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Equity Research vs. Investment Banking (both done at BB)

200k-300k are typically bonuses for ER Associates, not total salary. 

Palantir wrote:

200k-300k are typically bonuses for ER Associates, not total salary. 


Wrong. Those should be all in numbers

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

helpmefortheloveofgod wrote:
To be completely honest with you, the guys as WSO are laying down data points for IB and ER bonuses this year and what I’ve said regarding pay is not falsehood. It looks like mid-level associates in ER can make upwards of 200-300k/yr and that’s in your mid-late 20’s. So I was just wondering what happens as you keep climbing up.

Just remember everybody on WSO thinks they’re a BSD. Out of curiosity do you actually know anybody in these roles or are you just going off what anonymous people are posting on a message board?

Well I have one friend at a BB who will clear 170 this year and he just started his second year. So I’m assuming by the time he becomes an associate analyst he’ll be clearing 250 minimum. This is at Jefferies I think. 

The other numbers were just confirmation from WSO ppl. So that’s why I was so quick to assume that these guys will make 7 figures by their 30s. I mean 200-300k as an associate analyst is in line with IB compensation. So why wouldn’t IB and ER comp keep neck-and-neck during career progression? Is there a point where they begin to diverge rapidly, while the IB guys make off with more in their mid-late 30s?

IB guys probably get paid 10% to 20% more than ER guys throughout all career stages. People tend to be paid more when they are closer to the money. Plus, IB tends to have a hard requirement of MBA between analyst and associate stages, so this needs to be priced into years 3-6 for IB people. IB people probably have bigger upside as well - you could generate $100mm in a great year in IB, not so much in ER. But there is probably greater risk that you will have no deals and no pay in very bad years.

It’s hard to really compare starting salaries (IB analyst/ER associate) between the two fields. IB people are right out of college while ER associates are more likely to have a couple years of experience doing something else. So age adjusted pre MBA, IB probably makes even more.

And anyway, the compensation projection needs to be handicapped by the odds that you will survive in any field for N years. IB attrition is probably much higher than ER. So, your expected earnings while in that field must be discounted, due to the likelihood you’ll drop out for any number of reasons.

Anyway, most of this is probably moot, since 1) you probably won’t have offers in BOTH fields (if either), 2) the future is too variable to make long term projections, and 3) despite the actual numbers, they are still high anyway. It’s not like you are going to make a decision because you will “only” make $400k at age 30.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

I already flagged OP as a troll and yet senior members are fooled by Mr PharmD here.

Thanks ohai. This was pretty informative.


Jefferies is known to pay well. But it’s a total sweat shop

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

Can you get a job offer(s) first and then come back here to ask these questions? You sound like the asian kid who had a dad who said he had to be a doctor and now you’re deciding to try a career in finance because you “love” the idea of looking at companies…etc…etc. The fact is you don’t know what that entails yet so you “don’t” love it and obviously your enamored by the money. Your friends quoting you 140-160k all in are straight losers to be honest…you should def be clearing 200k first year out on the street. Just finish your degree, apply to med school, and stick to your original plan.

Ramos4rm, CFA, CAIA

you’re right, of course. I was just fishing for info to see how bright the future is in regards to this career path.

My friends are not losers though. I don’t know what the proper comp package is for a good performer, but they’re all hard working and bright individuals who give it their all. But thanks anyways for the encouragement. Have fun with your millions, imagined or otherwise. 

helpmefortheloveofgod wrote:
…but they’re all hard working and bright individuals who give it their all.

But you see that’s the funny thing. Or maybe not funny, but it’s still a thing. In IB people aren’t hired because they’re smart. I mean sure they might be or appear smart, but to get in the door going to the right college or fitting the mold is more important, IMO. In Houston, that means going to UT or A&M, and has a pretty high correlation to being a dopey looking white male.

I’ve dealt with IB guys as clients for the past 3-4 years. Directors and MDs are sharp as a tack. They have to be to deal with clients and they got there because they were the best of the large intake class. The job of an analyst is to grind out excel spreadsheets and powerpoint presentations. Some of them are smart, most aren’t, they’re just trying to figure out the easiest way to get done what their boss told them to do. They’re paid decent sums of money for what is entry level work because they work insane hours. One of my friends that’s in energy IB here, the only free time he knows he has is before 9 am each day for breakfast. Office every day until 9-10, Saturdays are usually in the office, and Sundays are spent cleaning up crap from the week that just ended. Good luck having a vacation or a life, but if all you care is that upward trajectory and absolute $$, then go for it.

