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Salary for 1st year Associate at I-Bank

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Replies to: Salary for 1st year Associate at I-Bank

  • southpasdenasouthpasdena Registered User Posts: 1,718 Senior Member
    You took the top portion of the salary stated by a previous poster, but obviously you forgot the starting salary indicating that it included a range and a variation of 150k.
  • SilverSpySilverSpy Registered User Posts: 31 New Member
    Yes the range is wide, it's because there are a lot of factors. The answer would have been different if he broke it down by what banks and what desks. For instance if you're at a 2nd tier bank like Bear Stearns in an unglamorous area like DCM or Public Finance you're going to be closer to the bottom of that range. If you start out at a top tier bank in M&A for instance you could be closer to the top of the range. Not all i-banking is created equal, there are factors to consider.

    Just to keep people in reality a little also consider your taxes, in NYC you're paying one of the highest state taxes plus the city tax. With all the other things like Social Security, FICA, your 401k contribution, etc thrown in you walk away with around 50% of your salary to take home. So even at $200k-$250k which is what most post-MBAs will be making their first year on Wall Street it means you take home around $100k. If you're still in school that may sound like a lot of money but anyone else will tell you how that basically makes you a middle-class New Yorker
    and that's what you get for putting in the 100 hour weeks. Be sure it's something you want to do for the long run, otherwise it aint worth it.
  • ABirch IIIABirch III Registered User Posts: 399 Member
    "T. Boone Pickens, the prototypical private equity maven, reportedly made $1-1.5 billion in 2006."

    But thats from being a trader not a private equity guy. T. Boone Pickens trades energy instruments these days, he hasn't done major LBO stuff in years. Pickens also said himself he's made much more money from oil speculation than he ever did with his LBO activities.
  • futurenyustudentfuturenyustudent Registered User Posts: 5,366 Senior Member
    The $425k was from the Wall Street Journal...someone needs to write them and tell them their numbers are too inflated.
  • sammy101sammy101 Registered User Posts: 124 Junior Member
    I agree that $425k first year out seems awfully high, but I'm sure 1st year associates can expect around the $300k range ($95k + 200k bonus?), based on what I've read seen in the vault salary reports etc. I mean, consider the guys in Monkey Business who made over $200k at DLJ in their first year, and that was a couple years ago...

    SilverSpy, can associates really make just $150k/yr? That seems really low especially considering analysts at BBs can make that these days. Were you referring to boutiques?
  • futurenyustudentfuturenyustudent Registered User Posts: 5,366 Senior Member
    The Monkey Business guys worked at DLJ like in the early 1990's. I think.
  • SilverSpySilverSpy Registered User Posts: 31 New Member
    Sammy like I said not all investment banking is the same. So $150,000 is what some associates can expect if they work at 2nd tier banks and/or unglamorous groups. To really get a proper expectation on compensation it helps to know the firm and group you'll be working with. The same goes for hedge funds and PE.

    Also something to keep in the back of your head - it sounds like a lot of people assume bonuses are a virtual guarantee and in some ways they are, you are not going to get a ZERO bonus for instance. But last year's range can very well be much higher than this year's range if the market slows down. Talk to bankers who've been around in harder times, most recently in 2001-2002, bonuses were frightnengly low even for senior guys. Personally as long as credit is cheap I think the good times will continue (barring some event that greaty increases risk premiums). So far it looks as if credit will remain cheap.
  • sallyawpsallyawp Registered User Posts: 2,059 Senior Member
    Remember, too, that each group at an investment bank typically gets a pool of bonus money to be divvied up among the bankers in that group. Associates are rated within their groups, and different associates get different bonuses depending upon their ratings. It can be a very unhappy time for associates who always seem surprised when they are rated among the lowest in their group. Typically, only a few associates will receive the top bonuses in their group (it is inevitable that someone has to be rated the lowest). The rest fight for the scraps.
  • sakkysakky - Posts: 14,759 Senior Member
    But thats from being a trader not a private equity guy. T. Boone Pickens trades energy instruments these days, he hasn't done major LBO stuff in years. Pickens also said himself he's made much more money from oil speculation than he ever did with his LBO activities.

