Stern) so I would do NYU.
Thanks Brain!! However, if I were to attend NYU, are there a lot companies that recruit for Chicago based firms?
There might be some but overall most companies there are focused on NY
Brian,
Amazing article! I am high school student, interested in investment banking. As of now, I am debating whether to attend the University of Virginia to major in economics or head to a Mid-Western school like IU or U of I.I have already been accepted into both IU’s and U of I’s business schools. I wonder how much does a double major in accounting and finance weigh, coming from either IU of U of I? As opposed to an economics major from UVA? From what I have heard, your undergraduate major doesn’t matter that much. Is that the case? In addition, of these three school’s, which do you believe/know has the strongest network for Mid-West/Chicago are based firms. Granted, UVA is on the East coast, but does its location truly limit its network and reputation?
Thank you for your time! Once again, awesome job!
-Dietz
UVA is the best of those but you should really be going for a top school to begin with… think HYPS. Some banks do recruit at UVA but overall it’s still much tougher than the top 10 schools.
What is considered to be top schools? And does the field of your undergraduate matter too much?
HYPS (Harvard Yale Princeton Stanford) also Wharton, MIT, other Ivies, then some top state schools like UCLA, UC Berkeley, UMichigan. http://www.mergersandinquisitions.com/investment-banking-major/
I’m an engineer (BS, MS) heading back for a top 10 MBA this fall, married, and really stable. I’m thinking about IB as a career path and want to end up in Boston. Do you see any issues with my plan? What kind of salary expectations should I have being in Boston? My objective is to make a lot of connections and bounce out into another area of finance (private equity, perhaps) in about 2-3 years hopefully making a decent amount along the way.
Salary is about the same in Boston but maybe lower if you’re at a regional boutique instead. The main issue with IB is that you will have a fraction of the time for your family as you would in other industries.
Considering my other potential track is management consulting, I think I’ll take the long hours of IB over long hours and 90% travel. Thanks for your input!
I’ve noticed that bulge bracket firms have offices outside of New York City. Is it possible to get into these offices as an analyst and then make a similar amount of money (compared to NY)?
Yes the pay is similar in other regions and you save more due to lower cost of living
Sorry it doesn’t pertain to this article…but is harder to get into other offices? Can you transfer from New York or do you have to interview directly in the city you wish for?
No it’s not harder, you can always transfer from NY but harder to do the reverse.
Could you name a few options to make conservative investments? Can you invest in S&P? And what combinations of bank account, investments etc. do you suggest?
Thanks for the article!
Don’t really focus on investing myself but just pick a broad market-based ETF or something like that that has a mix of US and international companies
Thanks that’s very helpful! Also I am wondering if it’s ok to put 70% in bank deposit + 30% in stock, or is it better to be more conservative/aggressive?
Most people would tell you to be more aggressive than that, but it’s your call
Great article and very relevant to my scenario. I have an offer to return to BarCap in NY next year as an associate (I am pursuing an MBA now), but purely from a financial point of view, I want to see if Houston is a better idea for saving taxes and living expenses.
What do you think are the tangible downsides of being in a city like Houston for banking? Of course I will lose out on the networking opportunities and such, but anyday, doesn’t a good natural resources banker in Houston make the same as a good tech banker in NY? I am super confused about my priorities right now, and am wondering if you could point to more articles/resources/advice for my situation?
Also, can you point me to IB rankings for a regional office like Houston?
Thanks a lot.
Prash
You’ll have to check re tax rates of the two cities – I’m not sure. Living expenses – I think NY will be higher though I may be wrong
Regarding your other questions, unfortunately I don’t have resources specifically on Texas though this article might help
http://www.mergersandinquisitions.com/investment-banking-new-york-california/
I’d suggest you to network w bankers who have experience in Texas/NY – they might be able to tell you more.
Hi Prashant,
Where did you do your MBA from?
I’m interested in what kind of slaries and bonuses do investment analysts eran in their first year?
