$200,000 paychecks, exit opportunities and proximity to power: Why graduates flock to Wall Street
- Tough conditions created by a boom in deals haven’t dimmed the most obvious allure of Wall Street: money. Investment banking analysts at major firms can expect total compensation approaching $200,000 in their first year out of college.
- JPMorgan received almost 50,000 applications for about 400 internship positions at its investment banking program this year. Goldman Sachs saw a 50% increase in applications for its investment banking analyst program this year, compared with 2018.
- At top feeder school University of Pennsylvania, the percentage of graduates with full-time jobs choosing Wall Street has stayed at roughly 30% since at least 2015, beating out consulting, technology and health care.
-
When junior bankers at Goldman Sachs complained about what they called “inhumane” working conditions in an internal survey that made waves across the industry this March, one incoming analyst wasn’t fazed.
He knew about the industry’s reputation for hazing its recruits with 90-hour work weeks. But for him and many others, tough conditions created by a boom in deals combined with a still-raging pandemic haven’t dimmed the most obvious allure of Wall Street: money.
The son of South Asian immigrants said he’s planned for a Wall Street career since high school after seeing his parents struggle financially. He secured an internship at JPMorgan Chase in New York midway through his time at a prestigious Ivy League and started as a full-time analyst in June.
More selective than Harvard
JPMorgan, for instance, received almost 50,000 applications for about 400 internship positions at its investment banking program this year, according to a person with knowledge of the company. (Interns typically return as first-year analysts after they graduate.) The acceptance rate of less than 1% makes JPMorgan’s investment bank harder to get into than Harvard or Yale.
That level of interest doesn’t seem to be isolated to JPMorgan, which is a juggernaut on Wall Street across advisory and trading businesses.
Goldman Sachs, the world’s top mergers advisor, saw a 50% increase in applications for its investment banking analyst program this year compared with 2018, according to a person with knowledge of the bank. While banks don’t typically disclose specifics about their programs, making it hard to know how many join Wall Street out of college, it’s likely that a few thousand are hired at the top investment banks every year.
Meanwhile, the industry’s best-known feeder schools say that demand for finance careers hasn’t abated. At the University of Pennsylvania, for instance, finance has been the top destination for students for the past two decades, according to Barbara Hewitt, executive director of its career services group. The percentage of graduates with full-time jobs choosing Wall Street has stayed at roughly 30% since at least 2015, beating out consulting, technology and health care.
To be fair, the industry’s reputation has ebbed and flowed over the years. Earlier rounds of angst and self-examination were caused by banks’ role in the 2008 financial crisis and the 2013 death of London-based intern Moritz Erhardt. The rise of the technology sector over the past decade, as well as the growth in private equity and venture capital firms, have given young achievers other avenues for high-paying, rewarding positions.
Understaffed and overworked
But each time, despite headlines proclaiming that young people have soured on the industry, there is no shortage of volunteers willing to sign their lives away to a bank.
“I don’t think investment banking has lost any of its appeal; it’s still a phenomenal job in a great industry,” David McCormack, an 18-year recruiting veteran, told CNBC. “It’s just that you’re asking people to work unprecedented levels without the support they would’ve had pre-pandemic.”
Analysts on Goldman’s technology advisory team involved in the now-famous survey were caught in a “perfect storm” earlier this year, according to Alan Johnson of New York-based pay consultancy Johnson Associates. Investment banks reined in hiring at the start of the pandemic because they thought the impending recession would limit deals activity, he said.
When deal flow and the IPO market boomed, thanks to the Federal Reserve’s response to the pandemic, banks were caught understaffed. The companies resorted to hunting for junior bankers in unusual places including among consulting and accounting firms, offered perks like free Peloton bicycles and raised base salaries. In earlier decades — when investment banks were more likely to be staffed with the well-connected offspring of wealthy families — young, hungry outsiders were known as PSDs. The acronym stands for Poor, Smart, with a Deep desire to become wealthy. That phrase was born at Bear Stearns, the training ground for future industry titans including Citigroup’s former CEO Sandy Weill and Goldman Sachs CEO David Solomon.
“If I have to basically sell my soul to this bank for a few years, I need to be paid for it,” said a first-year banker at Citigroup. “There are a million students who are all deserving, but there just aren’t enough spots; they would kill for this opportunity.”
(CNBC withheld her name and the names of the other junior bankers in this article because their employers prohibit them from speaking to the press.)
Besides starting pay that is higher than virtually every other industry – top analysts at major firms can expect total compensation approaching $200,000 in their first year out of college, according to McCormack – junior bankers often cited “exit opportunities” as a reason for joining a bank.
That is Wall Street-speak for the types of careers that await after a successful stint at investment banking, whether it’s in private equity, hedge funds, fintech, consulting or venture capital.
While she considered roles at technology and venture capital firms as well as graduate school, the Citigroup analyst ultimately placed her bet on investment banking because it offers the most exit opportunities, she said.
“It really came down to the fact that I felt strongly that I could pretty much go anywhere after I do two solid years of investment banking,” she said. “People make this assumption that if you can survive investment banking at a top firm, you can handle anything.”
Most of the analysts said they were aware of the industry’s reputation for grueling work, an assertion backed up by the University of Pennsylvania’s Hewitt: “They know it’s going to be a lot of work for a couple of years,” she said. “They’re pretty open-eyed about that.”
In recent years, banks have begun recruiting as early as freshman year, probably due to competition for top students from big tech and other firms. They have also begun leaning on testing and interviewing software platforms to help pull from a broader array of schools as part of the industry’s diversity push.
选择“Disable on www.wenxuecity.com”
选择“don't run on pages on this domain”
