Stellar returns
The market may be in the doldrums, but you wouldn't know it from Wall Street's own numbers
Stanford University's graduate business school has seen a rebound in companies coming to campus and the number of jobs they've got to offer, but it's clear "this expansion is more conservative," says Andy Chan, director of its career management center. According to students and career counselors, a typical package for an M.B.A. entering the industry is a salary of about $85,000, with a bonus--perhaps some paid upfront, some later--of about $25,000.
Looking ahead, the recovery looks solid, although evidence suggests the pace is slowing. In a recent report on the brokerage industry, for example, Goldman Sachs analysts say that the peak of what they call the current "minicycle" may already have been reached. In the same vein, Merrill Lynch's CEO, E. Stanley O'Neal, spoke recently of how his firm will pursue "disciplined growth." And not all big firms are doing well. Last month, Charles Schwab Corp. ousted its CEO and reinstalled its namesake in the post, then followed that move with an announcement of plans to close 53 branches and lay off 245 workers. A onetime pacesetter, Schwab is being squeezed from above and below--caught between financial giants like Goldman and Merrill and low-cost online players like E*Trade Financial Corp.
Fernandez, the Securities Industry Association's economist, notes that firms' average fees and commissions continue to decline. Recent money market fund withdrawals that ordinarily would have been plowed into stocks instead appear to have been diverted into real estate. "It's not like we're going to retreat," he says. "But it's at a stage now where it's maturing."
With that maturity comes hope among those who rely on Wall Street that the securities firms will share their wealth more broadly. In some quarters, that's evident already. Take Analar Corp., a New Jersey helicopter charter firm. In the past year, its business of ferrying well-paid brokers, traders, and CEO s from Manhattan to locales like Boston and the Hamptons--at rates up to $1,900 per hour--has taken off by some 15 percent to 20 percent. "They're spending the money again," says Vice President Heinz Graumann. In coming months, plenty more will be looking to tag along for the ride.
Let the Good Times Roll
By keeping costs down, and adding few new employees, the securities industry has boosted its profits to levels not seen since the glory days of 2000.
The Money's Back...
Securities industry domestic pretax profits in billions
2000 $31.6
2001 $16.0
2002 $12.1
2003 $24.1
2004 $27.8*
...But Not the Jobs
Average securities industry employment in thousands
2000 804
2001 835
2002 790
2003 764
2004 777*
*Estimate
Sources: Securities Industry Association, Bureau of Labor Statistics
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