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Back office left behind on bonuses

Bonuses for juniors in front-office roles look set to soar higher than ever this year. Shame the same can’t be said for operations.

“It’s still early days, but the figures we’re seeing suggest bonuses for corporate finance analysts are higher than ever this year,” says Logan Naidu, a consultant at recruitment company Cornell Partnership. “We’ve seen first-years receiving up to 140% [of salary].”

Given salaries are typically 35k to 40k in the first year, this puts the very top first-year analysts (i.e. people in their first year out of university) on nearly 100k.

Operations staff are impoverished by comparison: “In the past few years when profits have been high, bonuses in operations haven’t shot up to nearly the same degree as the front office,” says the director of one operations-focused search firm.

He says most banks hire graduates into operations on a 32k base salary, plus a bonus of – wait for it – 3k to 6k.

Even at senior levels, operations staff still don’t pull in huge sums of money. A vice president in a US investment bank can expect 75k to 100k in base salary, plus a bonus of between 50% and 100%, he adds.

Mike Hartwell, managing director of operations specialist search firm Hartwell Buck, says the best-paid people in ops are either business analysts and project managers helping outsource projects to India, or people running hot product areas such as interest rate derivatives, credit derivatives and commodities. Even so, bonuses are unlikely to be more than 50% after three years.

Analyst salaries and bonuses, operations

First-year analyst: 32k base salary, plus 4k to 5k bonus

Second-year analyst: 35k to 37k base, plus 10k to 15k bonus

Third-year analyst: 40k base, plus 10k to 15k bonus

Comments (40)

Comments
  1. First year FOs are not paid that at all – they are simply not worth it, though the current crop think they are! Most banks are vaguely inline – 140% of salary is ridiculous

  2. 140% would be good for a 1st year. I believe the first years were paid c. 110%. 2nd years c. 120-130%. My place (tier 2) – 133% for 3rd years. Ops guys leave at 5.30! Why should they get a bonus more than 10k?

  3. agreed with anon, i can safely say that there is not a single first year grad that is earning a bonus of 140% of salary in the whole of London (or NY). top performing analysts with 2y+ possibly. ps i am a track manager at a bulge bracket bank

  4. we’ll have a rush of first year analysts demanding huge bonuses for making powerpoints more tidy. from this they will then learn their first lesson in pay demands (1)be worth the money you ask for and, at the same time,back it up with p&l or a huge offer from another bank (as is the case for the rest of us). first years will have neither. new grads – learn, work hard and be humble – money shouldn’t and won’t be handed to you on a plate

  5. guys what would be the bonus estimate for a first year corporate finance associate?

  6. Ops leaving at 5.30? Mr SR, that might be the case at your bank but top tier IB ops staff work damn hard (I often work 60hrs+ per week), and to be fair, if a 1st year IBD analyst can get almost 100K, do you honestly believe that a 3rd year Ops analyst deserves around 10K? Sure, Front office make all the money, but Ops plays a major part in that money making. Im not saying Ops generally should expect a 50K bonus after 3 years, but i honestly think that Ops staff should get a bigger bonus than they do now…

  7. What’s a bonus?

  8. I am currently working in Operations my self, desperate to move to a MO position and i can honestly say that OPS people DO NOT deserve anything near 50K bonuses. Some of the hires in Operations are shameful i.e. no university degrees and actually have no understanding for the products at hand. For this reason i think it’s fair to say that they simply do not warrant the right to claim excessive bonuses. On the flip side, i feel that FO grads do not warrant the right either. One thing I have learnt about banking is that it is very much a waiting game. Per the previous comments, grads should sit, learn and be humble with the salary. It will come in years to come.

  9. How can you justify a bonus of 140%??? To earn such a bonus you need – 1st expert product knowledge (which takes time more than a year normally) – 2nd have a strategic view that leads to increased revenue or reduced costs. Who the hell is going to listen to a 1st year grad for any restructuring or increased deal flow??? I think the article should have stated 14%!

  10. i understand that front office guys have to work hard to get the business, but actual delivery and maintenance of that is done by back office guys.they continously work hard to deliver what has been promised by front team.they go through all the grilling as matter of fact.they has full rite to get good bonuses.

  11. My husband is never home before 8pm and at month end is usually home after 11pm!! The only time he sees his kids during the week is if one of them wakes in the middle of the night. He gets a joke of a bonus and it’s probably the same as it was 8 years ago. No wonder ops staff retention is so poor.I hate to think what the average bank spends on recruitment and how many mistakes are made by inexperienced staff.

