It pays to work at a boutique investment bank, but only these select few

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It pays to work at a boutique investment bank, but only these select few

There are a number of advantages of working at a boutique investment bank over a large bulge-bracket firm. You’ll get to work more closely with clients, the work-life balance is often better (though not always) and compensation tends to track a bit higher. But don't consider all boutiques the same, particularly when it comes to pay. There are the elites and then there is everybody else.

New compensation figures from banking executive search firm Pinpoint Partners confirm that “elite” boutique investment banks in the U.S. are the best payers on the street. Depending on the title, top-ranked boutiques typically pay 5% to 10% more than bulge bracket banks. The report considers the following to be elite boutiques: Centerview, Evercore, Greenhill, Lazard, Moelis, Perella Weinberg and PJT Partners. The non-elites were put in a bucket of mid-cap and sector boutiques, though the study didn’t list the firms by name, likely due to a limited sample size at smaller banks.

As you can see in the chart below, elite boutiques nip bulge bracket banks at the analyst, associate and vice president levels in terms of total compensation (salary plus bonus). And then there is a chasm between the top seven boutiques and all the other smaller firms that fit the description. Junior and mid-level bankers at elite boutiques earn roughly 30% more in total compensation than their peers at other boutiques. When you get to vice president (VP) level, the average difference in pay is nearly $170k. By comparison, VPs at bulge-bracket banks earn around $14k less than those at the seven aforementioned firms.

Yes, boutiques are known to be great payers, but that’s mostly because the top firms get more visibility, especially after several went public and are now obliged to divulge compensation costs. Unless you receive an offer from one of the elite boutiques, you may do better financially working at a big, full-service investment bank.

 

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