2018 September Analyst to VP Compensation Report

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Dartmouth Partner's complete 2018 Analyst to VP Investment Banking Compensation Report

 
For a copy of the report, please contact us today at info@dartmouthpartners.com.

As I write it’s starting to feel very much like it’s nearly the end of our great British summer. The kids are already back to school, it’s gradually getting cooler and darker. But before we get too morose, let’s not forget what a hot year we’ve had so far.

Record temperatures over an extremely long and barely broken summer, record highs on US, UK, and European exchanges, and record highs in employment. It’s been a hot year and hot market. Yes, there’s plenty of uncertainty that could derail us, but let’s just bask for a moment in that warm afterglow of summer.

A focus on growth

In the recruitment market, replacement hiring, which had become the norm, has been superseded by a renewed focus on growth. The majority of our clients are looking to strategically grow their businesses as deal flow and the resulting workload stretch teams across all industry groups. 

This has been mirrored internationally, and our Frankfurt office is seeing similar activity – firms are positive and want to capitalise on momentum in the market. Brexit thus far has had little impact on hiring, although I’d suggest the confidence does seem a little fragile and could easily be shaken by unfriendly comments emanating from our politicians. We’ve also grown our European presence and will be opening a new office in Paris in 2019. Very much banking on a soft Brexit!

So, how has this played out in terms of compensation? That old phrase, “a rising tide, lifts all boats” seems particularly apt. Bonuses for Analysts are more or less universally up across the Street. On average, Analyst 1s have seen a 23% uplift, Analyst 2s a 79% uplift and Analyst 3s a 77% uplift. It’s been well received, with Analysts generally happy with their pay across institutions.  

Having said all that, nearly everyone we spoke to has the view that M&A is a good platform for gaining deal exposure and technical skills before making a move to the buy-side. For at least a decade, the land of private equity was the next destination, and with a record amount of fresh powder raised, there are more opportunities to make the move to a PE house than ever before. 

As is the tendency in good markets, where keeping resource seems to be the name of the game, the variation in buckets has narrowed. At both Citi and BAML the range seems narrow, at Goldman we found at Analyst 1 and 2 level a £18k range, and for Morgan Stanley a £12k and £10k range respectively. Whilst they’re not inconsequential amounts of money, the range is far slimmer than it has been in previous years. 

Candidates have more opportunities and are now open to a broader variety of roles than ever before. From other banks to the buy-side, from venture to buy-out, to corporates large and small – Analysts are being targeted for a variety of positions almost constantly.

Within advisory, mid-market firms and boutiques have risen in popularity for the perceived better exposure to senior individuals, and the fact that they can ofter more friendly working environments. This shift in interest to smaller, more agile institutions is replicated in the PE search. Often, it’s the start-up or mid-market funds who are attracting the most interest – as long as they’ve raised enough money to offer market salaries.

Thinking outside the box

It’s been a recruiter’s dream of buoyant employment markets and general skills shortages. Analysts have cottoned on to their demand – it’s bred increased confidence, and dare I say sometimes arrogance. It has sometimes led to candidate misbehaviour. They’re more prone to buybacks, multiple offers and sometimes only saying last-minute that they’re reneging on an offer. Take comfort that if this has happened to you, you’re not alone. 

We’ve seen more of this in 2018 than the last few years together. As a firm, we’re having to work harder to stay on top of processes. Diligence around controlling interview processes and of really getting to know what motivates and drives individuals is where we’re adding most value at the moment. As a hiring firm, you can respond by ensuring you put your best foot forward at all junctures, run a slick and transparent process, and sometimes be prepared to sell harder than was previously required. 

Like the long, hot summer days we enjoyed in July and August, it surely won’t last. It might seem as though there is a lot to complain about, but let’s also appreciate the good times before they’re gone.

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