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Why you (probably) actually want to be a commercial banker

If your dream is to work for Goldman Sachs, JPMorgan, or Morgan Stanley, you might be shooting not just your future, but your entire life, in the foot.

The reason for that is simple – you’ll be worked like a dog. The stress and lack of sleep (which further compounds the stress) will make you unhealthy. You may lose hair, put on weight, and potentially cause permanent damage to your health. 

But there might be a way out. There might be a way for you to keep your pride (“I’m going to be a banker, guys!”) and still have a genuinely decent life at the end of it all. And you might want to hear it, but it’s commercial banking.

We spoke to Dr. Kent Belasco, associate professor of practice, finance and banking, at Marquette University in Wisconsin. A former banker himself once upon a time – “not the youngest guy around,” as he puts it – Belasco spent 37 years in the commercial banking industry and was once chief information and operations officer for First Midwest Bank, formerly based in Chicago.

What’s stopping students from looking at commercial banking as a career, Belasco thinks, is a lack of information. “Commercial bankers get a bad reputation sometimes,” he says (perhaps an understatement). But “it's a great career, you can have a life, you can retire well, you can do all those things, which they're interested in. But you can also contribute – you can make a difference.” And making a difference is a big draw for Gen Z.

“Young people today are more socially conscious. They want to give back. And one of the best ways, one of the best professions that can give back is banking. Because when they make loans, they make loans to communities, people that are trying to start small businesses, and startup companies. When they do that, they create jobs,” Belasco says.

Is that sort of career a sell for students? Yes, it seems. “Most of my students coming out of the commercial banking program, I'd say 95% of them go to a commercial bank,” Belasco says. “I've had a few that have gone into businesses, but they're on the credit side, because the skills that we teach them are transferable to areas like that.”

The recruitment process is more or less the same as IB too, with a summer internship that leads to a job offer (although that internship is during a student’s senior year). Belasco also encourages students to do internships in the summer before that, however – so they can “get their feet wet. Get some exposure.”

The only real way commercial bankers fall behind investment bankers is in terms of pay. A newly minted commercial banker earns around $70k-$85k in their first year working, along with a signing bonus of around $5k-10k. That’s less than a New York investment banking analyst earns (according to our compensation report), by about $20k in terms of salary, and around $30k worth of bonuses – around 35% to 40% less, in total.

The trouble is that bonuses for commercial bankers are unequivocally lower than for investment bankers. A year in, new commercial bankers can start to earn bonuses between 5 and 10% of salary in cash. A few years later, they can expect stock-based bonuses (in the form of RSUs) that range from 5 to 15% of salary. More senior people, can expect 60 to 80% of salary. “That's pretty significant,” Belasco says. Investment bankers earn multiples of salary, though.

But the cost of living needs to be factored in too. Belasco’s numbers are for commercial bankers in Milwaukee. According to Numbeo, a website that aggregates costs of living, consumer prices in Milwaukee are 29% lower than in New York, excluding rent. When rent is added, they're 44% lower.

Maybe commercial banking isn't so bad? And when you consider that you also get to be home at a reasonable time, it might even look better.

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AUTHORZeno Toulon

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