How soon do you start earning ‘good money’ in finance jobs? When does your pay peak, and when should you probably think about moving on, or suffer a precipitous pay fall? The new eFinancialCareers salary and bonus survey suggests the answer to each question is, “Sooner than you think.”
Over 4,500 people globally responded to our salary and bonus survey earlier this year, and many were high earners relative to almost any other industry. As the chart below shows, most finance careers bring high levels of total compensation (salary plus bonus) at a young age. Compensation typically rises dramatically until your mid-40s. And then it usually falls back – although there are exceptions.
Our survey data suggests most finance jobs will pay you over $200k by the time you’re 26. Private equity is the curious exception here, possibly because a high proportion of PE pay comes in the form of carried interest which is only provided to more senior (and therefore older staff).
On average, our survey results suggest that if you work on the sell-side (in an investment bank) you will earn over $300k by the time you’re 30, although the highest pay is reserved for people who work in front office roles like M&A and sales and trading.
The bad news is that pay in many roles peaks in your 40s and then falls dramatically. Depending upon where you work, it’s then all downhill from there.
The biggest drop-off is in the investment banking division, where pay goes from a peak of $496k aged 36-40 to $200k aged 51-55. In private equity, some over 56 year-olds appear to be earning a pittance compared to their younger counterparts.
There will always be high performers that skew the figures. In hedge funds, a few high earners in their late 50s drive the average up – and reflect the fact that in an industry where performance is everything, age can be immaterial.
The best place to work if you’re in finance beyond your 40s looks like the sales and trading divisions of investment banks. Even though pay here peaks in your early 40s, the drop-off is far less significant than in other areas. – If you survive that long on the trading floor, you can still expect to be earning over $500k in your 50s, while the average 50 year-old in the investment banking division is earning half as much.
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