    True, he does a lot of trading and speculation. But at the end of the day, he's still highly involved in PE, and I doubt that he can be classified as an 'institutional trader' the way that term is usually defined.

    Besides, Pickens is not the only one. You can take a gander at any of the top PE guys. The bottom line is that top-level PE tends to make more than top-level institutional traders.
  • ABirch IIIABirch III Registered User Posts: 399 Member
    There is no issue regarding this: Boone Pickens is not "highly involved in PE" these days..not the way Blackstone or KKR is. The bulk of his income comes from TRADING energy products, not PE activities.....even the link you cited to provide his income is a trader magazine, so clearly he is considered a trader.

    It also depends how you define "institutional trader": Is it a hedge fund manager, bank trader, or both? If you define it as someone who works for a large bank...the top ones make more bank than anyone else at the investment bank they work for. People on buy side (ie hedge funds, PE, VC) however make a lot more than anyone at an i-bank, and within the buy side, hedge fund guys are by far at the top.
  • sakkysakky - Posts: 14,759 Senior Member
    even the link you cited to provide his income is a trader magazine, so clearly he is considered a trader.

    Uh, no, Trader Magazine caters to a quite wide clientele. That's like saying that Popular Mechanics is only read by mechanics, when in reality, PM caters to science and technology enthusiasts of all types (not just mechanics). Trader Monthy has plenty of news that is of interest to finance people of all types, not just traders.
    It also depends how you define "institutional trader": Is it a hedge fund manager, bank trader, or both? If you define it as someone who works for a large bank...the top ones make more bank than anyone else at the investment bank they work for. People on buy side (ie hedge funds, PE, VC) however make a lot more than anyone at an i-bank, and within the buy side, hedge fund guys are by far at the top.

    That's the point I was trying to make - investment banking traders (which is what I call, and I think what most people would call 'institutional traders') don't make as much as people in those other fields.
  • ABirch IIIABirch III Registered User Posts: 399 Member
    First off the name of the magazine is Trader Monthly, not Trader. The fact that Trader Monthly magazine may cater to some non-traders (a dubious assertion at best because the main target audience of the mag is in fact traders) has nothing to do with the issue of where Pickens's income comes from. The link you cited was from the magazine's survey of TOP EARNING TRADERS. So now tell me, why was Boone Pickens included in this survey if he is considered a private equity guy? Why then were other private equity mavens who would clearly make the cut like the top guys at Blackstone, Carlyle or KKR not included in the magazine's survey? Simple, because they are not traders, but T. Boone Pickens IS.

    “Most of our money came from shorting natural-gas futures”--that is the quote from the very link you provided. Does that sound like trading or private equity to you?

    I agree with you re: the point of sell side traders, but the vast majority of Picken's money today comes from trading, not LBOs, there isn't even a question here.

    I'll say the pecking order goes like this: top hf-ers>>top private equity mavens>>top ibank/"institutional" traders>>everyone else at ibanks.
  • DenzeraDenzera Registered User Posts: 3,371 Senior Member
    people in private equity actually don't make that much money unless you're at a big well-known LBO firm. Most PE funds lose money. VC is less profitable than LBO funds, about the same as mezzanine. The difference is, people in Venture Capital have much better hours, and - this is big - their work is a LOT more fun. They're finding and determining the future winners of our economy, the new innovations that will win big, and then supporting and guiding them. That's pretty freaking cool, and it's worth making "only" 500k even as a partner.
  • southpasdenasouthpasdena Registered User Posts: 1,718 Senior Member
    I would have to agree what abirch is saying, especially since he quoting out of the latest trader monthly. Last years trader monthly (100 top earners) said exactly the same thing.
  • futurenyustudentfuturenyustudent Registered User Posts: 5,366 Senior Member
    Um trading, PE, VC, HF, IB, we're all going to make bank, so let's leave it at that.
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