Investment Banker Salary: How Much Do They Earn? Factors (2024)

Investment banking is one of the most prestigious career paths in finance and even though the work is gruelling at times, the pull behind investment banking roles for most people is that you have the ability to make a lot of money.

So, let’s jump right into it – how much do investment bankers really make?

The general salary compensation range for a first year investment banker is $85-95k. This gets bumped up with signing bonuses ($5-15k), stub bonuses ($20-30k) and end-of-year bonuses (70-80% of base salary).

An associate base salary in the US can increase to $140-180k as they climb the corporate ladder.

The actual salary you receive will depend greatly on where you hire into. The figures above are ballpark numbers.

Investment Banking Compensation Explained

For junior analysts and associates recruiting into investment banking, your salary will be made up of five components. We touched on some of them briefly above but let’s break them down.

  1. Base salary. This is your bread and butter, which you’ll take home regardless of performance. As mentioned, for mid- to large banks this will be in the range of $85-95k for 1st, 2nd and 3rd year analysts. Boutique banks might pay more and they might pay less. Associates will earn $140-180k as they move up the ladder.
  2. End-of-year bonus. Your end of year bonus will be a percentage of your salary and it depends on your performance, deal flow, industry experience and which ranking bucket (general five buckets) you fall into. These bonuses tend to be in the range of 70-100% of base salary and, like base salary, can vary if you are an elite or boutique bank.
  3. Stub bonus for new hires. When analysts are hired in the summer, they’ve been working at the bank for 5-6 months when bonuses are due. These hires get a stub bonus in the region of $20-30k. Associates hired in the summer will get a lower percentage of base salary.
  4. Signing bonus. First-year analysts can also receive a one-time signing bonus in the range of $5-15k. Associates receive a multiple of this figure which is significantly higher.
  5. Employee benefits. Often overlooked are the 401(k) plans, health insurance and vacation days.

Senior Investment Banker Salaries

As investment bankers in bulge bracket banks climb the ladder, their base salary increases significantly. A large portion of their bonus, however, comes in the form of stock and deferred compensation.

Deferred portions generally vest over a period of 3-5 years which incentivizes bankers to stay with the firm and potentially receive a bonus as high as $1 million.

Once promoted to a senior investment banker, bonuses are closely intertwined with individual performance and what you generate in terms of fees for the bank. It depends on the bank mostly, however, deals worth less than $1bn might come with a 1% commission, while deals worth more than that will scale down to around 0.1%, but even then, a 0.1% commission on a $50bn is $50 million.

Investment Banking Salary Ladder

Analyst Salaries

First, second, and third-year analyst salaries fall in the range of $85-$95k with bonuses ranging between 70% and 100% (scaling with tenure at the investment bank). Adjusted for potential bonuses, their salaries look something more like this:

Investment Banker Salary: How Much Do They Earn? Factors (1)

Associate Salaries

Associates tend to earn salaries in the range of $140-180k or $250-400k adjusted for their bonus.

First-year associates tend to earn slightly less than $200k due to their stub bonus, however, their salary progresses quite nicely from Year 1 through Year 4.

Vice President & Director Salaries

Investment Banking Vice Presidentsthrough toSenior VPs will be earning $200-300k base salary.

Their bonuses vary in the range of 120% – 150% of their base salary with total compensation reaching upwards of $450k to $700k.

Managing Director Salaries

If you ever reach the level of Managing Director you will be earning upwards of $1m a year with base salaries in the $400-600k range with incredibly variable bonuses ranging from close to nothing to several million dollars.

Other Factors Impacting Compensation

Compensation does not vary much between different groups at the analyst level.

At that level, salary generally does not tend to vary that much based on the hiring bank and even if the analyst’s deal flow is poor, compensation levels tend to average out since junior investment bankers don’t do the majority of deal closing.

As you move up, your salary starts to fluctuate a lot more based on the type of investment bank you are working for. Generally speaking, at capital market groups the remuneration tends to be towards to lower level whereas M&A groups tend to rack up the big bucks.

