Investment Bankers: How Much Money Do They Make?

Investment bankers advise companies on large, corporate-level transactions such as mergers and acquisitions, and debt and equity issuances. It is a high-pressure, high-stakes job that requires long work hours and can be repetitive. However, it is also a lucrative career, with even mid-level bankers earning top 1% incomes in most states and countries.

The career path in investment banking is relatively standard, with the hierarchy ascending from Analyst to Associate, Vice President (VP), Director or Senior Vice President (SVP), and Managing Director (MD). The salary increases with each promotion, with base salaries for Analysts ranging from $100,000 to $125,000 and total compensation often falling between $150,000 and $250,000. Associates earn between $300,000 and $550,000, VPs make between $500,000 and $900,000, Directors earn around $800,000 to $1,200,000, and MDs can make anywhere from $1 million to a few million dollars per year.

While investment bankers are well-compensated, the job comes with drawbacks, including a poor work-life balance, limited exit opportunities at the mid-level, and a high risk of getting stuck in the middle without advancing to the top roles. Nonetheless, for those who are competitive, detail-oriented, and willing to put in the long hours, investment banking can be a rewarding career choice.

Investment banker salaries

Investment banking is a type of banking that offers services related to raising capital to other companies and sometimes even governments. The salary of an investment banker depends on their role, location, and experience.

Investment Banker Roles

• Analysts are in charge of Excel and PowerPoint work and administrative tasks such as tracking buyers and sellers, managing the data room and deal documents, and responding to requests from clients and potential clients. The salary range for analysts is $100K to $125K USD at large banks, with bonuses that are roughly 0.5x to 1.0x that base salary. Total compensation is often in the $150K – $250K range.
• Associates are better-trained monkeys who have more life experience, earn more, and do work that’s a bit more interesting. The salary range for associates is $300K to $550K USD for total compensation, with base salaries progressing up from $175K to $225K at large banks.
• Vice Presidents (VPs) assume more of a “project management” role and do not get into the weeds in the same way as Analysts and Associates. VPs communicate with the Directors and Managing Directors, interpret their requests, and then work with Associates and Analysts to implement those requests and check their work. The salary range for VPs is $500K to $900K USD at large banks.
• Directors are also called “Senior Vice Presidents” or “Senior VPs”. This level is a mix between what VPs and Managing Directors do, and the role differs depending on the bank and group. The salary range for directors is $800K to $1.2 million per year, with the majority in the bonus.
• Managing Directors (MDs) have one goal: to make it rain. They spend their time winning clients, meeting companies, and developing relationships, and they’re on the road doing that much of the time. The salary range for MDs is $1 million to a few million per year.

Location

Bonuses are higher at elite boutiques compared to bulge brackets. The pay is also higher in New York than in other regions in the world. The pay gap between New York and London narrows as bankers progress in their careers.

Experience

The longer bankers last in the industry, the more their compensation grows. However, most do not stick around until they get promoted to rainmaking roles.

Bonuses

Analysts

Analysts typically receive bonuses that are 50% to 100% of their base salary. Some elite boutique banks have been known to pay bonuses closer to 100% or even higher. The total compensation for analysts, including bonuses, can range from $150k to $250k.

Associates

Associates can expect bonuses that are around 50% of their base salary, but this can vary widely depending on the bank and individual performance. Associates at elite boutiques may earn bonuses that are 100% or more of their base salary, while those at other banks may receive significantly lower bonuses. The total compensation for associates, including bonuses, can range from $300k to $550k.

Vice Presidents (VPs)

VPs typically receive bonuses that are less than 100% of their base salary, but again, this can vary significantly depending on the bank and individual performance. Elite boutiques may pay bonuses well over 100%. The total compensation for VPs, including bonuses, can range from $500k to $900k at large banks.

Directors/Senior Vice Presidents (SVPs)

Directors and SVPs can expect a total compensation, including bonuses, of $500k to $1 million or more. The bonus forms a significant portion of this, often more than half.

