Young analysts on Wall Street are finally realising what they’re worth to the firms that employ them for gruelling 18-hour work days.
Apparently, that number is now around $220,000 to $300,000 — the number private equity firms have to offer top analysts in order to lure them away from investment banks which are also struggling to keep them.
(Those are around the same numbers that many 25 and 26-year old private equity analysts, who have been working there for at least a year, are currently making. When they joined a year ago, they were offered about $200,000.)
In many ways, the opposite used to be true. College graduates used to clamor to join 1-2 year analyst programs at investment banks only to consistently work 12-18 hour long days without thanks. Now some of the power is shifting back to the analysts.
There’s a fight for the best and brightest young bank stars, and the 23-to-24-year olds are reaping all of the benefits.
Their employers, often investment banks, are said to be frustrated with the firms who are stealing their analysts, the work horses who do all of their dirty work but are often too tired and strung-out to realise it (and thus make for great employees), over a year before the analyst program is finished.
It seems as ibanks have fought back, and now private equity firms and investment banks are trying to pre-empt each others’ offers.
The career site, FINS spoke to Rostan at Training the Street who said that superiors are “signaling” to the best analysts that they will be given offers at the end of the 2-year program, or that they’ll be promoted to associate after 3 years.
If they don’t make this signal, investment banks might risk losing their top analysts to competitors. In response, according to FINS, “in 2009, many private-equity firms waited until September to make offers for jobs that would start about 12 months later. Last year, they started sending offer letters in mid-summer. This spring, the rush started March 3.”
(Within 2 weeks, the private equity firm Carlyle, for example, had hired 16 analysts to start in August 2012.)
Once an analyst is recruited by an outside firm, there’s obviously little incentive for them to continue working so hard. So, according to the career site, FINS, at least one senior managing director at a bulge-bracket bank sent a letter to private-equity recruiters last year urging them to stop recruiting their analysts so early.
This battle for top analysts is great news for the young work horses because it has resulted in private equity firms offering fantastic pay packages.
Recent offers guarantee $220,000 to $250,000 a year, and some offer more than $300,000, Jessica Hersch, who targets bank analysts for private-equity clients of Glocap Search, told FINS.
By contrast, investment banking analysts were making base salaries around $60,000 and bonuses (for “top-tier” analysts) around $90,000, for a grand total of $150,000 in compensation, in 2007 (levels then dropped, now they are probably about the same. Some interns are now making $100,000.)
Another sign of a power shift can be seen in the interns who are choosing the firms whose employees treat them best. Click here read more >