Investment bankers give big businesses and governments a lot of different kinds of financial advice.
Investment bankers may be asked for advice on the following:
- Investing in the stock market
- The resulting sale of stock
- Mergers and acquisitions
- The sale of bonds to get money
- Underwriting deals
- Wealth management and a lot of other things related to a client’s finances are also covered.
Investment banking salary in United Kingdom
London is the most important place for investment banking after New York. Base salaries for analysts are £50,000 for the first year, £55,000 for the second year, and £60,000 for the third year. The average bonuses are between £30,000 and £35k, £35,000 and £40k, and £40,000 and £50k.
At a rate of 1.27 dollars to 1 GBP (as of December 30, 2018), the total pay for UK analysts is between £80,000 and £110,000, or $108,000 to $140,000 in US dollars. This is less than their US counterparts, who earn between $140,000 and $200,000 per year. This could be because of Brexit, a limit on the ratio of salary to bonus, or a difference in how surveys are done.
In London, base salaries for associates are between £80,000 and £120,000, and those for vice presidents are between £140,000 and £160,000. The total pay for associates is between £120,000 and £220,000, and the pay for vice presidents is between £250,000 and £350,000. Both of these numbers are much lower than US salaries.
According to another estimate, investment bankers in London can expect their salary to go up from £72,000 (salary plus bonus) to £93,000 when they move from analyst 1 to associate 2 between the ages of 22 and 25, to £294,000 when they move from associate 2 to VP between the ages of 25 and 30, to £380,000 when they move from VP to director between the ages of 30 and 35, and to £1.1 million or more if they move from director to managing director between the ages of 35 and
First, a warning. The estimates above are for front-office investment banking salaries, not for salaries in other departments like risk. Also, you might not make it to your 30s if you work in investment banking.
You might not get promoted to MD, you might not make a million dollars, and you might have some good and bad years. But, just so you don’t get the wrong idea, investment banks do love their people: In 2016, Goldman Sachs paid its top 700 bankers in the UK £1 million. Read Banking on Investments in Europe.
What Types of Salary and Benefits Do Investment Bankers Get in USA?
The high salary that comes with being an investment banker is one of the main reasons why people want to work in this field. Investment bankers can expect to make more than just their regular base salary, though. You may also get bonuses and other benefits.
Your base salary is what you will get every month, no matter how well you or your team does. The amount you get paid will depend on a number of things, such as:
- Experience, education, and time in the job
- Details about your job
- Location of the employer in the world
For example, a graduate who just got hired will make a lot less than an investment banker with ten years of experience at the same company. In the same way, an investment banker in New York will usually make more money than one in a smaller US city.
On top of your base salary, you might get bonus payments at different points in your career and throughout the year. You might get a signing bonus when you start work as an investment banker. Most banks now give new investment bankers a signing bonus. For analysts at smaller investment banks, this bonus starts at around $5,000.
As an investment banker, you can expect to get a bonus at the end of the year or in the summer, depending on how your employer handles bonuses.
Your year-end bonus is a certain percentage of your base salary, which is based on:
- How well you do
- How well the team of investment bankers did.
- Changes in this area
- How do other banks pay bonuses?
- The bank is also affected by other economic factors.
Most year-end bonuses are based on a percentage of the base salary that ranges from 70% to 100%. Bonuses of more than 100% are sometimes given to top performers and people in more senior roles in investment banking.
The problem with giving the year-end bonus to all investment bankers at the same time is that analysts and associates who started working during the summer may not have been there for a full year yet. This problem can be fixed by giving those employees a stub bonus instead. When figuring out the year-end bonus, a stub bonus takes into account the number of months worked.
Consider a company where the end-of-year bonus is 70% of the base salary. In place of a year-end bonus, a new employee who has only worked there for six months will get a stub bonus of 35% of their base salary, which is half of 70%.
The more senior and experienced an investment banker is, the more likely it is that their bonus will include both cash and stock or deferred compensation.
This means that part of your bonus is held back and given to you over the next three to five years. For example, you get a $150,000 bonus. This is how your boss handles bonuses:
- Bonuses up to $75,000 are paid in full, with nothing held back.
- Bonuses of more than $75,000 and up to $150,000 are held back by 10%.
- Bonuses worth more than $150,000 and up to $300,000 have 30% taken away.
- All bonuses over $300,000 are put on hold.
So, you get $135,000 of your bonus right away, and $15,000, or 10%, is put off until later. The more likely it is that some of your bonus will be put off, the higher it is.
Salary.com says that the average salary for an investment banker in the US is $247,904 as of August 2020. This number is an average of all levels of experience, all sizes of banks, and the whole country.
What Salary Should You Expect as an Investment Banker?
This average salary can be misleading because the salaries of investment bankers can vary a lot depending on:
- Where you are in your career development
- The size of the bank or organization you work for.
- The city or country you work in.
Because of this, it is hard to say what a US investment banker’s salary is for sure. But using a job at a large US bank as a starting point and recent salary numbers, the following pay ranges may be helpful:
The analyst job is the first step on the path to becoming an investment banker.
The analyst’s job is to:
- Research and getting information
- figuring out how good an investment could be
- The giving of advice to clients based on the above
- Getting ready for client transactions and helping with them
- Administrative tasks that are related
A US analyst working for a big bank might get a base salary of $85,000 before taxes in their first year, then $90,000 in their second year, and $95,000 in their third year.
Adding a signing bonus of maybe $10,000 (or the stub bonus equivalent) in the first year and a yearly bonus of between 70% and 100%, the total pay could be:
- Between $154,500 and $180,000 in the first year ($85,000 base salary, $10,000 signing bonus, and $59,500 70% bonus). $85,000, $10,000, and $85,000 100% bonus.
