Wall Street Compensation

This article states that it is set to bounce back, after falling substantially, last year. If this is true, then there is one question I have and two prerequisite questions.

1. How quickly will MBAs flood back to Wall St.?

Prerequisites:1. Will Wall St. still hire the same number of MBAs?

2. Is Wall St. permanently tainted in the eyes of MBA grads?

My reaction to the last follow-up question is that Wall St. is certainly tainted, but I think quite a few people will be driven back there because of the staggering amounts of money that can be made. Is that right, probably not, but do people sometimes look for the quickest get rich quick scheme, certainly. Many of this year’s grads had to change career plans quickly because there were no jobs to be had in finance. It should be interesting to see how the class of 2010 shakes out because Wall St. will be there with big bonuses, but non-profits and green tech companies will also be there. Do MBAs derive more utility from doing something good (for the country or the environment) or from the money offered by Wall St.? In the past, the answer was emphatically: Wall St., but now I am not so sure.

The next prerequisite is whether or not Wall St. still has an insatiable appetite for MBAs. Do firms view it as the failure of the MBA system, or simply bad risk management practices. My view is that Wall St. is going to need talent to make money, and an MBA (along with other professional designations, like a CFA) is a bona-fide stamp of approval that the person is intelligent and can work hard. Will the numbers be down? Of course they will be. The sheer consolidation of the financial industry almost assures that there will be less financial recruits on a yearly basis. This consolidation also provides smaller financial firms the opportunity to recruit talent that was not available to them during the boom. A smaller firm, like Jefferies, should be able to pick up a whole class of Top 10 MBAs because it is now a game of musical chairs, and no one wants to be unemployed when the music stops.

This brings me to my main question. Much like the clip below, MBAs will come, they will most certainly come.

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8 Responses

  1. “The next prerequisite is whether or not Wall St. still has an insatiable appetite for MBAs. ”

    I think this is the larger question. Now that things are settling down a bit, I think the larger banks are starting to realize that the compensation packages of the past are unsustainable. Fact of the matter is, investment bankers don’t add a whole lot to a deal, certainly not the $10MM per year they were getting.

    What I wonder is if all those MBAs who left after the banking crisis will be considered “tainted”, in the same way Enron taints someone’s resume (even if they were the mailroom clerk). If I was in a hiring position between two MBAs, one with experience at a failed Wall St. bank (Bear, Lehman), or someone not part of the late 90’s-2000s banking culture, I’d almost choose the new person. You can learn better risk management and the business overall; you can’t unlearn “the way things used to be”.

    You don’t double down on a bad hand, you don’t bring in people who caused a failure elsewhere.

  2. How are investment bankers suppose to “make it rain” on less than $10MM/ year? Huh? Ridiculous.

    I agree that those should go away, as should guaranteed compensation. I never understood why someone would pre-pay for a performance that is never itself guaranteed.

    Uh oh, that internship I did at Bear isn’t looking so hot these days…I agree that some people will be tainted by the crisis, but I don’t think that if you were on the M&A side at Lehman you are tainted in any way. If you ran the mortgage desk, or were a risk manager with the firm, then you might have a problem. I see it as a more product/role specific tainting.

  3. I make it rain, and I’m a “thousand-aire”. ­čÖé

  4. This obviously must be you in the video then…

  5. […] the full article: Wall Street Compensation AKPC_IDS += […]

  6. Hahaha, wow. I’ve got to find out more about that.

    Pretty funny that they use a starter Porsche for the rich banker. Let’s maintain a little attention to detail!

  7. […] of the song “Damn It Feels Good to be a Gangsta” by the Geto Boys. ┬áSpecial thanks to Steve for pointing this out to me. […]

  8. […] of the song “Damn It Feels Good to be a Gangsta” by the Geto Boys. ┬áSpecial thanks to Steve for pointing this out to me. […]

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