McLagan has been covering banking and capital markets for over forty years. We provide our clients with a full range of performance and reward consulting services and benchmarking products covering compensation, methods of pay, staffing, revenue, market share, and productivity.
Our team of industry experts is available to advise clients on a broad spectrum of topics including compensation plan design, executive pay, business benchmarking and cost savings.
Our clients include virtually all of the global investment banks, securities firms, regional banks, and many of the boutique investment banks and commodities trading companies.
Our coverage is global, with offices in Stamford, Chicago, New York, London, Japan, Hong Kong, India and Dubai, across equities, fixed income and investment banking.
McLagan has recently completed consulting assignments banking and capital markets including the following:
- Developed incentive plan design for several boutique investment banks, with a particular focus on linkage to business strategy, stage of development and resource profile.
- Advised the CFOs of two separate global investment banks on appropriate incentive funding across divisions/products based on performance (revenues, profit, return on risk weighted assets) and business model.
- Designed a long-term incentive plan for an international bank, with particular focus on linkage to U.S. business performance.
- Created and executed year-end compensation summary reports for management at several bulge bracket investment banks as well as a wide range of commercial banks (both U.S. and international).
- Assisted in the compensation strategy for several firms, both pre and post IPO.
- Supported job alignment and banding exercises at a leading financial services organization, including complete compensation benchmark review of 15,000 employees.
- Reviewed title ratios and promotion criteria at a leading international bank against market practices.
- Advised numerous banks on appropriate year-end pay levels for senior executives in banking, sales and trading.
McLagan offers a wide range of studies focused on performance and reward including the following:
Pay and Performance Studies
- Board Flash
Provides an early assessment of an organization’s compensation positioning against the competitive market covering all officer level staff, V.P. and above in equities, fixed income, investment banking, executive management and non-revenue staff. All regions are covered in this survey.
- Gauge Benchmark
Provides detailed analysis and actionable results for staffing levels, grade pyramids, cost levels, structure, competitiveness, market sizing, capital and key performance ratios such as payout ratios, front office to back office ratios, and cost per head.
- Quarterly Financial Benchmarks
Provides detailed analysis of the financial performance of approximately 40 publicly owned or publicly disclosed commercial and investment banks globally.
- Institutional Equities Performance Monitor Service
This service covers the institutional equity business conducted by over 70 major securities firms with approximately 2,000 of the largest institutional investors worldwide. Using this service, participating firms can evaluate their current position in the institutional market, develop market and client coverage strategies, and monitor firm, product, salesperson and trader performance.
- Equity Sales Metrics / Productivity
Utilizing a combination of revenue, aggregate compensation spend, and staffing information, this study provides participants with comparative data to benchmark their scale, production, and productivity (per capita and per $ spent) in institutional equities. Detailed metrics can be provided by function (sales, sales trading, trading and research) and by regional product (U.S. equities, pan-European equities, etc.) versus a group of comparable peers.
- Equity Research Business Factor Benchmark
Provides benchmarking information regarding the size and scope of equity research platforms versus peer firms. The benchmark is conducted annually and covers aggregate equity research costs, equity research headcount, methods of allocation of equity research costs and scope of equity research coverage.
- Investment Banking Productivity
This study provides a productivity metric spanning products, industries, regions, and officer title levels. By combining staff data, deal data and top-line revenues, and compensation information, we create metrics on productivity by level, pay level, deal position and type of deal.
Market Share Studies
McLagan’s Institutional Equities Performance Monitor Service (IEPMS) supports an active client account management process in the institutional equities business by providing comparable and actionable data on a firm’s competitive position in the market and the incremental revenue opportunities that are available.
Using McLagan IEPMS data, participating sell-side securities firms can evaluate their current position in the institutional market, develop marketing and client coverage strategies, determine the appropriate allocation of resources and monitor firm, product, salesperson and trader performance over time.
Revenue, Expense & Staffing Benchmarks
McLagan’s Gauge study provides actionable results. In an ever challenging business environment, financial institutions must allocate resources as efficiently as possible. We benchmark a firm’s performance against its competition and help our clients focus on areas with the greatest potential to enhance the bottom line.
Financial institutions spend a considerable amount of time and money on budgeting and planning. Our data and expertise enhance the entire planning process by allowing participants to factor in peer trends when making strategic decisions. We provide comparable and actionable data on competitive positioning versus closest peers, including:
- Detailed cost by line item (compensation and non-comp costs)
- Staffing levels and grade pyramid
- Market sizing and trends
- Key performance ratios (e.g. payout ratios, FO:BO ratios, cost per head)
In our unique process, we utilize data from the general ledger and map it into a standard structure to provide a real apples-to-apples comparison. The result is our demonstrated track record of delivering significant value to the world’s leading financial institutions. We take revenue, cost and headcount and compare them against peers at a granular level.
Our processes include:
- Sourcing from our client’s financials
- Mapping by us to functions
- Questioning any/all exceptions
- Gathering sign-off by each business
- Tailoring our reports to the client’s need
- Drafting results in 12 weeks
Output includes detailed reporting for each business unit and location:
- Headcount and grade levels
- Cost by detailed line item
- Trade count and ratios to take account of scale and complexity
- Conclusions and commentary
Our clients use the study results to:
- Identify and quantify variances
- Effect change through the application of best practices
- Review external structural and organizational differences
- Inform the decision making process