Is The Salary Worth a Career in Investment Banking?

Looking at the salary figures and comparing what different roles are earning might help you understand the market better but is the compensation worth it for a career in investment banking?

The first question to ask yourself is why you want to get into investment banking. If it’s just for the salary then there are much better and less competitive careers that have compensation far in excess of banking.

For example, tech companies pay a lot more for engineers. Not only at the base salary level, but once you factor in the equity options offered you will likely outperform banking bonuses.

Working at Google or Facebook, you’d be looking at an average compensation of up to $200k and much more relaxed working hours of 40-50 hours a week. It’s a much more comfortable lifestyle.

It’s worth mentioning that there are disadvantages at smaller tech companies such as slow ladder progression, lower pay ceilings and fewer executive roles available.

Undergraduates often start out in investment banking as a stepping stone to exit into the lucrative private equity world where the compensation ceiling is far higher because you can reap the rewards when an asset increases its value by 2-20x.

If the plan is to transition into PE then the salary doesn’t matter. It’s almost a prerequisite to get experience in IB before moving over to PE and so you would need to start your career in banking to get your foot into the private equity door.

But if compensation and wealth are your primary concern, you’re more likely to become wealthy faster by starting a business, and investing successfully in startups and/or on the stock market than by being an investment banker.

Hopefully has given you an insight into investment banking salaries and the different levels of compensation available.

FAQs

1. What is an investment banker?

An investment banker is a professional who helps companies and governments raise money by underwriting and selling securities.

2. How much is an investment banker's salary?

Investment Banking Vice Presidents through to Senior VPs will be earning a $200-300k base salary. Their bonuses vary in the range of 120% – 150% of their base salary with total compensation reaching upwards of $450k to $700k. Managing Director Salaries If you ever reach the level of Managing Director you will be earning upwards of $1m a year with base salaries in the $400-600k range with incredibly variable bonuses ranging from close to nothing to several million dollars.

3. Can you become a millionaire as an investment banker?

It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year. To amass a million-dollar fortune, an investment banker would need to save and invest a large portion of their income over a period of many years.

4. Why are bankers paid so much?

Bankers are paid a great deal of money because their skills are in high demand. Bankers are essential to the smooth functioning of the securities markets, and they play a critical role in the economy by helping companies and governments raise money.

5. What exactly does an investment banker do?

An investment banker is a professional who helps companies and governments raise money by underwriting and selling securities. They work in the securities industry, and their main job is to help companies issue new stocks and bonds, and to help investors buy and sell securities.

Investment Banker Salary: How Much Do They Earn? Factors (2024)

FAQs

Investment Banker Salary: How Much Do They Earn? Factors? ›

The general salary compensation range for a first year investment banker is $85-95k. This gets bumped up with signing bonuses ($5-15k), stub bonuses ($20-30k) and end-of-year bonuses (70-80% of base salary). An associate base salary in the US can increase to $140-180k as they climb the corporate ladder.

How much do investment bankers actually make? ›

What Is Investment Banking?
RoleBase Salary ($)Average Year-End Bonus (% of base)
Analyst$100,000 - $120,00050% - 100%
Associate$150,000 - $200,00050% - 100%
Vice President (VP)$200,000 - $225,00050% - 150%
Senior Vice President (SVP)$250,000 - $500,000> 100%
2 more rows
May 4, 2024

Can you make 7 figures as an investment banker? ›

Senior Investment Banker

According to Indeed, the average base salary for an investment banker in the U.S. is $86,824, not even six figures. But these professionals can go far and rake in a lot more money. On the highest earning end of the spectrum, investment bankers make $544K.

Can investment bankers make 500k? ›

Investment Banking Career Path

As an associate, compensation rises significantly. The next level up is Vice President, which can make upwards of 500k. Highest on the food chain is the Managing Director, who makes anywhere from 500k to several million dollars.

