It is no secret that the Finance industry is among the most lucrative and best paid.
However, it is worth researching and selecting a career with caution as there is a huge pay range within the sector.
Emolument.com has analysed 1,157 London Directors' salaries to pinpoint the top paying jobs in Finance. We found that working for an investment bank pays 30% more than working for buy-side institutions such as asset management and hedge funds companies. Salaries are linked to how close the function is to direct revenue generation and bonuses are indexed and tied to performance- revenue or performance-generating jobs are much more likely to pay substantial bonuses.
|Investment Banking||£ 160,000||£ 100,000||£ 260,000|
|Financial Buy Side||£ 120,000||£ 75,000||£ 195,000|
|Ratings Agencies||£ 111,000||£ 22,000||£ 133,000|
Graph1. & Table 1. Median salaries & bonuses per sector. Data based on 1157 Directors in London.
With great responsibility comes increased revenue potential: Investment Bankers earn 30% more than buy-side Directors and almost twice as much as Directors working for Ratings Agencies, where bonuses are one fifth of thos in Investment Banking. The more risk involved in a job, the more aggressive the bonus policy. Whilst Rating Agencies recommendations are key influencers in the market, the research analysts wont take a position or any kind of exposure on the back of their recommendation, which means their employer's top line will not be directly impacted by their work. At the opposite end of the spectrum, traders and fund managers' bonuses are directly aligned to their fund performance or profit and loss.
|Origination & Syndication||£175,000||£105,000||£280,000|
|Institutional Sales (Banking)||£150,000||£100,000||£250,000|
|Private Equity LBO||£123,000||£102,000||£225,000|
|Venture Capital Investment||£130,000||£60,000||£190,000|
|Relationship Management (Banking)||£139,000||£39,000||£178,000|
|Product Development & Marketing||£100,000||£60,000||£160,000|
|Relationship Management (Buy-Side)||£105,000||£42,000||£147,000|
|Ratings Agency Research Analyst||£111,000||£22,000||£133,000|
|Middle & Back Office Generalist||£88,000||£16,000||£104,000|
Graph2. & Table 2. Median salaries & bonuses from 1157 Directors in London.
Banking all the way: Not only do M&A bankers earn three times more than Middle & Back Office professionals, they also earn 40% more than the best paid jobs in the Asset & Wealth Management industries.
You want that bonus? Generate some profit first. Bonuses make up almost 50% of the total remuneration package in key, revenue-generating positions both in Investment Banking and in Hedge Funds and Asset Management firms. In performance-oriented jobs, bonuses are used to incentivise employees; when working in Risk Management or for Ratings Agencies, where either the function is far removed from revenue generation, or where the company's output (ratings research) does not directly impact revenue, bonuses only constitute around 18% of annual earnings.
In it for the long haul? M&A bankers earn 16% more than traders, while their lifestyles are vastly different: M&A projects tend to last weeks or months with 24/7 working hours, whilst in trading, decisions are made in an instant, with the working day over as soon as markets close. Are the sweat and tears of a career in M&A worth the extra 16%? A personal decision.
Incentives rule! Closely matching Fund Management or LBO Investment pay, fundraising proves to be a rewarding trade. Again, it is a job where bonuses are directly linked to how much is being brought into the fund, with very specific formulae and as fundraising becomes all the more competitive, funds are trying to attract and retain employees with a proven record of good results. Expect to do well when liquidity is rife and investors are cash rich, but in cash-strapped times, fundraising professionals are most likely to rely on their salaries only.
Alice Leguay, Co-Founder & COO at Emolument.com said: 'While remuneration in banking, is not what it used to be, it remains the highest paying sector. Senior bankers who have been accustomed to a plush standard of living through a career of earning sky-high bonuses are often trapped in the industry, both burning through their revenue to cover household costs, and not making the fortunes they were aiming for 10 years ago. The levelling of earnings between banking and buy-side activities for juniors allows them a broader scope when it comes to picking a career path, less defined by the hope of making a push towards the banking bonanza, but rather the added value a job in Private Equity, Venture Capital or other key roles in the industry may bring.'
Source: Emolument, the salary benchmarking site