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Should you work for McKinsey, Goldman Sachs, Bridgewater or Blackstone? Parsing pay in consulting, banking, hedge funds and PE

Small piles in consulting

Small piles in consulting

Life is full of choices if you’re a high achiever with an impressive academic record, a CV stacked with internships and a few family connections in the finance industry. But assuming that the world is indeed your bivalve mollusc, which elite career path should you follow? Which career path will fit your earning aspirations? The new compensation survey from Wall Street Oasis (WSO), the investment banking and finance community, offers some answers.

1. Work for a management consulting firm like McKinsey & Co. if you want to earn a good steady salary rather than to become immeasurably rich

If you work for a management consultancy firm like McKinsey & Co, you will be well off. But you won’t be immensely rich. Nor will you earn enormous bonuses.

WSO’s data shows that average total compensation in consulting firms is allocated as follows:

Analysts: $69k

Associates: $81.5k

Consultants: $105.6k

Managers: $155.1k

Principal/partners: $319.8k

Conclusion: principals in consulting are paid far less than managing directors in investment banks.

2. Work for a bank like Goldman Sachs if you’re prepared to pay a long game and to get paid for performance

If you work for an investment bank like Goldman Sachs, you’ll be reasonably well paid in the short term and will almost always earn more than consultants, but the really big rewards only start to kick in once you reach vice president level and above – something which usually takes at least five years, and often longer if you’re in M&A or capital markets. Bonuses still form an important part of pay in banks – if you want to achieve the big packages, you’ll need to perform.

WSO’s data shows that average total compensation in investment banks is allocated as follows:

First year analyst: $80.4k

Second year analyst: $103k

Third year analyst: $108k

First year associate: $113k

Second year associate: $124k

Third year associate: $160k

Vice president: $294k

Managing director:  $624k

3. Work for hedge funds like Bridgewater or DE Shaw if you want the freedom that comes from being outside banking, but are prepared to sacrifice some pay

Surprisingly perhaps, WSO’s survey of hedge fund pay (which included submissions from Bridgewater and DE Shaw), suggests that hedge fund professionals don’t earn more than bankers. In fact they earn a bit less overall – but their bonuses are higher.

WSO’s data shows that average total compensation in ‘mega hedge funds’ is allocated as follows:

1. Analyst: $82k

2. Senior analyst: $122k

3. Senior associate: $164k

4. Vice president: $244k

5. Principal: $592k

4. Work for private equity funds like Blackstone if you want to make more than anyone else in the mid-ranks and as much as anyone else once you reach the top

On the whole, WSO’s pay data makes private equity jobs look pretty appealing. At the top end, you can earn as much as if you work in banking. At the middle and bottom end, you can earn more. Bonuses are high and PE funds are absolved from European pay restrictions. The only downside, as we’ve reported previously, is that private equity funds won’t pay carried interest when their performance hurdle hasn’t been met.

WSO’s data on average private equity pay indicates that compensation is allocated as follows:

1. Analysts: $104k

2. Associates: $130k

3. Senior associates: $195k

4. Vice presidents: $303k

5. Principals: $624k

Related articles:

An honest account of working in the ‘promised land’ of private equity

This is what McKinsey & Co. are saying about your job in private equity

A small chart explaining why people who work in private equity are so well paid

 

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