Time for Brass Tacks: Will I Make a Killing?

By Derek On September 6, 2011 Under Uncategorized

“Money talks… but all mine ever says is good-bye.” Anonymous


As I’ve said in other parts of this blog, stockbroking is a lucrative career. In the good old days you worked gentlemen’s hours, had two-hour, four-martini lunches and knocked off early to play a round of golf.

Nowadays, you are never drinking at lunch (unless it is London on a Friday) and more often than not you will find yourself wolfing down a sandwich on the desk. But the compensation is better than the days of yore, so it isn’t all bad.

Paid Squat to Start

When starting out in the business your compensation will be thin, to put it mildly. This is because you are not “a producer” and probably won’t have anything to contribute for a year or more. If you are entry level you should not look too closely at “the comp” but treat your job as an opportunity to learn. You will get paid more later. A lot more.

Where You Work Counts

Depending on the market (whether New York, London, Hong Kong, or Indianapolis) your salary may be $100-$150K a year after one to two years experience. Obviously, the cost of living is much higher in the global centers of finance (there are only three and sorry, Indianapolis isn’t one of them). Thereafter, your base won’t change much and everything comes down to the bonus.

Things Are Changing

Post GFC (Global Financial Crisis) there has been an effort to move away from the “excessive risk-taking mentality” that comes with the bonus system. Global investment banks have in some cases doubled salaries to compensate for paying out lower bonuses. A broker with several years experience may now be on a $200 – $500K annual salary but his bonus may only be 20-50% of his base. (When I say “broker,” I mean “equity sales.” See this post I wrote for more information).

It all depends on who you work for and what kind of year your company has. Senior brokers can make over $1mn a year, in general. However, that is not every year and we all have good and bad years. (Senior corporate bankers make 5-10 times that amount but they have no lives at all, so we won’t go there).

As with life, the way to look at it is over time. Over time yes, you will make more money stockbroking than most any other legal profession. But the volatility is high: this is a feast or famine business. Save during the good years and endure the bad ones and you should be able to retire long before you are “65.”

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