How do you answer what do investment bankers do? ›

The Bottom Line. Investment bankers play a role in helping their clients raise capital to finance various activities and expand their businesses. They are financial advisory intermediaries who help companies and governments raise money for various uses.

Who is the highest paid investment banker? ›

1. Goldman Sachs is the highest paying bank overall - $398k in combined salaries and bonuses, on average. Goldman Sachs, which paid average salaries of $200k and average bonuses of $199k for 2023, was the highest paying bank we polled.

Does investment banking still pay well? ›

Total compensation is often in the $150K – $250K range (as of 2022). Investment Banking Analyst Hours: You'll be in the office for 70-85 hours per week, but you won't be working for that entire time. Investment banking hours are long, but there's also significant “downtime.”

How much does a VP of JP Morgan investment banking make? ›

Total salary range for J.P. Morgan Investment Banking Vice President. The estimated total pay range for a Investment Banking Vice President at J.P. Morgan is $193K–$349K per year, which includes base salary and additional pay. The average Investment Banking Vice President base salary at J.P. Morgan is $188K per year.

How much do Goldman Sachs partners make? ›

Get feedback on your pay or offer

Create an anonymous post and get feedback on your pay from other professionals. The estimated total pay range for a Partner at Goldman Sachs is $415K–$700K per year, which includes base salary and additional pay. The average Partner base salary at Goldman Sachs is $295K per year.

At what age do investment bankers retire? ›

Age plays a huge factor in the decision-making process. Wall Street is an up-and-out industry. Unless the goal is senior management, most people in finance are out of there by age 50. That's not at just the biggest investment banks, either.

Can you live off 500k investment? ›

Most people in the U.S. retire with less than $1 million. $500,000 is a healthy nest egg to supplement Social Security and other income sources. Assuming a 4% withdrawal rate, $500,000 could provide $20,000/year of inflation-adjusted income.

Why are investment bankers so rich? ›

At the heart of an investment banker's earning potential lies their involvement in high-value deals and transactions. These professionals facilitate mergers, acquisitions, and IPOs for corporations, reaping substantial fees in the process.

What does a VP in investment banking make? ›

Investment banking vice presidents (VPs) are the next step after associate and before director in the investment banking career path. At the VP level, the base compensation is typically between $250,000 and $300,000.

What is the biggest weakness of investment banking? ›

Some examples of common weaknesses in investment banking include public speaking, networking, and delegating tasks. Explain how you are working to improve your weaknesses. For example, you could talk about how you are taking a public speaking class or how you are practicing delegating tasks to your team members.

How many hours do investment bankers work? ›

How Many Hours do Investment Bankers Work? Investment bankers work notoriously long hours, with the typical work week filling in 60-80 hours per week, and the occasional high-intensity work week that can push a banker to 100+ hours.

How hard is it to become an investment banker? ›

Is it hard to become an investment banker? Becoming an investment banker requires several years of higher education in addition to licensure. It also requires strong mathematical and analytical capabilities, which may be challenging for some people.

Do investment banks make a lot of money? ›

Investment banks impose a high fee based on the amount of the offering (usually 2-8% of the total deal). They earn millions of dollars in commissions as a result. They are also paid for setting an appropriate price and assembling a solid network of enthusiastic investors about the company's long-term prospects.

How much do investment bankers make right out of college? ›

How much does an Entry Level Investment Banker make? As of Aug 13, 2024, the average annual pay for an Entry Level Investment Banker in the United States is $118,333 a year. Just in case you need a simple salary calculator, that works out to be approximately $56.89 an hour.

Why are investment bankers paid so much? ›

High-Stakes Deals and Transactions

At the heart of an investment banker's earning potential lies their involvement in high-value deals and transactions. These professionals facilitate mergers, acquisitions, and IPOs for corporations, reaping substantial fees in the process.

How much does a VP of IB make? ›

At the VP level, the base compensation is typically between $250,000 and $300,000. Regarding the variable bonus portion, on average, bonuses range from $200,000 to $400,000 at bulge bracket investment banks and elite boutiques.

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