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Risk Management?

The averages shown look a bit low to me but I can see there are some weird data points (for example the 36k low end comp which is obviously wrong).

My first Wall St job (NYC) in Institutional Equity Sales had a starting base salary of $40k.

front office positions receive much higher year end bonuses - even in bad years like the last three.

I made my money on commissions - there were no bonuses. Need I say what happens in bad years?
 
My first Wall St job (NYC) in Institutional Equity Sales had a starting base salary of $40k.

I made my money on commissions - there were no bonuses. Need I say what happens in bad years?

Unless you started working in 1982, you had a remarkably unconventional experience. If you started out as a first year analyst at a global investment bank in a sales or trading role in 2008, the worst year in a very long time, your typical base salary was $60k and your bonus was $40k (paid in 2009 to be clear since you started in 2008). If you entered the bank in 2009, your base salary was $70k and your bonus was $50k. Some banks did still pay $60k as base salary for the class of 2009. In 2010, again your base salary was $70k (everyone this time) and your bonus was $50k. Bonuses fluctuated at most -$20k/+$20k from those averages each year depending on what tier you were, but more commonly the range was -$10k/+$10k. Not only did I witness this first hand, but it's also well documented on websites like mergersandinquisitons.com and wallstreetoasis.com, so if you don't believe me you can see it there.
 
If you started out as a first year analyst at a global investment bank

This is mistaken presumption #1

First year analyst front office S&T positions at global investment banks do not make up the majority of positions available on the street and I would, again, argue that anyone who had the fortune (and luxury?) to be offered such a position is the one with a remarkably unconventional experience.

Many career switchers, people with foreign education/experience/status and people who find stubbornly decide to 'break into Wall St' at the wrong time (there were several 'wrong times' after 1982 and before 2008, for the record) or the wrong place or found themselves working with the wrong people (there are many 'black balls' on the street) at the wrong time and place weigh the options they find before them - it is less likely that at FO S&T BB position will be presented and more likely that a random walk will ensue. Many people turning to internet forums to map out their Wall Street career paths will fall into such categories and to imply a guaranteed first year comp of $120k is a complete fallacy.

I implore you to go back to mergersandinquisitons.com and wallstreetoasis.com and read about lateral hiring prospects from back office/IT roles to front office S&T at global investment banks vs front office positions at prestige and regional boutiques and the comp numbers associated.

Boutiques have a long reputation of paying lower salaries + higher commission and/or draws vs salary + bonus. Many boutique IB analyst positions offer NO salary. There is plenty of well documented data out there to support this.

Trying to compare Risk jobs to S&T is about as illogical as trying to compare piloting to air traffic control.

Risk is not a dead-end with a conscious decision to make a career of it - there are plenty of rewarding careers to be found. Joining a risk group with the intention of making a lateral move to the front office is wrong reason to be there.
 
So it seems where we differ is at what sorts of places the people we're describing work. To be clear, I am describing sales, trading, and risk management as they pertain to global investment banks. In that context, sales, trading, and risk are directly comparable. I'm not talking about boutiques, hedge funds, or chop shops or any of that stuff since who knows what different roles even mean at any given outfit. The banks, however, who have the largest sales, trading, and risk divisions of any other kind of shop on the street, are consistent. Take, for example, an equity derivatives business at a given bank. The traders obviously trade the products and manage their positions, the salespeople work with traders to deal products with clients whose positions then appear in the traders' books, and the risk managers serve as a semi-independent third party who ensure that the business of the front office (S&T) does not take on too much potential risk. To me, these are directly comparable roles, and my point was that while all of them are necessary, all of them do have pros and cons about them, and one con about risk management among an accompanying list of pros is that the employees in the risk management department will not be paid as much as those in sales or trading roles.
 
I have been approached about a job opportunity within a Model Validation Group. It was my understanding that these types of jobs are programming-heavy, but the job-spec does not allude to programming skills. I am in the process of doing my own research on what types of jobs exist in this type of Risk Management group. However, I would like to ask the Risk professionals in the forum to offer any insight into the types of positions, responsibilities, etc. that might fall into this bucket.

Perhaps Ken Abbott would care to chime in?

Thanks.
 