  12. Ops staff should get lower base and higher bonuses, but to be fair no ops analyst is worth more than 20k.That’s why all thier jobs are being outsourced

  13. yep – agree with anon. analysts beware

  14. I’m an ops grad and I also think ops work a lot harder than we are given credit for. The FO guys can promise anything they like and it’s up to us to deliver the service to meet heightened client expectations. I don’t deny that most FO guys deserve their pay, but also think ops should get more respect and certain a better bonus.

  15. I agree with anon, trading. I work for a search company and often get analysts coming to me with these types of expectations. It seems that there are some headhunters who like to talk up the market with very little knowledge of what is really happening. This is similar to the supposed boom in distressed debt hiring six months ago hyped up by two London firms.

  16. BO, Asset Management, LOL excellent.

    Seriously though, most of the BO staff lacks commitment and shows no interest in becoming part of a value chain. They are, by and large executers and like it too. I have to agree with the consensus above and conclude that >20% bonuses for BO is a waste. Front office people who are deal makers are motivated by the bonuses they can get, BO people who add value (as oppose to just execution), should move into middle- and front office eventually and should be able to get a bigger slice of the pie. Talent and commitment should be rewarded, a lot of talent is also wasted in the backoffice!

  17. “Some of the hires in Operations are shameful i.e. no university degrees”. I’ve worked in Ops for nearly 25 years and found that Ops people with degrees are the worst type to hire. Arrogant and find Ops beneath them. I’d much rather have a hard working school leaver/A level person. Also, before you start judging what bonuses Ops staff should get, ask yourself this question – how many times has that person saved/protected my career/reputation/bonus by being good at their job? Dont forget, it’s us Ops bods that keep everything running smoothly, often on outdated, under supported systems best suited for low volume vanilla business and not fast moving, high volume complex instruments now traded.

  18. Forget analyst / ops bonuses, the recruiters in these areas are the real winners – the fees we pay to hire are astonishing; for nothing more than merely sending a CV and arranging an interview!! I have seriously though about moving to the dark side myself!

  19. I know somebody in his first yr as an analyst was on 38k basic and received a bonus of 28k in cash + 35k in stock. This means a total of 166% for his first year or a total of 101k. Not bad…

  20. Young – not bad but untrue. Ignoring fact that he’s a 1st year – those levels are too low for banks to start bothering with non cash benefits. Not heard of many banks that would not just give the 63 all in cash. Probably got 28 or less. even that’s too much for a first year

  21. Top rated second year analysts in Corporate Finance at tier one banks do get these high bonuses. Went up to 150% at our bank, baring in mind that this year has been outstanding for M&A

    Corporate Finance – Top Tier Reply
     
  22. I work in MO derivatives in first tier IB and I have never finshed at 5:30pm. I usuallly stay until 9 or 10, and past midnight at month end.
    Stating that ops people have no university degree is completely wrong. In IB most MO people have MSc or higher. Some of them are more educated than FO guys.
    I believe ops people should get at least 50 % bonus.

  23. Agree with Corporate Finance (above) that GOOD 2nd yr analysts could get upwards of 100% bonus, though i think 150% is at the very, very top end of the scale (i.e. someone who was deemed to be top of their intake at GS in all probability!). The incremental value-add capability of a 2nd year over a 1st year is considerable, and rightly reflected in compensation. Also agree with anon, Trading that i have never come across banks allocating stock > cash for a total of comp figure of 63k! If the stock allocation story IS true, which i very much doubt, maybe the bonus figures are USD with a GBP base??

  24. I received my 1st yr analyst bonus last week. Am at one of the ‘superbulge’ banks (GS, ML, MS) in front-office IB. My base for the first yr was GBP 37k (plus GBP 5k sign-on) and bonus was GBP 46k – and I was not top rated. It is certainly possible that a 1st can get 140% of base, but he would have to be a truly stellar performer

  25. During my time in back office I was correcting errors made by junior traders that, if not corrected, would have cost between 100-200k (euros) pretty much every day. I was given a bonus about 40% of salary. I do think this is appropriate as I was adding a lot of value that junior traders were taking away. I think back office should be given budget based bonuses akin to front office pnl.

  26. Thats so not true. Many of us do 12 hour days everyday. FO’s perception of MO is wrong

  27. Obviously based on the comments above many of you in FO Banking or Sales/Trading & Research have absolutely no clue what the type & depth of talent that work in Finance & MO. This is largely due to the fact that Non-FO types seldom interact with anyone that’s not running a Group or producing on the desk. Most of the time they’re chatting with your Biz Heads about Risk, Funding, Committments, Exposure, strategy, Market Color, P&L, internal disputes, litigation, etc. – Stuff way above your pay grade.

    Of course they’re underpaid on average, but that’s the nature of the business – since if you don’t produce in the FO you’re OUT. However please keep the naive comments about the lack of effort & intelligence in the BO to a minimum, because it makes you look totally uninformed, and sorta stupid.

