Working in quantitative risk pays – investment banks in the U.S. are offering bigger bonuses and relocation packages of up to $40k to lock down the best PhD candidates on Wall Street.
Investment banks are now offering salaries of $90-125k to PhDs fresh out of university in quant risk, according to new figures from recruiters Selby Jennings, and bonuses are up to 35% in high-paying U.S.-headquartered investment banks.
“One of the main points risk individuals should realize is that the industry will start to shift into a format of fixed salary bands, similar to how IBD operates,” says Kareem Bakr, a director at Selby Jennings. “We anticipate bonuses and performance buckets to become a much larger part of compensation packages and internal rankings.”
This is a big change. Between 2012 and 2016, banks went heavy on quant risk managers’ base salaries while offering smaller bonuses. However, the survey results indicate a return in flatter base pay and more competitive bonus structures that incorporate both cash and stock.
Risk candidates are also asking for – and often receiving – relocation and sign-on bonuses. Selby Jennings reports that it is highly rare to see organizations not provide a comprehensive relocation package ranging from $5k to $40k.
“The most consistent trend we have seen is that the floor for starting salaries is rising. Entry-level candidates are receiving very well-rounded compensation packages made up of sign-on bonuses, deferred bonuses and hefty relocation assistance when needed,” he says.
Risk management professionals’ base salaries at Canadian and Japanese banks continue to lag peers at U.S. banks and even a few European banks that are ponying up to attract senior talent.
The new rule preventing New York-based hiring managers from asking candidates about their compensation is already having an impact. Some candidates have already started to leverage withholding their compensation, which has been a double-edged sword for banks. For example, one candidate that Selby Jennings worked with did not disclose their previous compensation until they accepted the new offer. This tactic ultimately resulted in a 70% increase in total pay.
“Some have taken a stance on generally low balling the offer and negotiating from there, while other institutions are going to swing for the fences and try to beat out the competition with their initial offer,” Bakr says.
The most challenging level to for banks to recruit is the VP-level talent pool, typically someone with between five and eight years of experience, per Selby Jennings.
Photo credit: SIphotography/GettyImages