Managing Directors (MDs)

MDs typically earn bonuses that are highly variable and directly linked to their contribution to the bank's deal flow and revenue. The bonus can range from zero to over a million dollars. The total compensation for MDs, including bonuses, can range from $1 million to a few million dollars.

It's important to note that the above figures are based on salaries and bonuses in the United States, specifically in large banks in New York. Compensation may be significantly lower in other regions and at smaller banks.

Roles and salaries

The career path in investment banking is relatively standard and does not vary much from bank to bank. However, the titles may differ. The usual front-office hierarchy at an investment bank is as follows, in ascending order:

• Intern or Summer Intern
• Analyst
• Associate
• Vice President (VP)
• Senior Vice President (SVP) or Director
• Managing Director (MD)

Investment Banking Analyst

As an analyst, you are in charge of Excel and PowerPoint work and administrative tasks such as tracking buyers and sellers, managing the data room and deal documents, and responding to requests from clients and potential clients.

• Salary: Base salaries tend to be between $100K and $125K USD at large banks, with bonuses that are roughly 0.5x to 1.0x that base salary. Total compensation is often in the $150K–$250K range.
• Hours: You'll be in the office for 70–85 hours per week, but you won't be working for the entire duration.
• Promotion Time: It traditionally takes 2–3 years to be promoted to an associate.

Investment Banking Associate

As an associate, you are a better-trained analyst with more life experience, a higher salary, and more interesting work. The analyst on the team will do the grunt work, but the associate assigns the work, checks it, and occasionally jumps in to help with Excel and PowerPoint on more complex assignments.

• Salary: Associates tend to earn between $300K and $550K USD in total compensation, with base salaries progressing up from $175K to $225K at large banks.
• Hours: The average is more like 65–80 hours per week because associates don't get called in for as many last-minute emergencies.
• Promotion Time: It might take 3–4 years to reach the next level of Vice President.

Investment Banking Vice President (VP)

Vice Presidents assume more of a "project management" role and do not get into the granular details in the same way as analysts and associates. VPs communicate with directors and managing directors, interpret their requests, and then work with associates and analysts to implement those requests and check their work.

• Salary: Base salaries range from $250K to $300K USD, with total compensation in the $500K to $900K range at large banks.
• Hours: Average hours at this level are around 55–70 per week, as the work shifts to project management rather than last-minute presentations and requests.
• Promotion Time: It usually takes 3–4 years to be promoted to director, assuming you perform well.

Senior Vice President (SVP) or Director

There are other variations of this title in the industry, like Principal and Executive Director (ED). The role differs from bank to bank, but it is a mix of the Vice President and Managing Director positions. Directors equally devote their time to bringing in clients, developing relationships, and managing projects.

• Salary: The normal range for their total compensation is from $500K to $1M, with the bonus forming more than half of it.
• Hours: The hours drop to around 50–60 per week, but required work travel picks up.
• Promotion Time: It's probably an average of 2–3 years to get promoted to Managing Director, assuming you perform well enough to justify it.

Managing Director (MD)

Managing Directors have one goal: to make it rain. They spend their time winning clients, meeting companies, and developing relationships, and they're often on the road.

• Salary: An MD doing decently should earn between $1 and $3 million per year, and sometimes a low multiple of that.
• Hours: Similar to directors, the hours are in the 50–60 per week range, but with even more travel time.
• Promotion Time: There is no set path or time frame to reach levels beyond MD, such as Senior Managing Director, Group Head, CEO, or COO.

Career path

The career path of an investment banker typically begins with a strong academic background, often including a degree in a quantitative or finance-related field. Many investment bankers also pursue advanced degrees or certifications, such as an MBA or the Chartered Financial Analyst (CFA) designation, to enhance their knowledge and credentials.

The first step in the career path is usually an entry-level position as an analyst or associate in an investment bank. These positions involve long hours and intensive work, providing a solid foundation in financial analysis, modelling, and transaction support. Analysts and associates are often expected to master financial modelling, perform industry research, and assist in pitch books and client presentations.