Around USD 70K base w bonus which depends on the year and your team
Apologize if this is listed somewhere on the site but I honestly didn’t see it. What can we expect as a normal bonus at a bb. For 1st,2nd year analysts. And also for a middle market like BMO. thanks
I don’t have the exact figures. In my limited experience, how much bonus you get paid depends on the year, your division and your bank so we can’t give you the exact figures. Good year : 100+% of base; bad year (or they want to kick you out; or your team did poorly etc): 50-60% base or maybe less it really depends on the individual
I just graduated and I will be starting with an IB in Corporate Solutions/Deal Origination. I am actually very interested in the Asset Management side of IB(such as Equities research/Investment) but since the job market is not so good at the moment would this be a good move in terms of my career path? How hard would it be to switch to Asset Management? Well I wouldnt mind going into hedge funds after a year or 2 either.
Network and see if anyone in the divisions you like is interested in your background/skills and what you have to offer. You can “test” the market.
Shouldn’t be too hard to switch from IB to AM though you’ll have to demonstrate your passion in the stock market and ability to pick stocks if you want to be a PM
so your saying that i could get a $20,000 bonus at an investment bank?
if they don’t like you enough yes
Just out of curiosity, what is the percentage that full-time analysts quit after 2 years? And which group tends to have slightly better hours? I know M&A is always the toughest one.
S&T has the best hours. ECM better hours than M&A but still v long. % of analysts that quit – I don’t have the stats but there are a few here and there
As a 14 year old interested in high finance, you’d think this would make me sad and unintrested in investment banking what with all the things you might have to do etc. But actually this just makes me more interested. Thank you for this article, it will help
Great!
Hey,
Very informative article, indeed.
You mentioned that there are some legal restrictions while working as an investment banker, but do these restrictions still apply after you quit the job? (for example, if you choose to be an investment banker for 2 or 3 years, and then choose to go into a different field, are there still any complicated restrictions for personal investments?)
thanks in advance for your reply!
No I don’t think so
thank you for the reply
My son will be completing ORG from Columbia and most probably joining a wealth management company as an investment analyst.
He got a USD 60,000 student loan on his head. All those calculations and analysis makes me too depressed. It will take years for him to pay off the student loan!!!!!!!!!. Poor Boy.
DAD
You can help him!
I would have loved to, Nicole. But, there is another child in the line with a budget of 50,000 USD to spent on education!
If the situation continues to looks like this for couple of years for the son, then there is no way but to support
Good luck!
Is IB in Boston very limited in terms of opportunity or is it conceivable to get a job as an analyst there? Also, are salaries comparable to NYC?
Thanks!
I think Boston is more of a “buy-side” hub. I presume NY has more opportunities for sell-side roles.
I am not quite sure re salaries – readers might be able to help
can you tell me what exatly “buy side” and “sell side” is??
Buy side – mutual funds, hedge funds, private equity firms
Sell side – investment banks
Hi Brian (although any responses will be welcomed)
I am only 15 years old but have been thinging about Merchant or Investment banking for years as my future job. Being only 15 I currently dont have many high qualifications. I have an A* for Gcse in Maths, Physics, Biology, and Chemistry for their first module. I am having a week of work experience at PKF accounting firm later this year. In simple terms my questions are these. What would a merchant/investment bankers day to day job be and what do they do? Secondly to make money what qualifications would I require? And finally how would I get a job (who do I talk to etc).
I currently live in England, in Surrey but would happily move to new york (else where in america) and abroad. Please help me and if possible could anyone contact me personally on my email to start with adamcieslakjones@gmail.com thank you Adam
Please refer to below:
http://www.mergersandinquisitions.com/investment-banking-analyst-life-worst-day/
http://www.mergersandinquisitions.com/best-day-in-life-investment-banking-analyst/
Qualifications: Go to target schools banks recruit in and get your bachelors there would be your best bet. Otherwise, you’ll have to network really hard to land yourself a job there.
I’d suggest you to relax and enjoy yourself cause you’re only 15!