Forget the big bonuses

[bigbadwolf]

Article by Gillian Tett in today's FT.

The sector is shrinking: an estimated 60,000 jobs were cut last year. Staff are being paid in stock deferred over a longer time, and pay appears to be falling. Morgan Stanley, for example, has declared plans to cap the amount of bonus that its staff can receive immediately at $125,000; Goldman Sachs has announced that it is cutting 2011 compensation by 21 per cent; JPMorgan Chase has cut the total pay pool for its investment bankers by 36 per cent year on year. Indeed, the consensus among bank executives in Davos last week was that total compensation for mid- to senior-level employees in 2011 was about 30 per cent lower than 2010 – and perhaps 60 per cent below the 2007 peak.

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[Andy Nguyen]

I have a feeling that this does not deter the legions of people flocking to finance every year looking for the big payday

 

[bigbadwolf]

I am sure people factor this into their calculations. But the problem is often lack of worthwhile alternatives. So they are willing to chance it, hoping, dreaming, praying, they will be one of the lucky ones. What the article is saying is that the "expected payout" is going down -- but buyers of lottery tickets seldom calculate the expectation.

 

[Andy Nguyen]

but buyers of lottery tickets seldom calculate the expectation.

Not a good analogy.
It costs a few bucks to buy lottery tickets for millions dollar payout.
It costs 50K average upward to 200K tuition/fee and lost opportunity cost for jobs that may pay on par with other engineering jobs.
Take a look at the MIT MFin 2012 placement report.
http://www.quantnet.com/forum/threads/2011-mit-mfin-placement-report.8496/

This is MIT and chances are at other lesser known programs, it's not that much better.

 

[bigbadwolf]

This is MIT and chances are at other lesser known programs, it's not that much better.

At 2nd and 3rd tier places, I'm convinced the placement and salary levels are horrendous. With regard to MIT, the $30,000 figure may have been an outlier, or someone who returned to India or China.