Investment Banker Salaries

When it comes to lucrative careers, none really come to mind as quickly as investing banking. Investment bankers are tasked with helping businesses get funding by getting them in touch with investors and providing financial advice. Rumor says that young hotshots can earn six-figure salaries straight out of college, and that makes this career choice very attractive to those looking to strike it rich in their youth. If you’re looking to get into investment banking, you’ll want the real numbers before starting your academic journey. Here’s a quick glance at how investment bankers get paid and how much they generally earn.

Pay Structure and Influencing Factors

The most common compensation format for investment bankers is regular salary plus an annual bonus. Contrary to popular belief, individual performance isn’t the biggest factor that affects how much an investment banker gets paid. While you obviously have to be competent at the job, everybody at the same financial institution who performs will generally make the same basic salary at the same job level. Bonuses are what really distinguishes one investment banker earnings from the next, and they’re determined by several major variables.

HEALTH OF MARKET

The strength of the economy will determine whether or not an investment banker earns a large bonus or a small bonus. When the economy is strong, your bank will make big profits and pass on the earnings to you. When the economy struggles, your bank won’t rake in as much, so that money is less likely to make it to you in any significant quantities.

PERFORMANCE OF YOUR DIVISION

Every investment bank is split into divisions called IBDs. When your IBD as a whole contributes a lot to the bank, every member in the division will get a nice bonus.

PERFORMANCE OF YOUR GROUP

Even within the division are separate groups. If your particular group shines, you and every other group member will benefit financially.

INDIVIDUAL PERFORMANCE

Finally, your individual performance will influence your bonus. Your exact position within the bank, time working at the bank, the number of deals you close, your timeliness, your professionalism, and other factors all affect how hefty your bonus will be.

Average Investment Banking Salaries

There are several different positions that may be categorized under the investment banker label. Here are their salary estimates as of 2013.

ANALYSTS

First-year analysts earn a base salary of about $70,000 and a yearly bonus that ranges between $30,000 and $70,000. Second-year analysts earn a base salary of about $80,000 and a bonus of $30,000 to $80,000. Third-year analysts make nearly $90,000 annually and get a bonus of $35,000 to $100,000.

ASSOCIATES

First-year investment banking associates earn a base salary of $110,000 to $125,000 plus an annual bonus of $55,000 to $145,000. Second-year associates make $120,000 to $145,000 a year and get a bonus of $70,000 to $160,000. Third-year associates earn $130,000 to $160,000 with a $90,000 to $190,000 bonus.

VICE PRESIDENT/DIRECTOR

After many years working in one or more of the positions above, it’s possible to move up to a VP or director position. These experienced investment bankers earn a starting base salary of $175,000 to $200,000, but they can make anywhere between $250,000 and $750,000 annually with bonuses after a few years.

SENIOR VICE PRESIDENT/EXECUTIVE DIRECTOR

If you ever make it to this level, you’ll earn an astounding $300,000 to $1.5 million annually with bonuses.

MANAGING DIRECTOR

At the top of the ladder is the managing director who earns $700,000 to $3 million per year.