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The 29 year-olds with no experience on $200k salaries in banks

What's the recipe for achieving first year fixed compensation in investment banking of $200k, even if you have no  prior banking experience?

It turns out that it helps to spend $78k on a top-tier MBA, plus around the same again on living expenses.

Three top U.S. MBA schools have now released their employment reports for 2021-2022: Wharton, MIT and Chicago Booth. They suggest that in the current employment year, the going rate for a new MBA becoming an associate in an investment bank is a median salary of around $150k (Wharton and MIT), plus maybe a signing bonus of $52k on top. At Chicago Booth, the median starting salary for an MBA in banking is a mysteriously higher $175k. Bonuses will be paid in addition to this.

This isn't bad, when you consider that the average age of MBAs leaving these schools is around 29 and that a significant proportion won't have worked in finance before. One recently ex-analyst at JPMorgan says that many of the MBAs the bank hired into his sector team knew almost nothing about financial modeling and had to be trained by the analysts below them. He said new MBAs' only advantage is that they might have direct industry experience, and they tend to be more loyal than analysts, who typically want to leave for private equity. 

While $200k was the going rate for this year's batch of MBAs, pay is likely to be even higher next year. - Most banks increased associate salaries to at least $175k this summer. The chart below, based on Wharton data suggests a salary increase was overdue. Entry-level MBA pay hadn't increased for three years in banking (along with hedge funds and various other sectors).

While MBAs going into investment banking are compensated well, some of the best entry-level compensation in finance instead goes to a handful of MBAs in private equity. - At Chicago Booth, one private equity MBA achieved a salary of $225k this year; at MIT, an MBA going into PE received $250k.

Photo by Chris Turgeon on Unsplash

AUTHORSarah Butcher Global Editor
  • pb
    15 November 2021

    These spoiled brats who know nothing and learn little and spend half their day in line for super expensive cr-p coffee and getting badly overpaid are part of why the people behind the scenes, like technologists, compliance staff, accounting teams, middle and back office, and many others get paid so poorly and have lost any sense of loyalty for the nasty pr-cks that they work for. The absorb resources like crazy. Sure, the top bosses making 10's of millions for showing up in expensive suits are often far worse. Anyone who really knows what goes on in top banks - the BS, the corruption, the waste, the Not Invented Here problems, knows that the more the big bosses and the fancy MBA's get paid the worse a place gets run. Nothing against someone having an MBA - I've got one, hard earned, one that made me far more useful in IT, and most recruiters pass right over it because it's not in 'finance'. Right, we do the work, the fancy MBA's get the pay. And don't believe for a minute that they are any more loyal - someone offers them more money, maybe in a tech startup, and they're off and running!

    What amazes me is that some banks actually have some good investment bankers. The very poorly run Asian bank I worked for a couple years ago has some amazing bankers. But they don't get the support they need because of gross incompetence, nepotism and management in other areas.

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