Equity researchers face a struggle to pay mortgages and school fees this year

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Eton College, where M&A bankers are formed

Goldman Sachs may be paying its bankers an average of 10% more for 2012 than 2011, but overall the expectation is that bonuses in banking will be down for last year- possibly significantly. For some people, this has the potential to cause serious problems, particularly if their expenditure is still running at a level that was established several years ago.

Compensation appears to be a particular issue in equity research, where pay has plummeted.

"This is a very stressful time. People are struggling to cope," says one equity research headhunter in London. "There are some top rated equity research guys out there who were making very high six figure packages in 2007. They're going to be lucky if they get half of that this year."

Jason Kennedy, a headhunter working in the U.S. and the U.K. says falling pay is an issue across the industry, but that equity researchers have been particularly affected. "Pay has gone down dramatically, especially for top-rated researchers. Equity research is a cost centre and banks are trying to cut costs . The first people to go are the senior equity researchers who have historically been very expensive."

There are signs that falling pay may be creating big problems.

In October last year, equity researcher Nico Lambrechts became the fourth person to commit suicide at the London restaurant Coq D'Argent. Lambrechts spent 13 years working at Bank of America Merrill Lynch, where he was one of the top rated European equities analysts. He moved to Investec Asset Management in May 2012 and is said to have had concerns about the payment of school fees for his three children after he was unable to transfer money out of South Africa. He was also reported to own a £2m home in Cobham, Surrey, which may have had a costly mortgage.

Lambrechts didn't lose his job at Bank of America Merrill Lynch, but moved to Investec voluntarily. "He wanted a new challenge and moved on," one former colleague tells us, "he was a popular guy, larger than life." However, the equities headhunter we spoke to says pay at Investec Asset Management is likely to have been far lower than at BAML. "Someone like Nico Lambrechts would have been making close to a million a few years' ago at BAML. At Investec he would have been lucky to receive £250k," he claims.

Bank of America and Investec did not immediately return a call for comment.

Philip Hodson, a psychotherapist works with investment bankers, says it's always challenging to adjust to a situation in which your income is dramatically lower than it has been. "It leads to self doubt, to feelings of inadequacy, to questioning the value of what you're doing and to wondering what all the long hours are for," says Hodson.

However, Kennedy says most equity researchers are adapting well to their new circumstances. "Most of them are saying that they're just happy to have a job. If you can't pay your school fees, you move your children. If you can't pay your mortgage you sell your house," he says. "People are adaptable."

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