Jobs in banking aren't what they used to be. There are many reasons why people who have jobs in banking are prone to disliking them intensely. However, it would be a fool who writes off banking jobs entirely: they still have an enormous amount going for them.
As the chart below shows [click to expand], fuelled by deregulation pay in investment banking relative to other industries has been on a tear since the late 1970s. As regulation increases, the differential between pay for bankers and pay for other professionals has been narrowing, but remains huge. It's not just M&A bankers, traders and front office banking professionals who benefit from the banking uplift - a bilingual secretary can earn up to £42k ($65k) in the City of London compared to £35k in commerce and industry according to recruitment firm Robert Walters.
You must not mention the money in banking interviews, but people working in banking at any level will freely admit that compensation is the main draw. "I want to experience a lot of different things," one analyst told us recently. "I know that with the money from a job in the financial sector I can do so much more when I'm not working."
The average price for a home coming onto the market in London hit £500k in May according to property website RightMove. Assuming a 20% deposit and lenders' willingness to offer a mortgage equivalent to three times income, you'll need to be earning £130k if you want to buy a typical London home. Banking seems the best route to affording this - if only as a route to getting the mortgage (and letting rooms later).
The average price of a Manhattan condominium is $1.25m. A two bedroom condominium on the island costs $1.7m. Don't even think about trying to buy one if you're a journalist or creative type without wealthy parents. Co-ops are cheaper, but you'll still be paying around $1m for two bedrooms. A big banking job will be clearly a big help.
Yes, you can earn giant bonuses in hedge funds, but in banking you can earn a giant salary. Senior bankers who've self-declared their salaries to peer to peer pay service Emolument claim to be earning salaries between £220k and £340k in the City. On Wall Street, research from search firm Options Group indicates that salaries are even higher.
By comparison, salaries in hedge funds and fund managers are rarely higher than £150k ($233k).
If you work in a bank, you will have a compliance department. There will be some poor souls who work all night in a graphics department formatting your pitchbook for you. There will be support staff in Mumbai to help you when things go wrong. People in banking don't necessarily appreciate all this at the time, but they miss it when they leave for a start-up hedge fund or corporate finance boutique.
Even in these tough times, most U.S. banks will still fly their new trainees to New York (if they're in Europe) to meet their counterparts from across the world. J.P. Morgan's new graduate hires spend seven weeks in New York, for example. Banking is international, and internationalism remains a feature on graduates' wishlists.
Along with internationalism, banks offer excellent training for new graduates. After flying graduates to New York, banks fly them back home again and typically subject them to ongoing training over the next two years of the analyst programme.
Much like attending Harvard or Cambridge, a stint in an investment bank at some point in your career is a badge of competence. You may not want to work in banking forever, but the fact that you've worked for a big name bank at all will single you out as a highly desirable high-achiever.
Yes, banks have made 80,000 redundancies in two years according to Gary Cohn at Goldman Sachs. And, yes banks like Goldman Sachs regularly remove their poorest performers. But with the exception of serious slashers like RBS and UBS, many banks have simply been tinkering with their headcount in recent years - at Goldman, headcount is down just 10% since 2007, at Credit Suisse it's down just 5%. As we noted earlier, some people have worked at the same bank for entire decades. Banking jobs are more secure than you think.
There's nothing to document the fact that everyone in banking has an IQ of 120 more, but anecdotally this seems to be the case. Everyone we've ever spoken to who has left their job in banking reflects back on the fact that all the people they worked with in the industry were super-bright.
If you work for an investment bank in London, you will be working alongside French, Italians, Greeks, Portuguese, Americans. Research undertaken two years ago by the British Office of National Statistics (ONS) found that only 40% of front office bankers in the City of London have British nationality.
Other industries will seem very parochial by comparison.
Why would you want to leave a job that everyone else wants? Goldman Sachs says it only accepts 2% of people who apply for internships there. Research from the Association of Graduate recruiters indicates that there were 135 applications for every graduate job in banking in the UK this year. Why give up a job that everyone else is clamouring to get?
Most banks now allow deferred bonuses to vest on a regular basis. At Morgan Stanley, for example, 25% of this year's bonus was paid in May and another 25% will be paid in December. At French banks like BNP Paribas, payments typically take place throughout the year. The longer you stay at a bank and the more annual bonuses you receive, the larger your occasional payouts will be. It's like Christmas several times a year.
Working in banking isn't just about receiving your salary and your bonus. If possible, it's also about plowing some of this money back into the bank's own investment funds. This option is typically only available to senior staff, but can be incredibly lucrative.
According to its detractors, the problem with banking is that it allows employees to benefit from amazing and seemingly unlimited upside (in the form of higher bonuses) but with highly restricted downside risks (in the form of simply losing your job).
Thanks to pay restrictions and bonus clawbacks, this is less the case than it used to be. However, markets jobs in banks continue to place people at the nexus of global capital flows, and M&A jobs in banks continue to allow people to reshape entire industries (once you escape the spreadsheet phase). This in itself is a huge buzz. The absolute worst that can happen is that you lose your job and your deferred stock - but you'll still have years of elevated salaries to fall back on.