Banks Reducing Junior Banker Workloads With Automation, Even After Bumping First Year Pay To $120,000

As if all investment banks stepping up junior banker pay (mostly to the $120,000 level, as we have reported) wasn’t enough, it is now being reported that major financial firms are looking to automate the work the entry level staffers will take on. 

Goldman Sachs, Barclays and Moelis are all in the process of automating “basic functions such as generating pitch books and valuation modelling”, according to a new report in FT. The push is supposed to help the perception of unbearable workloads, which has been a rite of passage on Wall Street for junior bankers for decades. 

The move suggests that attrition amongst younger bankers continues, despite the pay raises.

Dan Dees, co-head of investment banking at Goldman, told FT: “The goal with this is to allow younger bankers to do more and more of the meaningful, and less and less of the menial.”

Other tasks that firms are looking to automate include “scanning through news stories to prepare the public information book (PIB) on a potential client, scrubbing data sources for companies’ financial metrics and formatting PowerPoint presentations” – all have been work staples for entry level analysts.

Goldman has nearly 100 projects in place to try and further automation and Barclays has formed a task force for the same purpose, according to the report. 

John Miller, Barclays’ co-head of investment banking, commented: “We’re investing to automate elements of the junior banker’s role in an effort to improve efficiency and enhance their work experience.”

Mike Mayo, a banking analyst at Wells Fargo, added: “Headcount in the banking industry is likely to get reduced, aided by technology. The mantra has been, remains and will only increasingly be: do more with less.”

David Erickson, a lecturer of finance at the Wharton School of the University of Pennsylvania, told FT: “The velocity has changed forever since the pandemic. Instead of eight to 10 [presentations] a week for the team, it’s now eight to 10 presentations a day.”

Erickson is right that analysts now seem to have the upper hand. Recall, just weeks ago, we noted that Evercore was now paying its junior bankers up to $120,000 per year. Second year analysts at Evercore will make $130,000 and third year analysts will make $140,000. 

Guggenheim has also raised its first year analyst pay to $110,000. First-year analysts across the global corporate and investment banking, markets, and research at Bank of America will now receive $100,000 per year, up from $95,000. Second year analysts will make $105,000 per year and third year analysts will make $110,000. 

B of A said to its employees last month: “In the face of increased market activity, your contributions and commitment have become more important than ever to the continuous success of our business. Fostering an environment where you can build a long-tenured career is of the utmost importance to us.”

Recall, just weeks ago we also noted that Jefferies announced it was going to be raising pay for its first year analysts in the U.S. to $110,000. The bump in pay is a raise of $25,000 from their previous starting salary of $85,000 per year. Second year analysts will make $125,000, up from $95,000 and third year analysts, called associates, will move up to $150,000 per year from $125,000. 

Bonuses for the firm, which are typically handed out in August are “expected to be high”, we wrote. Jefferies’ pay bumps match that of Goldman Sachs, who raised pay by 30% just weeks ago.

First year analysts at Goldman will now also make $110,000 per year in their first year and $125,000 their second year. Senior associate ranks will see their pay bumped to $150,000, similar to Jefferies.