    Former MO, Now FO Reply
     
  28. agreed 140% for firsst years is top end but i’ve seen it happen. i think average performers have been getting 120%. are we worth it? possibly not, but that’s the market at the moment i guess….and chances are 2 years from now and number of us will be unemployed so might as well enjoy it whilst we can…

  29. i’m a first year and just received a 146% bonus. i was well rated but have the feeling that we were all paid pretty much in the same bandwidth.

  30. agree with anon, investment banking…see below!

    i work in M&A at a top tier bank and have asked a number of analyst friends at other top tier IBs over the last few weeks and compiled the following mini table for Summer bonuses…i am not saying anyone truly deserves this level of cash but frankly who cares? just grab a slice of the action…

    Corporate finance analyst bonus table (Summer 2007) – top tier IBs

    Analyst ’06 Base 35k-40k (110%-140% of base)
    Analyst ’05 Base 42k-48k (130%-150% of base)
    Analyst ’04 Base 48k-52k (135%-175% of base)

    chris, investment banking Reply
     
  31. How can a 1st year pitch book monkey be regarded as “stellar performer” for a 100% plus bonus? Good work if you can get it but no more revenue generating than those in ops…

  32. My old boss used to always say “Your bonus is your job”

  33. If it was not for Operations staff the front office staff would not get any bonus. The Senior Ops Managers should fight more for their staff. The Front and back staff are all one team. Yes?

  34. I just left i-banking front-office. I hate to say it, but these numbers are true (140%). But no analyst deserves it… I left b/c my work was mind-numbingly boring and required very little intellect (in fact, simple-mindedness is an analyst’s best asset!). The industry is geared into this up-cycle, though. Believe me, things will turn around, and the lucky analysts will have to adjust their living standards accordingly. My advice: stick that 140% in the bank for a rainy day!

  35. Is 140% for real. This might be a few desks at some of the top banks. What is the average percentage bonus a first year trading analyst can expect

  36. I started in Ops – best places to work have the best Ops. allowing for exceptional trading talent, in the 3 places i’ve been there’s a nice correlation between good infrastructure and good P&L (not that i’m saying one leads to the other), but being able to focus on trading is a must. I can’t say much about cap mkts analyst as all i’ve ever seen them do is eat, powerpoint, and fetch coffee. The market prices their salary so maybe there’ll be a correction – take the advise of Etienne – stick the 140% bonus in a bank.

  37. I am a first year financial advisor in a HNWI (high new worth) US private bank. I am wondering whether anyone out there can suggest the financial package I should be receiving? Bearing in mind I have only 2 years experience to date.. thx

    SG, Financial Advisor Reply
     
  38. Supply and demand determines prices…Ops cant demand 50% bonus…if they are so key, they should threaten to walk out if offered less than that, say. I am in Ops, btw. (Project Manager, CFA, FRM)

    Now, there should be a lot of people willing to do PowerPoint, so the supply should keep IB Analysts prices down to reasonable levels, no? but the problem there is: the work is not divisible among many people. It will, by nature, have to be done by a few, and the lucky few who get such roles with get supernormal bonuses.

    This is not correlated or inversely correlated with intellect. If you think higher intelligence merits higher pay, try having a look at the typical MENSA meeting. you will find people from all walks of life. Rgds, Roshan.

  39. 2 Points:

    1) I think that most of the FO people deriding the MO and BO staff and pay levels are deluded, from my side of the pond I see a lot of the hard work that our Prime Broker OPs people do fixing the issues the FO people create.

    2) Having gone into to the milk round and heard the pathetic “all i ever wanted to do was investment banking blah blah blah” its all rubbish, the intellect of the FO staff I sometimes have to deal with amazes me, given how high recruitment standards are.

  40. wow, amazing how money distorts people’s perception of the world. I, as much as anybody, would love gigantic bonuses. I work in a great front office role in one of the top 3 1st tiers.
    But all around me, I seem that people have come to expect money for nothing.. Investment banks arent charities, they’re just very large buisnesses. Bonuses are not automatic rights because you were good at interviews or went to imperial..
    During all this fighting for big dollars, which is a natural human instinct, let us not forget the privelage of being in such a well paid environment. 10% bonus or 200% bonus, we will all make our mortgage payments,have money to pay for a dentist when our tooth hurts, go on nice holidays and eat well.
    I honestly dont mean to be melodramatic, and everyone should strive for big dollars or else business would cease to exist, but lets not get swallowed up, and lets not lose our humility, and most of all lets not forget that there are people who are glad when they land cleaning jobs so they wont starve. That old lady who cleans your desk, I would bet my bonus that she’s more content and thankful than anybody whose desk she cleans.

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