2016 Analyst to VP Compensation Report

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Our 2016 Investment Banking Salary and Bonus report.

 

It’s a game of two halves. It’s not over ‘til it’s over. Two classic sporting platitudes that could be applied nicely to what we’re witnessing in the Square Mile at the moment. We’ve had a roller-coaster start to the year and it will take a much braver (or stupider) man than I to call the market at the moment.

The FTSE has swung wildly this year, as we contemplate a China slowdown, a commodities meltdown, and a European showdown. Mark Carney’s recent comments suggest rates could go down as well as up – well, if he can’t call it, then I’m not going to try. I’m just going to take each game as it comes. 

So, something we do know more about: bonus figures. Whilst 2015 saw a record level of deal activity, this has not been reflected in a record level of bonuses. Overall, total compensation across levels is flat to 10% down. For most institutions, the spread and range of pay between top and bottom performers has widened significantly.

Last year, the strategy seemed to be to pay average performers well on the basis that they’ll need the resource. This year the approach has been to protect and reward the highest performers, whilst weaker performers have been paid accordingly. Although the “if you ain’t first, you’re last” attitude still prevails, many have been more sanguine about what they’ve received.

As ever, some firms have paid more than others, but the difference in sentiment is really in how they’ve managed expectations. Most have done it well, although one institution seems to have given a masterclass on how not to do it – (we’d rather tell you who in person).

Despite this miserly backdrop, at Dartmouth Partners we’ve found ourselves surprisingly busy. Although you’re only as good as your last game (or month), I’ve had the busiest start to a year for a decade. While the client mix has varied this year, the demand for well-trained, hungry, ambitious and hardworking talent remains.

Private equity sits on a record amount of dry powder and will need to deploy this, the rise of M&A boutiques continues, and they’re both engaged in the War for Talent with start-up and established corporates. Even at campus level, firms are fighting it out over bright young things, and our Graduate team have had their busiest ever start to the year.

We’re often asked about retention, and what clients can do to encourage it. One of the interesting trends we’ve seen is that of junior candidates getting in touch at an earlier stage: how can they fast-track their career? When should they contemplate an exit? Our recent candidate survey suggests that most Graduates sign their contracts with only a two year view on their careers.

Maybe I’m old-fashioned, but I’ll end with another Sir Alex quote which demonstrates that, in most instances, there really is no substitute for long term application: “David Beckham is Britain’s finest striker of a football not because of God-given talent but because he practices with a relentless application that the vast majority of less gifted players wouldn’t contemplate.”

To access the full bonus survey please contact the Dartmouth Partners team

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