Better Salary at Consulting Firms, Private Equity Firms, Investment Banks or Hedge Funds?

You’ve finished your degree from a prestigious institution. Your CV boasts excellent internships and your family has excellent connections in finance. All of the pieces are in place for you to begin your elite career, but maybe you´re not sure whether consulting, banking, private equity, or hedge funds best fit your salary aspirations. You may find the answers you are looking for in the compensation survey recently published by Wall Street Oasis (WSO), which provides a comparison of earning potential in the finance and banking industry.

1. Management consulting firms.

In a management consulting firm, such as McKinsey & Co., you can expect to earn a comfortable salary and be well off, but you will not be extraordinarily wealthy. These firms do not offer huge bonuses either. And at the top, managing directors in investment banks earn significantly more than principals at consulting firms. Average compensation figures for various levels at consulting firms are:
Analysts: $69k
Associates: $81.5k
Consultants: $105.6k
Managers: $155.1k
Principal/partners: $319.8k

2. Investment banks.

Investment banks, such as Goldman Sachs, require you to put in your time but have a higher return. At the lower levels, working for an investment bank pays more than working for a consulting firm, but the real difference comes at the higher levels. The big rewards start at the vice president level, which generally takes about five years to reach, or even longer if you´re working in Mergers & Acquisitions or Capital Markets. Compensation is also based on performance in investment banks, as they pay significant bonuses. Average compensation figures at investment banks are as follows:
First year analyst: $80.4k
Second year analyst: $103k
Third year analyst: $108k
First year associate: $113k
Second year associate: $124k
Third year associate: $160k
Vice president: $294k
Managing director: $624k

3. Hedge Funds.

Working for a hedge fund, such as DE Shaw or Bridgewater, allows for more freedom than being in an investment bank, but overall compensation is not as high. Though bonuses are higher for hedge fund professionals, salaries are significantly lower and thus overall compensation is lower. Average compensation at hedge funds, as calculated using data from DE Shaw and Bridegewater is as follows:
1. Analyst: $82k
2. Senior analyst: $122k
3. Senior associate: $164k
4. Vice president: $244k
5. Principal: $592k

4. Private Equity

There are some clear advantages to working in private equity. At the mid-ranks, working in private equity pays higher than in banks, hedge funds, or consulting firms. And at the top, it pays just as well. Bonuses at private equity firms, such as Blackstone, are high and these funds are not required to adhere to European pay restrictions. When performance goals are not met, however, carried interest will not be paid. Average compensation at private equity firms is as follows:
1. Analysts: $104k
2. Associates: $130k
3. Senior associates: $195k
4. Vice presidents: $303k
5. Principals: $624k


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