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Why Goldman Sachs wants junior bankers to take weekends off
- jsun 13y agoProblem 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.
- refurb 13y agoThe 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.
- rayiner 13y agoThe 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.
- refurb 13y agoI 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.
- chrisgd 13y agoThe 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.
- rayiner 13y agoNot 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.
- ajiang 13y agoNope. 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-banking-bonuses/ http://www.mergersandinquisitions.com/2013-investment-bankin... http://www.businessweek.com/news/2012-09-13/goldman-sachs-stops-giving-two-year-contracts-to-junior-bankers http://www.businessweek.com/news/2012-09-13/goldman-sachs-st...
- rayiner 13y agoHow 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.
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- Lavery 13y agoThe 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.
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- cdcarter 13y agoSo you're making the point even stronger. Tech pays better. IB is making concessions to make it more appealing.
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- nilkn 13y agoInvestment banking jobs are also, generally, available only in NYC, specifically Manhattan, where the cost of living is matched only by San Francisco (in the US). There are still many high-paying jobs in software development in a variety of cities outside of the major tech hubs.
- walshemj 13y agoYes but when you actually look at this in detail by reading the comments of real IB types - a lot of those hours are just presentism they dont really do much more in an 8:30 till 11 Pm day than you would in a normal 8 hour day.
- chrisgd 13y agoThey do a lot, but it is just iterating the same thing over and over.
- rmcfeeley 13y agoOnce, I made the mistake of asking a more senior IB analyst the following question at a party (I did not know him well): "Some junior investment banking analysts work over 100 hours a week. There is no way that anyone is firing at full steam mentally pulling those hours weekly, because science. Why don’t banks just hire twice as many analysts and pay them all half as much to get more intellectual bang for their buck?" He was not pleased. Thoughts on what this means for our changing economy (and brunch): http://robmcfeeley.com/post/65530961398/goldman-sachs-encourages-junior-bankers-to-take http://robmcfeeley.com/post/65530961398/goldman-sachs-encour...
- lmg643 13y agoit's a great question. i think the only "real" explanation is that junior bankers become senior bankers, there are very low barriers to entry once you're inside (learn excel and accounting), and so working 100 hours a week is a way to limit the competition and prove your worthiness - you wanted it more than anyone else. mindless, yes. but it makes sense - banking is basically an exceptionally lucrative gentleman's occupation. particularly considering the largest clients have the resources to do M&A in house, so the bank most often gets paid fees for justifying what the client was already going to do.
- jsun 13y agoBanking is a relationship business. The hours aren't so much for productivity as for bonding. Think of it as a frat initiation ritual that lasts years. Some very small portion of IB analysts remain in IB, most move off and become successful somewhere else, building an incredibly strong network of captains of industry over time, all tied back to that particular investment bank.
- mathattack 13y agoFor the most part, the jobs in tech are just better jobs. The senior people you work for are less likely to treat you as if you are "useless" and only worth what you're paid because you are "available at all hours." The work is more psychologically rewarding and has less social stigma attached to it. You don't have to wear a tie. And there is the perception among young people that the potential financial upside is larger in tech than in banking (this is not entirely accurate but that's beside the point). Goldman's move to free up the weekends of investment banking analysts is no doubt driven by an understanding that the market has changed. Finance no longer has a monopoly on smart kids looking to make a lot of money. It has to compete to win them away from tech. This is exactly it. Investment banking barely pays more than tech for analysts. Banking IT pays engineers less than Google or Twitter. Add in the social prestige, quality of life, and respect from management, and it's understandable why they are having a harder time hiring the best. Goldman has a choice: Pay a lot more, Accept less worthy talent, or treat them better. They chose #3.
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- zallarak 13y agoEntry-level engineers in NY or CA with a relevant degree make more than entry-level investment bankers on Wall Street..
- mathattack 13y agoI'm not sure I agree, but if I'm wrong, it even further explains why GS is doing what they do. My impression is that the analysts can make 100K in year 1, and 200+K by year 3 or 4, but no equity. I would think that folks at Google making 200K after 3 or 4 years are outliers. Please correct me if I'm wrong, as I'm a little out of touch for what large tech firms pay.
- zallarak 13y agoNah, analysts will make 100Kish for up to 3 years, where they can then be promoted to associate which is 150-200K, maybe more if they are great or the firm has a great year. Some firms offer up to 150K for entry-levels but half that comp is an end-of-year bonus which sucks because its at the end of the year (lock-in) and it gets taxed at a higher rate. Engineers at the big tech firms pull in 100K+ (this plus literally means up to 200K.. more for some real talent) with solid signing bonuses as a starting salary. No end-of-year lock-in bs either.
- squeed 13y agoI graduated with a degree in CS from Columbia in 2007, at the peak of the finance boom. Most of my classmates at least considered a job at an i-bank; a lot of us had internships. I had a sweet job offer from Morgan Stanley waiting for me that I turned down to leave NYC for good (good riddance!). It was such a crazy time then, but it was all we knew. There was a constant stream of crazy, lavish recruiting events on campus from all the banks; it seemed like everyone was going to go work for them and that was normal. Three years later, and the only people in my cohort who still work at the banks are those who seemed to be in the lower tier of students. Everyone else had either moved to GOOG, a start up, or San Francisco. I'd love to see what the on-campus culture is now.
- rgbrgb 13y agoI just graduated from Columbia CS last year and what you describe your friends doing now seems to be the norm for seniors looking for jobs. Google definitely had higher profile recruiting events than any of the banks. There are still a few looking at jobs in the finance sector but not nearly what I had heard about coming into Columbia.
- squeed 13y agoAwesome, glad to hear that. I was president of the ACM for a year, and we totally stuffed our budget from organizing i-bank recruiting events.
- m_ke 13y agoAs someone who's about to gradute from CU in the spring, I can confirm that banks still have a strong presence here. Like you said, most of the top CS students avoid them but their events still draw a large crowd of international students.
- asselinpaul 13y agoHow was Columbia for CS? I'm applying this year RD.
- paddy_m 13y agoWhat a horribly edited story. Word that Goldman Sachs is discouraging its junior investment bankers to take weekends off initially prompted scoffing. That sentence is awkward, and I understood it to be the opposite of the meaning implied by the following sentence.
- itcons 13y agoAre you kidding me? I've worked in tech consulting since leaving university, spent a lot of time at Accenture and have worked just as many hours per week as my friends in the big 4 banks.
- itcons 13y agoAre you kidding me? I've worked in tech consulting since leaving university, spent a lot of time at Accenture and have worked just as many hours per week as my friends in the big 4 banks.
- ethanazir 13y agomaybe they are trying to disclaim blue law violations.