The response to the Covid 19 pandemic by governments and central banks across the world has transformed revenues for financial services firms. The record amounts of stimulus have led to record levels of capital markets activity and triggered a rebound in trading revenues, while private equity firms are looking to put cash to work again. Some banks are cutting staff but this is increasingly at the more senior end, where cost savings are easier to identify without weakening the future of the business. All this means that financial services sector remains an attractive one to work in going into 2021, providing some of the highest paid positions for new graduate applicants.
So which jobs pay the most when you're starting out?
Hedge fund, entry level, $167k-350k (£124-261k)
Hedge funds are increasingly keen on developing talent in-house and this means an increasing number of funds are rolling out formal graduate programmes. Junior salaries at big hedge funds are on the rise as they look to compete against Big Tech and private equity. According to Wall street Oasis, average analyst pay in 2020 was $167k, split between a starting salary of $110k plus bonus. There is huge variation in pay, depending on where you work. WSO reports total pay of $350k for a first-year analyst at Citadel, including a bonus of $186K. In some cases, bonuses can dwarf basic salary – for example Oaktree Capital management pays first year analysts $90K salary, with an average bonus of $180K, according to WSO.
Private equity analyst, $114.1k (£85k)
The best way to get into private equity is still through the analyst program at an investment bank, because private equity firms know they are getting the best-trained talent. But some PE firms have started offering their own graduate programmes, although that tends to be limited to the biggest firms like Blackstone. Salaries remain robust, and 2021 will be a big year for private equity as funds race to deploy capital on deals. Total compensation for a private equity analyst in the U.S. is $114.1k, falling to an average of $82k in Europe and $62.5k in Asia, according to Prequin
Investment banking division, analyst, $114k (£85K)
In response to the Covid-19 pandemic, the investment banking industry is continuing to invest in junior staff. This suggests it has learned lessons from the crisis of 2008-9, when it cut vast swathes of its analyst headcount, only to scramble for talent when the market rebounded. Also, investment banks are facing stiff competition for talented juniors from private equity firms, which is also keeping salaries at healthy levels.
Figures compiled by London recruitment firm Dartmouth Partners suggest that across the board, basic salary offers for analysts in the summer of 2020 were around $50K, with bonuses ranging from £28K to £36.8K. “Analysts remain in demand because people are leaving the industry sooner than they did 10 years ago for work-life balance reasons. Added to that, we’ve seen an uptick in M&A activity, so banks are staffing up to meet that growing execution need,” said Logan Naidu, CEO of Dartmouth Partners, adding that there are attractive opportunities to be had among PE firms and corporates.
Sales and trading, investment bank, $125-135k (£93k-100k)
Sales and trading departments have enjoyed a strong resurgence in 2020, boosted by record levels of volatility at the height of the pandemic. This year’s bonus round will be keenly observed. Some banks have pledged to increase bonuses but they have also been advised to exercise restraint by governments and regulators.
Quantitative risk analyst, $80-100k (£67-£78.6k)
Risk management salaries within investment banking and the broader financial services market have been on the up in recent years, although at the junior end, however, quantitative risk analysis is in danger of becoming commoditised. It is still a well-paid job, however, with Glassdoor showing entry level positions between £67k and £78.6k in London, with a cash bonus of £11k.
Regulatory reporting accountant, newly-qualified, $92k (£74k)
“Entry level” for accounting jobs tends to correspond to “newly qualified”, so it depends on whether you consider the first three years of an accountancy career to be work experience or the equivalent of a postgraduate qualification. Starting salaries for accountants vary depending on the location, sector, size and type of firm. Graduates entering the career can expect to earn salaries of up to £30,000, according to the Institute of Chartered Accountants for England and Wales (ICAEW). But in financial services, that is much higher, and once you’re qualified, starting salaries for regulatory reporting accountants start at 60K.
Internal auditor, financial services, $114k (£85K)
Accountants are in demand as internal auditors at the biggest banks. In New York, banks pay up to $114K in salary while in London salaries are around £56K.
Private banking analyst, New York, $94k (£70k)
Demand for private banking talent is set to rise in 2021 as investment banks look to expand their offerings. Market leaders Credit Suisse and UBS are continuing to allocate more capital to these businesses, while banks from HSBC to Deutsche are looking to expand their presence as they respond to the growing global pools of private capital being raised. Analysts salaries start at $94K in New York, according to Glass Door, while in London they range from £40K to £80K.
Compliance, product advisory, $55-100k (£41-74k)
Starting salaries for middle office employees have generally lagged those in the front office, but they remain stable and banks are continuing to beef up their control functions. In London, compliance managers with up to a year’s experience can earn up to £74K, with a bonus of around 3K, according to Glassdoor.
Actuary, $85-150k (£65-120k)
The path to becoming an actuary is a gruelling one, with training typically taking anywhere between three to six years and which is usually provided by employers to the best and brightest maths graduates. Starting salaries are relatively modest in the range of £34k to £36k, but they rise every time you pass an exam.
Photo by MORAN on Unsplash