Even as some investment banks cut staff, the competition for junior bankers is raging on Wall Street. Both bulge-brackets and boutiques alike have bolstered associate compensation to compete with the buy-side – and each other.
Looking at investment banking associates in mergers and acquisitions (M&A), their base salaries are more or less the same across large banks and boutiques. The bigger players have an edge in stub associate bonuses, but the top-performing first-year associates at boutiques have a slight edge over their big-bank M&A counterparts. From there, the gap widens at the top end of the pay scale, with the best paid associates at boutique investment banks earning significantly larger bonuses from year two through four.
“Across the board, people are wanting to leave large investment banks and move to a boutique, because there is more consistent compensation, especially at middle-market firms,” says Oliver Hayes, the head of corporate and investment banking, Americas, at Selby Jennings, a recruitment firm.
At boutiques such as Evercore, Greenhill, Moelis & Co., Piper Jaffray, Willman Blair, Jeffries and Perella Weinberg Partners, there is a lot more growth potential, Hayes says.
“Once you reach a certain level at a large investment bank, they’re not going to just hand out an elite title,” he says. “Big banks are very top heavy and very prestigious, so it’s difficult to move up.
“You can progress a lot faster at boutiques based on the amount of work you put in and the amount of revenue you bring in.”
Chain reaction in associate pay rises
Last year, the largest investment banks in the U.S. increased base salaries for analysts and associates, and while there was a lag, eventually the most competitive boutiques in the middle market followed suit to match the newly established pay scale: $125k, $150k, $175k then $200k. This assumes four years at associate level.
However, for associates who stay past year one, many boutiques are trying to retain their best talent by sweetening the bonus for top performers beyond what they could earn at the biggest IBD.
“Certainly performance will always be a big factor in the bonus, but candidates will definitely lean towards being more interested in the smaller platforms, because they pay all cash,” said Mike Brothers, managing consultant in the investment banking practice at Michael Page.
“Elite boutiques and privately owned banks are paying all cash and they’re paying more in many cases – their compensation is very competitive,” he says. “So far this year, bonus numbers are less across the board, but at a higher salary, so the all-in compensation numbers are essentially similar, within the same range, to what they were last year.”
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