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Comment by jsun | Hacker News Reader

Problem potentially even more dire than article makes it

"These jobs pay very well. According to the job search site Indeed.com, the average salary for an entry level software engineer in New York City is $71,000—just about the average for an entry level investment banker."

is a very misleading statistic. At a good school maybe the top 5% of a graduating finance class gets banking jobs. Pretty much every single CE or CS major gets a job in technology if they want one. The top 5% goes to work for a top tech firm who routinely pay 1st years 100-120k+, with amazing perks, work life balance, and tremendous growth potential.

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The other miss with that same quote is the implication that average salary is the same as average comp. In addition to the base salary, junior bankers typically expect to take home large bonuses--in a good year, sometimes 100% or more of their base salary.

While I'm not as familiar with the tech sector, my understanding is that they don't have similarly structured bonuses.

The salary is just base. Bonus is probably 100-250% of base, and a lot of times the 100% part is guaranteed. Just for comparison sake.

Not for junior analysts, and not in this economy. Average base + bonus seems to be just over $100k for junior IB analysts at GS/MS/JPM this year, pushing to just over $200k after a few years. After that, the banker starts to pull away rapidly, and can earn the 100%+ bonuses. But on the flip side, you can probably still expect to have a job at Google in a few years, but the standard for investment banks is a 2 year contract after which only the best analysts are retained.

Nope. 120-130K all in for top bucket in 2013, with some firms paying 140-160K (see BAML and Moelis).

Also not true is the 2 year contract, as GS is moving towards a career model and away from a 2 year analyst model.

http://www.mergersandinquisitions.com/2013-investment-bankin...

http://www.businessweek.com/news/2012-09-13/goldman-sachs-st...

How is "120-130K all in for top bucket in 2013" different from what I said (average just over $100k)? I'm thinking average at GS/MS/JPM for first years was ~$110k, no? As for Goldman, I'm aware they're getting rid of the contract, but it's still standard practice in the industry as a whole. Also, just because the contract is going away doesn't mean "up or out" is going away. At the end of the day you have to weight those high salaries for more senior bankers against the fact that the recruiting model of investment banks involves only a fraction of new hires making it even past a few years.

Just over 100k and 130k or $160k (Moelis) makes all the difference for what the parent comment said, which is that bonus is is 100-125% of base (65k)

No, parent comment said: "Bonus is probably 100-250% of base, and a lot of times the 100% part is guaranteed."

The plain meaning of that is that $130k all-in (100% bonus) is typical, and often guaranteed, with the top bucket being over $225k (250% bonus).

With first-year salaries at Google, etc, pushing $120k+, that's a very relevant difference. It's not accurate to imply that a first-year analyst at a bank could make up to $100k more than that.

You're right, I misread the top end of that range. Top trading firms get close to that, (e.g. Jane Street), but $225k is probably pushing unlikely until your 3rd year.

There is no way an analyst only gets a bonus of $30K. This economy is great for IBers.

It's long been observed that once earning reaches a certain absolute number, quality of life and other intangibles quickly overtake monetary compensation as the primary driving force. Basically its saying if my options were 60k/year and great quality of life vs. 120k/year and shitty quality of life, I'm much more likely to take the 120k than if the situation was 120k/year vs. 240k/year.

The problem is very real, banks wouldn't be responding to it otherwise.

Also helps that tech companies are "winning" the PR war against traditional banks. Being a banker used to be fucking cool, now its lame.

Edit: okay, that last line was confusing, so let me try to explain what I mean: Most bankers aren't married to finance, it's not like they have this amazing passion for excel financial models. They are attracted to being at the very top of the talent ladder, in a position that offers the most challenge and potential reward. Nowdays technology is seen as an equivalent option for a lot of kids entering school

I realize Glassdoor is hardly the last word on this, but its figures don't seem to agree with this at all. In fact, for an analyst at Goldman Sachs, Glassdoor reports the average total compensation as $76k.

With an average $60K cash bonus and $12.5K profit sharing bonus.

Not even close, I'm afraid. We must have looked at different pages.

http://www.glassdoor.com/Salary/Goldman-Sachs-Analyst-Salari...

I'm not saying you're wrong. I'm just saying that these self-reported numbers don't agree with you at all. I'm curious what your explanation would be for the huge discrepancy.

People are less likely to report their bonus.

You need to look at investment banking analysts

http://www.glassdoor.com/Salary/Goldman-Sachs-Investment-Ban...

The difference is the long-term compensation potential. There are many jobs you can take as a fresh undergrad that will pay you what a investment banking job will. However, there are very few jobs that will pay you $1M+ after 10 years of experience.

The key word there is "potential." You have to account for the fact that due to the "up or out" system, most people will never be there long enough to earn $1m+. Now that Google and similar companies are breaking through the "low $100k" salary ceiling that used to be common in tech, you really have to compensate for the probability of lasting long enough in a bank (or being able to exit to PE/VC/HF) in order to earn those really high salaries.

I don't disagree. However, investment banking is a relatively low risk way to a multi-million dollar salary. You stand a far greater chance of surviving the up-or-out than striking it rich through a start-up.

So you're making the point even stronger. Tech pays better. IB is making concessions to make it more appealing.

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