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? ›

Entry-level investment banking analysts straight out of undergraduate programs earn base salaries of approximately $85,000. Bonuses for analysts range from $40,000 to $100,000+ depending on firm and performance. Associates may earn base salaries up to $150,000 with bonuses from $100,000 to $250,000+

How do investment bankers get paid? ›

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.

Can you make 7 figures as an investment banker? ›

Investment Banking Managing Director Salary + Bonus: Base salaries are in the mid-six-figure range, with total compensation in the high six figures to low seven figures. An MD doing decently should earn between $1 and $3 million per year, and sometimes a low multiple of that (as of 2022).

Do investment bankers make 500K a year? ›

Ways to make a lot of money in this world

Sure, anybody can make a good living being a doctor or a lawyer or an investment banker where you can make ~$200-500K per year a few years after you finish with your studies, but you hit a ceiling very quickly unless you start your own practice (aka start your own business).

Do investment bankers make a lot of money? ›

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.

Can I invest $1000 and make money? ›

If you're wondering how to invest $1,000, putting your money in a retirement account offers one of the highest potential returns. You can opt for a workplace retirement account or open an IRA on your own with an online broker.

Can you invest $10,000 and make money? ›

Invest in individual stocks

Even with $10,000, it's possible to own a well-balanced portfolio of individual stocks. Many brokerage firms, such as Fidelity, Robinhood, and Square's (SQ 5.18%) Cash App, offer the ability to purchase fractional shares.

Where do investment banks get their money? ›

Investment banks earn commissions and fees on underwriting new issues of securities via bond offerings or stock IPOs. Investment banks often serve as asset managers for their clients as well.

How much is 12 figures? ›

How Much Is 12-Figures. 12 figures means that you have a value or worth of between $100,000,000,000 ($100 billion) and $999,999,999,999 ($999.99 billion).

How many figures is a million? ›

How many numbers does 1 mil have? 1 million has 7 numerals in it, 1 followed by 6 zeroes. So it is written as 1,000,000.

Can a banker be a millionaire? ›

It is fairly common for front-office investment bankers to be earning over US$1m after 8 years in the industry. But it caps out at around US$20m, which is how much a top-performing investment banking CEO gets.

What is the world's highest paying job? ›

The highest paying job in the world varies depending on several factors such as industry, location, and job requirements. However, based on recent data, some of the highest paying jobs in the world include surgeons, anesthesiologists, orthodontists, psychiatrists, and chief executive officers (CEOs).

What GPA do investment bankers need? ›

In recent years, the GPA cutoffs for investment banking have been trending higher. Currently, a GPA around 3.7 is often preferred for interviews at large banks, while elite boutiques and bulge bracket firms like Goldman Sachs and Morgan Stanley may look for a GPA of 3.8 or higher.

How often do investment bankers get paid? ›

Components of an investment banker's salary

It is earned biweekly, is stable, and increases each year.

Do investment bankers get paid commission? ›

In some cases, the investment banker may merely act as a go-between and not take on the underwriting risk. In this case, the investment banker might arrange to sell some of the securities and get paid on a commission basis for the number sold.

What percentage do investment bankers take? ›

Investment Banker Fees

On average, the commission for a business with a $5 million to $10 million value will be approximately five percent of the transaction value. For businesses with values greater than $10 million, the commission will generally decline from five percent as the transaction value increases.

How many hours a week do investment bankers make? ›

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.

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