Junior bankers in London earn 40% more than consultants
Investment bankers are some of the best paid people in the world – even when compared to their most well-educated and highly-compensated peers. The chasm, however, might be even bigger than you realize.
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A recent salary survey from recruitment consultant Dartmouth Partners looked at pay for investment bankers at elite boutique, bulge bracket, and middle market firms. It also looked at pay at strategy consulting firms including McKinsey, Bain, and Boston Consulting Group (collectively known as MBB), and Deloitte, KPMG, PwC, and EY (collectively known as the Big Four). And it looked at pay at strategy & corporate development teams, which are internal groups at major companies that work on M&A deals.
At analyst level, Dartmouth found found that the best-paid investment bankers (those at elite boutiques and bulge bracket firms) earned 41% more than their equivalents at the best-paid consulting firms (MBB firms). This was mainly due to bonuses. An investment banking analyst at a top firm can expect a bonus equivalent to 57% of their salary, while an MBB consultant can only expect a bonus equivalent to 15% of their salary.
At associate-level, things aren’t like-for-like. MBB pay figures skip over the “consultant” rung, which is equivalent to an investment banking associate, and go to “manager”, which is equivalent to an investment banking vice president.
Unfortunately for consultants, even when skipping a rung, investment banking is still better paid. Dartmouth found that, on average, an investment banking associate at an elite boutique earned 38% more in total compensation than an MBB consultant one rung above them in terms of seniority. This was entirely due to higher bonuses – although MBB managers earned average salaries 10% higher than investment banking associates, they still only earned bonuses equivalent to 25% of salary on average, compared with 50-54% for investment banking associates.
Dartmouth's survey suggests the pay disparity between entry-level banking and consulting jobs is greater in the UK than in the US. Harvard MBAs who go into banking only earn 30% more than Harvard MBAs who go into consulting, for example. But the last laugh might be the consultants’, however. Pay gets much, much closer when a consultant reaches the top of their hierarchy, with less volatility, as well as much better work-life balance throughout their entire careers.
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