Ken Abbott

Managing Director
Model testing, usually involving some coding, is key. There is a big and growing need for these people. The challenge is mobility. The risk business is changing rapidly. In the past, people moved between risk and the FO and back regularly. This happens less frequently now.

I know many, many people that do this and they seem to like their jobs.
 
The term "risk quant" has been mentioned several times in this tread. What exactly is the role of risk quants, and how do they differ from other quants and from risk managers?
 
Model testing, usually involving some coding, is key. There is a big and growing need for these people. The challenge is mobility. The risk business is changing rapidly. In the past, people moved between risk and the FO and back regularly. This happens less frequently now.

I know many, many people that do this and they seem to like their jobs.

Thanks Ken. Do you have any incling as to the type of non-coding work that would be performed by a model validation group?
 
I have been approached about a job opportunity within a Model Validation Group. It was my understanding that these types of jobs are programming-heavy, but the job-spec does not allude to programming skills. I am in the process of doing my own research on what types of jobs exist in this type of Risk Management group. However, I would like to ask the Risk professionals in the forum to offer any insight into the types of positions, responsibilities, etc. that might fall into this bucket.

Perhaps Ken Abbott would care to chime in?

Thanks.

I've never heard of Model Validation quants being lumped in with Risk Management quants before, even though MV might in some large group in a bank with "risk management" in its name.
 

Ken Abbott

Managing Director
I've never heard of Model Validation quants being lumped in with Risk Management quants before, even though MV might in some large group in a bank with "risk management" in its name.
This is much more the norm than the exception. The model review team is required to be independent by various rules, including OCC 2000-16 and 2011-12. The most logical place for it to reside is within Risk at a BB firm.
 
What's the typical exit opportunity for risk people? I am trying to project a long-term career goal (given that my short-term goal is to be a market risk analyst) but don't know what else I can say except for advancing for a promotion (which is too trifling to put into a career goal essay I guess). Does it make sense for risk analyst to move on to the trading floor or jump to the buy side?
 

Ken Abbott

Managing Director
What's the typical exit opportunity for risk people? I am trying to project a long-term career goal (given that my short-term goal is to be a market risk analyst) but don't know what else I can say except for advancing for a promotion (which is too trifling to put into a career goal essay I guess). Does it make sense for risk analyst to move on to the trading floor or jump to the buy side?
The world has changed, crispally. The mobility between the front office and support functions in the post-UBS world has been greatly reduced. Don't take a job with the thinking of an "exit opportunity".
 

DominiConnor

Quant Headhunter
Ken is right, whenever I advise people on choosing between job offers or on taking a job, I always explore with them the job after the one they may move to. It's hard and hardly deterministic but a valuable process.

Risk pay shows some signs of improving, but frankly not very much.

I will state, as a fact on the record, that the idea that top decision makers value risk management to be a lie of evangelical proportions.
Not bullshiot, bullshit is being reckless with the truth, a lie is when you say something that you know to be false, if one doesn't know that your bank regards risk managers purely as a cost to be minimised and patronised then you should not be in management.

Truth in banking is a function of money, if person A is paid more than B, then the work of A is valued more than B for all tuples A,B
Risk, especially model validation is really badly paid compared to front office.
Risk is just above IT in the pecking order, and a good % of risk people earn less than "housekeeping IT" programmers, that's not high frequency trading IT, that's database admin developers.

Risk managers aren't high in seniority, look at the board of any bank, see if you can even spot someone capable of managing risk on the board. Hint: taking risks is not the same as managing them.

Also the career progression even within risk is not good, the more senior roles typically require that you've been in front office, that's rational of course, but think how it affects career prospects for those trying to "work their way up" the risk management greasy pole.

Ken is also right that the world has changed, I see little evidence that the banks are changing with it, if anything it has got worse, since there is little appetite to spend money upgrading risk. Laws will cause new IT systems to be written and more forms with tick boxes to be generated, but risk management can't be done properly if it can pay enough to attract the best staff.
 
Very helpful thread. Can someone please post the typical salary+bonus range for someone at the Associate/VP/MD level in Market Risk at a global investment bank? Also, which Market Risk groups are viewed as more "valuable" to the bank, and thus, are compensated more accordingly? Thanks in advance!

-JJ
 
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