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Wall Street Salaries: Second Floor … Hedge Funds, Asset Managers … Oh, Good Morning, Mr. Tyler, Going Up?

Wall Street salaries.

Unless you received your first HP 12C in kindergarten, chances are the primary reason that attracted you to the investment management business was the lure of significant pay.

You’ve always wanted to know about Wall Street pay and my colleagues over at Mergers & Inquisitions have delivered the mother of all Wall Street compensation infographics (OK, it’s the only one, but that doesn’t mean it still isn’t awesome).

Check out the infographic below, and then keep reading for my take on the numbers as well as some more tidbits on compensation for hedge fund and asset management analysts.

Investment Banking Bonuses, 2007 - 2012

There are a couple of main takeaways:

  1. Pay is on the rise again.
  2. It still pays to be in finance.

I can attest that pay is on the rise and the game of musical chairs (i.e., analysts and traders jumping to other shops for more pay) has begun again because I’ve seen it firsthand. This is a good sign of potential future hiring, as the market for talent is opening up.

After Lehman, people were just happy to have a job, if they had one at all. Today, they are feeling comfortable enough to go out and actively seek better career opportunities. These clearly aren’t the salad days on Wall Street but, like the economy, things are slowing headed in the right direction.

But why are people lured to the high pay of Wall Street in the first place? Because it’s bloody expensive to get a university education these days. Finance is one of the best places to get an actual return on all that higher education. Plus, everyone wants to be a little better and make a little bit more money than their peers.

More Resources on Hedge Fund and Asset Management Compensation

One thing to note about the infographic data is that averages are displayed. By the way, the average human has one testicle and one ovary.

In other words: Averages lie.

And on Wall Street, the average pay figures are skewed higher by outliers. That doesn’t mean that compensation isn’t good; just don’t expect to be making $300K per year at age 22.

The best data for your compensation research will be the data you gather that’s specific to your situation. Luckily, some resources out there can help you out.

The first is the CFA Institute and their member salary surveys. These are starting to get a bit stale, so I hope the CFA Institute starts another one soon. But, in the meantime, head to your favorite search engine and enter the phrase: “CFA Member Compensation Survey.”

Another excellent source is your university career center. Now, most university career centers are rather worthless for helping place students, but salary surveys is one place they add value. Universities need to keep track of what their graduates make in order to recruit new students, so you can use this information to your advantage. Many times you can get this information free from university websites, even if you didn’t attend the school.

Finally, another good source for compensation data is the Greenwich Associates compensation reports, but those reports cost money.

If anyone knows of any other good, free Wall Street compensation surveys, feel free to shoot me a line.

High Pay = High Competition

There is an important caveat to remember when it comes to these pay figures:

Wall Street is competitive.

I once heard someone say, somewhat facetiously of course, that if you rounded up all the hedge fund managers in the world, they could cure cancer.

The investment management business is full of very smart people. There is no free lunch. You can’t just decide one day that you are going to start managing money because that’s where you can get paid the most.

That’s like me saying I want to become an NFL starting quarterback because Tom Brady makes a lot of money.

You need to study harder than the next guy, out-network the best networkers, and ace your interviews. It’s not going to be easy, but the biggest rewards never are.

{ 6 comments… add one }
  • TGM

    Is it too late for me to change careers ……… I noticed you used my salad days expression

    • Yes, Dad, it’s too late for you to change careers. Now go back to playing golf.

  • Jay

    Ha was that actually your dad commenting on your article?

  • Shashank

    CFA charter in emerging markets with 40k$ salary at 32, shud i stil apply for Wharton? 6 yr workex

    • Dave

      If you do, please use spell check.

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