I did some IB interviews last year but just didn’t bite when push came to shove. I interviewed with one of the top energy IB teams in Houston but they wanted to bring me in as an analyst despite having 3.5 yrs of experience and my CFA finished. I wasn’t interested. I’ll gross 6 figures (granted those 6 figures start with a 1) this year working 35-40 hrs a week and having 5 weeks of vacation. I’m not interested in grinding out 90 hr weeks every week except Christmas vacation. Yet conversely an ex-coworker of mine left a couple years ago to go do his MBA. He’s far from the sharpest tool in the shed, but he’s a white guy who went to A&M and has an amazingly good head of hair. He’s joining that IB team I interviewed with as an Associate, and I ran circles around him when we worked together. 

the tl;dr version of this is OP, you’re in college. You can read and believe all the WSO you want but things are different when you get into the real world, start interviewing, and your priorities may change. I mean you may not even get a full time offer for either IB or ER. Most people who apply for those jobs probably don’t even get interviews. And they probably all think they’re special too. You’re probably going to ignore my whole post anyway, but I’m also curious what some of the other people think.

Not to offend anyone in here but people who study finance in their undergrad are distorted anyway. 99% of them think they’ll be the next warren buffet or Lloyd Blankfein.They keep following stupid news about these hot shots making bank on wall street. If I have learned anything from my previous line of work (much more competitive than IBanking FYI ) is that being humble and always learning from your mistakes and having a knack for learning is what will get you ahead. Unfortunately, with the materialistic nature of finance as a major little is done to improve these aspects ,however in STEM majors people learn to be humble and learn due to the sheer difficulty of the material involved.Most STEM majors have to actually learn stuff and be open to new ideas which is essential for any kind of career.

I haven’t ignored it. I understand what you’re saying and to be honest it’s hard for it to register when everyone around you is a hotshot finance guy gunning for the same career choice as you. 

As a life sciences major I definitely wouldn’t say that STEM fields are devoid of their share of uppity young students either. Many of the aspiring doctors I know are pretty arrogant when it comes to class work and are also in it for the money. When everyone is so money-focused and intent on earning enough to shower their aging parents and siblings with the luxuries that wealth can bring, it’s impossible to not give some focus on the all mighty dollar. I’m only a rising sophomore and people are already talking about how IBers make this much, ER guys make this much, traders make that much, doctors get this much, etc. etc. etc. My older classmates with FO offers are even starting to claim they plan on retiring on 50, 60, 70, 100 million and more. 

But I do see your point. A career is a journey and no one starts off an expert. It’s best to make mistakes and learn as much as you can along the way while keeping your ego and optimism in check. 

Thanks for the words and your advice. I’ll enjoy the ride and see what life has to offer.

No offense taken. I guess I came off as kind of a dick in the beginning. 

Thanks for your input though.

helpmefortheloveofgod wrote:

 My older classmates with FO offers are even starting to claim they plan on retiring on 50, 60, 70, 100 million and more. 

planning to do something is not really much of an accomplishment, anyone here can plan to retire with 100 million or for that matter 100 trillion dollars, it’s not like it’s connected to reality. 

also the only people that are impressed by how much you are going to make are other people that are trying to use money as a way to impress people.  It’s not even really comparable, if you want to live on a few acres of land then it doesn’t matter how much that NYC job pays, you are going to be poorer, in terms of what you want, then someone who works at a big 4 in a more rural area. 

Clear alcohols are for rich women on diets.

edit-double post

Clear alcohols are for rich women on diets.

helpmefortheloveofgod wrote:

My older classmates with FO offers are even starting to claim they plan on retiring on 50, 60, 70, 100 million and more. .

Thats just puffery, of course they think that before they are in the field. Nothing wrong with it, just silly. The whole idea of “you keep moving up” is flawed, as there are only so many levels and each time people get weeded out. usually you either cap out at a certain level or leave the industry and take an easier job.

