2019 Investment Banking Compensation Report

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A complete Investment Banking Analyst, Associate and VP salary and bonus report.

 

For a copy of the report, contact us via info@dartmouthpartners.com.

 
The soap opera that is currently playing out in Westminster ends with a new cliff-hanger on a daily basis. Deal or no-deal? In a world where there is dramatic change and uncertainty, it’s good to know that the rhythm of life continues. The leaves are turning orange, the pictures of schoolchildren outside the front door get posted, and everyone winds themselves back up after a long summer. 
 
Interestingly, all this political turbulence has created little impact across bonuses and hiring sentiment. The wall of cash amassed by private equity and weakened sterling has kept deal activity healthy, if not booming. The UK lower mid-market has slowed a little, with decisions largely being pushed back until we have more clarity on Brexit. We may be waiting some time. 
 
Hiring across our business practices has remained robust; we’ve increased our number of mandates by 19% year-on-year. There have been significant pockets of activity within the boutiques as they seek out strategic growth. We’ve seen replacement hiring in the larger banks as they continue to lose Analysts, Associates and VPs to private equity, corporates, or indeed to other lifestyle choices. Our Corporate and Private Equity desks remain busy and our Graduate division has seen growth as firms continue to view organic hiring and training as the best way to plan ahead. 
 

Deal activity is healthy, so are bonuses

 
Bonuses across the banks have been well received. Year-on-year, we’ve seen an increase in the average Analyst bonus across all classes. More important than the actual numbers, sentiment seems positive. The satisfaction of Analysts in European banks who were largely paid in March has been matched by those working in their American counterparts. 
 
Generally, Analyst 1 level bonuses stuck close to the previous year’s average, leaving many with the comment of; it met expectations. Morgan Stanley made the biggest cut this year, with the bonus average decreasing by 14%, while Goldman Sachs had an increase, taking them to the top of the leader board to become the highest paying bank for the Analyst 1 level, with a total comp of £92k. Citigroup also increased their bonuses this year, with Analysts averaging a 75% bonus of their base salary, and total compensation of £88k.
 
BAML are top of the pack when it comes to Analyst 2 level bonuses with overall compensation averaging around £115k. However, at Goldman Sachs many at the same level have mixed feelings about the recent bonus; one says they are ‘disappointed’, and another commenting that quite a few Analysts seemed downbeat after the bonus announcement due to an overall decrease this year. 
 
Three out of the five US bulge bracket banks have opted for a two-year Analyst cycle; only Citigroup and J.P. Morgan remain with the traditional progression from Analyst 2 to Analyst 3 before moving into an Associate role. Moreover, those at the Analyst 2 level in this new cycle are adopting new salaries of £60k to enable a smoother transition to Associate. At Citi, Analysts are happy across the board with an average bonus of £69k. This is equally felt at J.P. Morgan, where the average bonus is 108% of base salary. So far, this new salary has been implemented at Goldman Sachs and for those new to the Analyst 2 level at BAML (as of this August); an increase from the usual £55k.  
 

Not just a number

 
Our 2019 Gen Z Report, released earlier this year, highlighted some of the trends and viewpoints that are entering the workplace. The one consistent theme is the desire for transparency, even within investment banking; it’s interesting to see how this is playing out. Analysts across all banks revealed dissatisfaction with the ranking system, describing it as ‘complicated’, ‘subjective’, and ‘political’.  The calls for more regular feedback, greater transparency, and a perceived fairer, more in-depth feedback loop are rising.
 
At J.P. Morgan, at the same time as their bonus figure, Analysts are also given comprehensive qualitative feedback from the year. Analysts find that this gives them a more holistic perspective on the development of their skills and strength of their overall performance – performance is assessed and graded across aspects such as successful client/customer relationships and collaborative teamwork, rather than just deals worked on.
 
We know that this new generation entering the workforce value learning and development. Whilst salary is important to show that they are valued, feedback and developmental experiences go a long way in retaining staff, and communication is key. Adopting a leadership and management style that encompasses training, communication, and a reward strategy will go a long way in stopping some unwanted attrition. 
 
Whatever the outcome of Brexit, there are many steps that firms can make to ensure they continue to attract, train, and retain junior and mid-level members of staff. Talent is out there, and willing to move. This creates both a significant opportunity and a threat. 

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