Bonus caps leading financial services workers to turn their backs on sector
Young professionals are set to turn their back on the financial sector as bonuses fail to live up to their high expectations in the era of bonus caps, leaving the industry at risk of a skills shortage.
The Morgan McKinley Bonus Survey released today reveals that a staggering 83 per cent of financial sector workers with one or two years’ experience were dissatisfied after their annual bonus payment failed to meet their expectations.
Hakan Enver, operations director at Morgan McKinley, told City A.M. that the salary expectations of professional millennials were “beyond any sense of reality”. Across the City, 26 per cent of all workers surveyed saw their bonuses decrease. For another 23 per cent, there was no rise on last year as bankers’ bonus caps take effect.
As a result, talent retention is becoming harder for financial institutions. More than two in five, or 42 per cent, of those with one to two years of experience were so unhappy with their most recent bonus that they were considering handing in their notice, compared with 25 per cent of financial sector workers overall.
Despite their perceptions, the survey indicates that those who had seen their bonuses cut were being compensated in other ways. Of those who had received a bonus that was smaller than they were accustomed to, around a third, or 31 per cent, said that their basic salary had been raised.
Alice Leguay, co-founder of salary benchmarking website Emolument, agrees youngsters in the banking industry are not getting a raw pay deal. Her firm’s research has discovered that the salaries of graduates and young professionals at the top investment banks had been pushed up this year, and, in some cases, had fared better in terms of cuts relative to their seniors.
Younger bankers’ misgivings about their pay could related to both the reputation and day-to-day reality of their chosen career.
Leguay remarked that there were many in “generation Y” who no longer viewed banking as an “aspirational” career, due in part to the continued culture of “banker bashing”.
She added: “From what I’m hearing, there’s a lot of very tedious regulation-orientated work that’s taking up more and more of bankers’ time, so they get to do much less of the attractive side of their job.”
The potential exodus of an entire generation could leave the financial sector with skills gaps, particularly in areas focused on technology, as FinTech firms and startups become increasingly good at enticing talented graduates.