Investment bankers are crucial for any company to make it to the stock market. Whether it is small businesses or even companies that have become household names, they all employ an investment banker to take care of their finances.
This has led to investment banking becoming one of the most sought-after jobs in finance. But how much do investment bankers actually make? The salary of an investment banker is not fixed as there are multiple types of compensation.
From the base salary to stub bonus and year-end bonus, the average salary of an investment banker is around $118,200 per year, according to ZipRecruiter.com. Moreover, the US Bureau of Labour Statistics estimates that securities, commodities, and financial services sales careers(including investment banking) will grow by 7% from 2022 to 2032.
In this article, we will take an in-depth look at investment banker salaries, investment banking bonuses, and the various types of compensation they receive. Let’s dive in.
- What is an Investment Banker?
- Investment Banker Salaries and Bonuses
- Main Components of Investment Banker Salary and Bonuses
- Trends That Influence Investment Banker Salary and Bonuses
- 10 Highest Paying Cities for Investment Banker Jobs
- Investment Banker Salary and Bonus for Various Levels
- Future of Investment Banking Salaries and Bonuses
- Frequently Asked Questions(FAQs)
What is an Investment Banker?
Investment bankers are financial experts who help companies gain capital resources. This is done by performing various activities like initial public offerings(IPO) and connecting businesses to prospective investors.
Besides that, they also provide a wide range of financial advisory services like mergers & acquisitions, hedge fund, mutual fund, and pension fund advisory. The work and timings of an investment banker analyst depend on their client’s requirements. However, most investment bankers lead a hectic life and work long hours.
Investment Banker Salaries and Bonuses
If you are interested in hard numbers, take a look at the table to get an idea about the basic salary of an investment banker.
| Position | Age Range | Basic Salary | Total Compensation | Promotion Timeline |
| Analyst | 22-27 | $100k-$125k | $140k-$190k | 2-3 years |
| Associate | 25-35 | $175k-$225k | $225k-$425k | 3-4 years |
| Vice President(VP) | 28-40 | $250k-$300k | $450k-$650k | 3-4 years |
| Director/Senior Vice President(SVP) | 32-45 | $300k-$350k | $550k-$750k | 2-3 years |
| Managing Director(MD) | 35-50 | $400k-$600k | $600k-$1300k | N/A |
Source: Dealogic
Main Components of Investment Banker Salary and Bonuses
For most investment bankers, compensation comes in five main elements.
Base Salary: Your base salary is the paycheck you receive every month. These numbers stay the same for years and increase when you get promoted.
Stub Bonus: Associate graduates from MBA programs start working in the middle of the year. As a result, they receive stub bonuses for the first 6 months of the job. Stub bonuses are typically 20% of their base salaries.
Year-end Bonus: After completing a full year at work, an investment banking analyst receives a 100% cash bonus. This shifts to stocks or deferred compensation as you get promoted and move up the hierarchical ladder.
Signing Bonus: This is specifically for analysts and associates who graduate and accept full-time offers from banking firms. Similar to the stub bonus, this is also a low percentage of their base salary.
Other Benefits: Health insurance, vacation leaves, 401(k) retirement plans. In Europe, healthcare is government funded so investment bankers received added vacation days.
Trends That Influence Investment Banker Salary and Bonuses
There are specific trends that majorly impact the salary and bonuses of investment bankers. From different firms to longer working hours, the base salary and bonuses can be different.
Company Variance
While base salaries across different firms were largely similar, there were major differences in the bonus amount. For example, most of the elite boutique banks like PJT Partners offered well above the standard average to their associates and VPs.
On the other hand, firms like Bank of America and William Blair gave below-average bonuses to their analysts and associates. Most bulge bracket and middle market banks have fairly decent compensation.
Individual Performance
Just 5 years ago, the percentage difference between the top, middle, and bottom pay grades was not substantial. But this has changed in recent years.
Specific banks and financial institutions pay more attention to individual contributions, performance, and skills, especially for associates and VPs.
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Working Hours
Although elite boutique banks pay significantly better than most bulge-bracket banks, they also have longer working hours. For instance, some associates and analysts work an average of 50-55 hours per week.