- In the second year, between $153,000 ($90,000 base salary plus $63,000 bonus of 70%) and $180,000 ($90,000 base salary plus $90,000 bonus of 100%).
- In the third year, he or she could make between $161,500 ($95,000 base salary plus $66,500 bonus of 70%) and $190,000 ($95,000 base salary plus $95,000 bonus of 100%).
Associate: People who have been investment-banking analysts for three years move on to the role of associate. If you have an MBA, you can also work as an associate in investment banking (Master of Business Administration).
The job of an associate is similar to that of an analyst, but they also have to be in charge of a group of analysts. A US associate at a big bank is likely to start with a base salary of around $140,000.
Most year-end bonuses are more than 100% of the base salary, and a new employee will usually get a signing bonus. So, a first-year associate could get a total of $324,000. This includes a base salary of $140,000, a signing bonus of $30,000, and a 110% bonus of $154,000.
Most associates stay in this job for up to four years, with their base salary (and, by extension, their total salary) going up each year.
Vice President and Director Roles
When a person has worked as an investment banking associate for three to four years, the next step is usually to become a director or vice president. At this level of seniority, you’ll usually be in charge of a group of analysts and associates and be expected to help the bank get new clients.
Base pay for a vice president or director at a large US bank is likely to be between $200,000 and $300,000. Most bonuses will be worth 120% to 150% of the base salary.
So, the total annual pay for this job could be as much as $750,000 ($300,000 for the base salary and $450,000 for a 150% bonus, for a total of $750,000).
At an investment bank, it usually takes more than ten years and more like twelve years to become a managing director. Base salaries for a managing director at a large investment bank in the US can range from $400,000 to $600,000. When the annual bonus is added to this, the total salary can quickly reach seven figures.
How Many Hours Will You Work?
Investment banking has a reputation for being a tough place to work because it expects its employees to work long hours, often on nights and weekends, for up to 80 hours a week to earn their high salaries and show their dedication to the business.
Recently, investment banks have tried to fix their bad reputation by giving their employees protected hours, cutting the number of hours that junior employees are expected to work, and even setting up rest areas on-site for employees who have to work late or overnight. The culture of the industry, on the other hand, means that long weeks for high pay are likely to continue for the following reasons:
The better each employee does, the better their team and the business as a whole do. This success and the money it brings in are a big reason why employee bonuses are so big. In the culture of investment banking, success is expected to come from working long hours, and competition between employees is encouraged as a way to get there.
Banks have made it more likely for clients to think that the investment bankers who handle their accounts will be available at all times and at times that are convenient for the client. It’s very important to the bank that these clients are happy, so investment bankers have to work long hours to meet their needs.
The investment banking market is open from early morning until late at night, and not just Monday through Friday. Each employee has a different amount of work to do. If one employee is in charge of a certain part of a client deal, that person will be expected to do that task alone. Their work cannot be done by someone else on the job.
If you want to be an investment banker, you should be ready to work long hours.
Which companies have the highest salaries?
These are the top five investment banks in the US that pay the most:
- Centerview Partners
- Guggenheim Securities
- Harris Williams Everscore
- William Blair
For an entry analyst position, all of the above investment banks pay between $85,000 and $90,000 as a starting salary.
This list is based only on the base pay. If you asked for a list of the top five investment banks in the US based on work hours or opportunities to move up in your career, you might get a list with Goldman Sachs or JPMorgan Chase on it.
How Much Might You Earn if Working Abroad?
Investment banking is a global business, so there are many ways to get into the field outside of the US. In overseas countries, these are the average starting base salaries for a new analyst:
- London, United Kingdom, £50,000, which is about $63,000.
- Germany: 66,807 euros, which is about $77,700.
- Dubai, United Arab Emirates, 49,000 AED, which is about $13,300.
- Switzerland: 71,587 SFr, which is about $77,100 USD.
- Canada, CA$86,425 (equivalent to approximately $64,500)
Most of the time, these average salaries are lower than what you would make in the US. However, you should always take into account the cost of living in these countries and any bonuses you might get.
What do investment bankers in the UK get paid?
To learn more about how much investment bankers in the UK make, it’s important to keep in mind that base salaries and bonuses depend on things like performance, location, and employer. In general, bigger cities, towns, and companies will pay more and give more bonuses than smaller ones.
At the beginning of their careers, investment bankers usually start with base salaries between £30,000 and £40,000. After three to four years, these salaries usually go up to around £50,000. But as senior associates, investment bankers with a lot of experience may have base salaries of around £150,000 or even more.
London, as one of the world’s most important financial hubs, pays investment bankers more than the rest of the UK. Analysts who work for a big bank in London for their first year can expect a base salary of about £50,000 and bonuses that range from about £10,000 to £40,000. This means that in their first year, they could make anywhere from £60,000 to £90,000.
In London, an analyst in their third year of work will make around £110,000 (base salary plus bonus), while an associate in their first year will make on average around £165,000. Depending on their employer, associates in their second year can make more than £200,000, and associates in their third year can make up to £250,000.
Investment banking and the six-figure salary it can offer can seem like a good choice for recent graduates and people looking for jobs in the financial industry. But there’s no doubt that the culture of this job requires a lot of dedication, which for investment banks means long work weeks of up to 80 hours.
Investment banks are not insurance companies and Investment banks have started to notice that their employees don’t have a good balance between work and life, so they are making some changes. However, there is still a long way to go before human resources in the industry catch up to the progress made in other industries.
Investment banking is a job that pays well, but it also requires a lot of hard work and dedication.