'A flute with no holes, is not a flute. And a donut with no hole, is a danish'

You’re a sophomore in college and this is the crap you’re worrying about?

Doing it so, so wrong.

^ agreed reality haymaker on the way…

Hey Hamilton, have a holly jolly Christmas.

Well Idk. I mean you’ve never folded under peer pressure and fallen to group-think? In my group of friends this is the crap they talk about. 

If I hang out with the finance guys from my Econ major, they talk about IB and ER and the money they’ll make.

If I hang out with my aspiring doctor friends from my Bio major, they talk about how they’ll be going off to Harvard in a couple of years and they’re retirement funds.

Both groups are arrogant, bright, and some are well-connected.

The entire time I’m sitting there with my thumb up my ass trying to figure out a way to just compete with them. I mean my grades are fine and I’ve got EC’s, but it’s just nerve-wracking to think all of this stuff will happen in less than 3 years. 

So yeah I’m a bit worried and scared I’ll get left behind. 

Sounds like you hang out with a bunch of dbags.  You might be better off getting “left behind”.  Money (or projecting lifetime earnings) isn’t everything.

Your older classmates are all planning to retire with 100 million?? LOL sounds like a bunch of dbags. Unless they are already wealthy, less than 1 in 10,000 will make that.

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

Lol. I mean I make it sound as if they’re all a bunch of selfish *******s. Don’t get me wrong. I mean they’re all arrogant and think pretty highly of themselves. But I guess they have a right to be cocky: A few of them are juniors with internships at Bulge Brackets.

But overall they’ve treated me fairly. I just wonder what they’ll say if I’m not as successful as them, you know? 

helpmefortheloveofgod wrote:

So yeah I’m a bit worried and scared I’ll get left behind. 

No need to worry.. We’ll be there and waiting to crush their spirits.

We’re gonna win so much, you may even get tired of winning. And you’ll say, 'Please, please. It’s too much winning. We can’t take it anymore. Mr. President, it’s too much.' And I’ll say, 'No, it isn’t!' We have to keep winning!

I can’t wait till they get into the real world. They’ll be smacked down right fast. Trying to act like a big shot just screams out “I’m a colossal asshat”. And seriously they are just interns?? LOL

Hope. It is the quintessential human delusion, simultaneously the source of your greatest strength, and greatest weakness.

thats crazy you getting trolled for 2 pages already

"You want a quote? Haven’t I written enough already???"

RIP

helpmefortheloveofgod wrote:
Lol. I mean I make it sound as if they’re all a bunch of selfish *******s. Don’t get me wrong. I mean they’re all arrogant and think pretty highly of themselves. But I guess they have a right to be cocky: A few of them are juniors with internships at Bulge Brackets. But overall they’ve treated me fairly. I just wonder what they’ll say if I’m not as successful as them, you know?

I don’t know why I’m wasting keyboard strokes typing yet another reply but here I am. First off, they have no right to be cocky. They just are. And who gives a **** what they say? Once you’re out of college you’ll realize that what they think of you and vice versa means very little, if anything at all. 

For what’s its worth here’s an article that compares ER and IB http://www.corporatefinanceinstitute.com/equity-research-investment-banking a lot of it comes down to personality, not just how much you want to earn… senior bankers have to be exceptional sales people, while ER not nearly as much… they don’t have to fight to win deals, but they do have to pump out a massive amount of analysis event at senior level (they can’t delegate the analysis down the same way bankers do). 

-

If I were you I’d go for IB.  More prestigious and better exit ops.

As someone else noted, the days of ER analysts making 7-8 figures is over; only a few super stars (II ranked 1-3) in desired sectors get that kind of pay typically.  Mid-level associates can get 200-300k at BBs, but even that is still mixed.  Big bonuses are also largely a thing of the past.  Most firms are now opting to pay higher salaries.

Pay/bonus is based more on how many names you cover, how many NDRs/conferences you generate, trading volume, amount and quality of research, and how clients/salesforce views you.  To get that you need years of experience and rep. within the firm.  Management also has a say of course and it’s not supposed to be tied your bonus, but the volume/value of banking deals your firm does for your sector has an impact on your bonus.   

Lastly, the outlook for ER is fairly bleak to be honest.  The same, if not more (because of declining headcount) amount of work for less pay is on the horizon.