The same level at an elite boutique bank was seen working an average of 70-90 hours per week. This explains why elite boutique banks offer 2-4 times higher bonuses to their associates.
10 Highest Paying Cities for Investment Banker Jobs
We have identified the 10 best cities with the highest investment banking salary and bonuses in the USA. These cities have average salaries higher than the national average, providing better opportunities for economic advancement and a career in investment banking.
| City | Annual Salary | Monthly Salary | Weekly Pay | Hourly Wage |
| Berkeley, CA | $151,717 | $12,643 | $2917 | $72.94 |
| Daly City, CA | $143,583 | $11,965 | $2761 | $69.03 |
| San Mateo, CA | $139,251 | $11,604 | $2677 | $66.95 |
| Irvine, CA | $138,914 | $11,576 | $2671 | $66.79 |
| Orange, CA | $138,243 | $11,520 | $2658 | $66.46 |
| Richmond, CA | $138,233 | $11,519 | $2658 | $66.46 |
| Tacoma, WA | $137,901 | $11,491 | $2651 | $66.30 |
| Oxnard, CA | $136,787 | $11,398 | $2630 | $65.76 |
| Merced, CA | $136,393 | $11,366 | $2622 | $65.57 |
| Bellevue, WA | $136,133 | $11,344 | $2617 | $65.45 |
Investment Banker Salary and Bonus for Various Levels
Investment Banker Salary and Bonus: Analysts
As mentioned above, $190k is the top range analysts earn in a year. However, plenty of analysts at large banks like Moelis, Guggenheim, Evercore, etc. earned more than that.
Anyone with a base salary of $125k would have easily crossed $200k in total compensation. Year 1 analysts earned a total compensation of around $130k-$150k. However, at an analyst level, the overall hiring was awful and there were plenty of layoffs as well.
Investment Banker Salary and Bonus: Associates
This year, associates at some elite boutique investment banks were generously compensated with some earning bonuses 100%+ of their base salary. But this was only the case at some financial institutions.
Banks like William Blair only offered a bonus of 25% of their base salaries. Most bulge bracket banks offered bonuses in the range of 50%-70%.
Investment Banker Salary and Bonus: Vice Presidents
The pay spread for Vice Presidents was massive. The minimum total compensation for VPs was around $325k to all the way to $900k.
For most bulge bracket banks, the total compensation was around $450k to $650k for the 25th to 75th percentiles and above. However, elite boutique banks paid way more with a minimum compensation of around $700k to $800k. This can also be due to the longer working hours in elite boutique banks.
Investment Banker Salary and Bonus: Managing Directors
The average salary and bonus of managing directors largely depend on deal volume. When deal activity drops, MDs are the ones that suffer the most. This year, most bonuses of MDs were down by 15%-20%.
The average total compensation of MDs was around $500k to $1 million+. Some VPs and Directors may have actually outearned MDs this year as their bonuses are not dependent on closed deals.
Future of Investment Banking Salaries and Bonuses
We are still recovering from the recession of 2022, and many professions have suffered. In the future, we expect compensation to continue to fluctuate from year to year.
We do expect an overall improvement in 2024 as capital markets and the mergers & acquisition market are slowly gaining pace in most regions. Companies are also cautious and deal slumps typically do not last more than a few years.
However, deal activity and bonuses may take a long time to recover as inflation rates are higher and are unlikely to return to the 2019 level. Moreover, the legal environment has also changed. This means antitrust and regulations could limit bigger deals.
That being said, if deal activity gains pace and there are no unexpected events or major disasters, investment banking bonuses could see an increase of 10%-15% in 2024.
>>> Read Also:- Top Boutique Investment Banks in 2024 <<<
Frequently Asked Questions(FAQs)
Ans. The basic requirement for becoming an investment banker is a bachelor’s degree and FINRA licensure. A bachelor’s degree program usually takes at least 4 years and completing licensure exams and certifications is ongoing thereafter.
Ans. Actual salaries and bonuses of investment bankers vary by experience level and location. Different firms offer different compensation. The average annual salary of an investment banker is around $118,200.