After gaining a few years of experience as an analyst or associate, investment bankers may advance to more senior roles, such as vice president (VP) or director. In addition to possessing a comprehensive understanding of the industry and strong leadership skills, VPs and directors take on greater responsibilities, including managing client relationships and leading transactions. They are also often involved in business development and mentoring junior staff members.

The pinnacle of the investment banking career ladder is often considered to be the position of managing director. Managing directors are responsible for driving the overall strategy and management of the firm, originating and executing complex deals, and cultivating deep industry connections. They play a crucial role in generating revenue and securing lucrative mandates for the investment bank.

Throughout their careers, investment bankers can choose to specialise in specific areas of interest or expertise within the industry. Common specialisations include mergers and acquisitions (M&A), equity research, debt capital markets, or investment banking advisory. Each specialisation offers unique challenges and opportunities for growth and development.

In summary, the career path of an investment banker is typically a rewarding and challenging journey that demands a strong academic foundation, a dedication to continuous learning, and a passion for the financial industry. Each step in the career progression builds upon the skills and knowledge acquired, leading to greater responsibilities and opportunities for personal and professional growth.

Work/life balance

Investment banking is notorious for its gruelling work culture, with junior bankers often working over 100 hours per week. This demanding schedule leaves little room for a work-life balance, as bankers find themselves at the mercy of market fluctuations, client demands, and the competitive nature of the industry.

The high-pressure environment, complex financial tasks, and relentless networking can lead to long workdays stretching into nights and weekends. The work-life balance for investment bankers is a complex issue influenced by various factors, including the culture of the bank, market conditions, and the individual's ability to manage professional stress alongside personal commitments.

The concept of work-life balance has evolved beyond a simple division of hours between work and personal life. In 2024, it signifies a seamless integration of career ambitions and personal well-being, where neither aspect consistently overshadows the other. For investment bankers, this means being able to engage in high-value transactions while also making time for relaxation, hobbies, and family.

Maintaining a healthy work-life balance is critical for investment bankers' professional sustainability and personal well-being. It helps prevent burnout, ensures optimal performance, and contributes to overall life satisfaction. Here are some reasons why work-life balance is particularly important in this industry:

• Preserving Mental and Physical Health: The high-stress environment of investment banking can take a toll on mental and physical health. Achieving a work-life balance allows for necessary downtime, preventing stress-related illnesses and maintaining overall health.
• Enhancing Analytical and Strategic Thinking: A balanced lifestyle provides space for bankers to step back and see the bigger picture, leading to improved analytical skills and strategic insights essential for successful deal-making and client advisement.
• Maintaining Professional Performance and Reputation: In the competitive field of investment banking, sustained high performance is key to building a strong reputation. Work-life balance helps prevent burnout, ensuring bankers can consistently deliver high-quality work and advance in their careers.
• Strengthening Client and Team Relationships: A balanced approach to work and life demonstrates to clients and colleagues that bankers value their time and the time of others, fostering more productive and trusting professional relationships.
• Encouraging Longevity in a Demanding Career: Prioritising work-life balance can increase job satisfaction and reduce the risk of burnout, encouraging bankers to have a long and fulfilling career in the industry.
• Supporting Personal Fulfillment and Happiness: While investment banking can be rewarding, it should not come at the expense of personal happiness. Making time for family, hobbies, and self-care contributes to overall happiness, which can positively impact professional satisfaction and success.

Common challenges to work-life balance in investment banking include unpredictable work hours, a client-centric focus, deal-driven peaks, performance pressure, constant connectivity, and travel demands. Achieving a healthy work-life balance in this industry requires targeted strategies such as setting clear boundaries for work hours, optimising time management, embracing technology for efficiency, delegating tasks, and regularly reassessing workload and goals.

While it is challenging to achieve a work-life balance in investment banking, it is not impossible. By implementing deliberate strategies and prioritising well-being, bankers can navigate their demanding careers while maintaining a fulfilling personal life.

Frequently asked questions