It’s 2018, and maybe you have itchy feet. You want to quit banking and go into consulting, or fintech, or private equity, or do something completely different.
Are you sure this is such a good idea though? A forgotten report issued last year from Bernstein research might make you think again, and stick with banking for a few more years at least.
1. In your early 20s you can earn three times more in investment banking than the average job
You might fancy becoming an accountant or a broadcaster or a civil servant instead of going into banking. If so, you’ll still earn a lot less than if you leave university and achieve a front office banking job. Admittedly, it shouldn’t be about the money, but the discrepancy is probably big enough to make you stop and think: Bernstein says entry-level banking jobs pay three times the average entry level pay for other sectors in the UK.
2. You probably shouldn’t step off your investment banking career before you’re AT LEAST 34 years-old
Bernstein’s most exciting chart (below) suggests that if you can stick it out beyond the mid-VP level, it will be worth it.
By the age of 30 you should, cumulatively, have earned $1m in front office banking. Thereafter, cumulative pay increases exponentially. By the age of 34, you should (cumulatively again) have earned $2m. If you can stick it out until the age of 42, Bernstein says you’ll have earned nearly $6m over your banking career. Do you really want to quit aged 27 for a small and ultimately unsuccessful tech firm? I
3. People elsewhere in ‘banking’ don’t make this money
Don’t assume that just because you get a ‘banking job’ you’ll be paid this sort of money though.
As the charts below show, hardly anyone in finance works in front office investment banking (IB) (ie. in sales, trading, M&A or capital markets), and those who don’t aren’t paid much more than people doing something entirely different. Most people who work in banks are working in the retail or commercial banking sectors. Even within investment banks there at least twice as many people working in support roles in the back and middle office as there are in the highly paid front office jobs. These jobs don’t pay nearly as much.
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Contact: sbutcher@efinancialcareers.com
Photo credit: Commuters by Rob Watling is licensed under CC BY 2.0.
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