The first thing to say about pay in sales and trading roles within investment banking is that since the financial crisis, the glory days are over. Once, it was possible for star traders to haul in millions as their performance was directly tied to their compensation.
But, as regulators banned ‘proprietary trading’ within investment banking through the Dodd-Frank act, the eat-what-you-kill mentality on the trading floor has dissipated. Most prop traders have long gravitated towards hedge funds, which are less restricted on what they can pay their employees.
Having said all this, investment banks’ sales and trading staff are still paid very well. Associates in equity cash sales and trading jobs can earn up to $200-250k, according to figures provided by executive search firm Options Group.
At the top, managing directors in sales and trading roles earn up to $1m in total compensation. If this seems high, it’s worth pointing out that bankers in M&A, equity capital markets and debt capital markets earn up to $1.6m as a managing director. And pay has been heading up in advisory functions, while compensation on the trading floor has declined by 5-10%.
However, as we’ve mentioned elsewhere in this guide, electronification of the trading floor has had a profound impact on the investment banking sector and it’s those working on electronic trading platforms who bring in the big bucks.
Managing directors working in electronic trading roles connected to the equities division earned, on average, $2.1m in 2014, according to the Options Group. This is the biggest pay packet of any front office investment banking job.