First-Year Investment Bankers: How Much Do They Earn?

Investment banking is a prestigious career path renowned for its lucrative salaries and long hours. The general salary compensation range for a first-year investment banker is $85-95k, with signing bonuses of $5-15k, stub bonuses of $20-30k, and end-of-year bonuses of 70-80% of the base salary. However, some sources state that first-year investment bankers can make upwards of $150,000.

Salary range: $85k-$150k+

First-Year Investment Banker Salary

The salary range for first-year investment bankers can vary depending on several factors, including the size and location of the bank. However, a common salary range for entry-level investment bankers is between $85,000 and $150,000 or more. This base salary is often supplemented by various bonuses and benefits that can significantly increase the total compensation package.

Base Salary

The base salary for first-year investment bankers can range from $85,000 to $95,000 at mid- to large-sized banks. Boutique banks may pay higher or lower salaries depending on their performance and structure. The location of the bank also plays a role, with banks in major financial hubs like New York offering higher salaries than those in other regions.

Bonuses

In addition to their base salary, first-year investment bankers can expect to receive several types of bonuses throughout the year. These bonuses can include signing bonuses, stub bonuses, and end-of-year bonuses. Signing bonuses for analysts can range from $5,000 to $15,000, while associates may receive significantly higher amounts. Stub bonuses are given to analysts hired during the summer and are typically in the range of $20,000 to $30,000. End-of-year bonuses are usually a percentage of the base salary and can be as high as 70-100% for analysts.

Benefits and Perks

First-year investment bankers are also eligible for various employee benefits and perks, such as health insurance, 401(k) retirement plans, and vacation days. These benefits can add significant value to the overall compensation package and should not be overlooked when considering the total compensation for entry-level investment bankers.

Career Progression

While the salary range for first-year investment bankers is already impressive, it's important to note that salaries increase significantly as individuals climb the corporate ladder in investment banking. Associates, who are typically more experienced than analysts, can earn base salaries ranging from $140,000 to $180,000. As investment bankers gain more experience and move into vice president and managing director roles, their base salaries can reach $200,000 to $300,000, with total compensation potentially exceeding $1 million.

Bonuses: signing, stub, and end-of-year

Investment banking is known for its high earnings and bonuses are a significant part of an investment banker's overall compensation package. Bonuses are usually paid out as a percentage of an employee's base salary and can make up a large portion of their total pay.

Signing Bonuses

Analysts typically receive signing bonuses of $10,000 to $15,000 when they accept a full-time offer, while associates can expect $50,000 to $60,000. Signing bonuses are usually a low percentage of the base salary and are meant to incentivize new hires to join the firm.

Stub Bonuses

Stub bonuses are given to new hires who have not completed a full year at the company. Since investment bankers are often hired in the middle of the calendar year, they receive a fraction of the usual year-end bonus, known as a stub bonus, for their first six months on the job. This is typically 20-30% of their base salary, though some sources state that it can be as low as $5,000 or as high as $35,000.

End-of-Year Bonuses

End-of-year bonuses are performance-based and are awarded at the end of the fiscal year to reward bankers for their contributions and retain top talent. The bonus can range from 50% to 100%+ of the base salary, depending on individual, group, and bank performance. Analysts and associates, as well as high-ranking bankers at smaller firms, usually receive this bonus in cash, while bulge bracket and publicly traded banks may pay this bonus as deferred or stock-based compensation.

Bonuses are tied to specific performance metrics, including individual contributions to revenue generation and deal success. The higher the deal flow and revenue, the larger the bonuses banks can offer to attract and retain talent.

Location: higher salaries in New York

New York City is known for its high salaries for investment bankers, with the average base salary for an entry-level position in Manhattan being $130,595 per year. This is largely driven by the presence of "bulge bracket" banks like Goldman Sachs, JPMorgan, Citigroup, Morgan Stanley, and Bank of America, which deal with large clients and multi-million-dollar deals.

The average salary for an investment banker in New York, NY, is $179,507 per year, according to recent data from 2024. However, this figure can vary widely depending on the specific role and experience level. For example, an entry-level investment banker in New York can expect to earn an average of $86,476 per year, while those with 1-4 years of experience can earn an average of $120,172.

The highest-paid investment bankers in New York are managing directors, who can earn up to 50% of the revenues they generate. At elite boutique banks, third-year associates, who are typically in their mid-20s, can earn upwards of $500,000 per year in total compensation.

In addition to base salaries, investment bankers in New York can also expect to receive bonuses. For example, a first-year investment banking associate in New York City can expect a base salary of $150,000, with a year-end bonus ranging from $90,000 to $130,000, bringing their total compensation to $240,000-$270,000.

Qualifications: MBAs can start at $150k

An MBA is not a requirement for entering the investment banking field. However, it may be easier to secure a job with this advanced degree, especially at one of the top multinational banks. An MBA from a top business school is a virtual necessity, according to experts. The degree gives students the skills to become investment bankers, and top business schools also provide networking and recruitment opportunities.

Investment banking salaries at top firms can exceed six figures in the first year after graduating from an MBA. After joining as a first-year investment banking associate, the starting salary at the bulge bracket banks and elite boutique firms in New York is $150,000. These firms typically keep their salary offerings consistent with one another to remain competitive.

In addition to the base salary, there are bonuses. New investment banking associates will also often be offered a relocation or signing bonus, which can reach as high as $60,000. The first bonus, known as the 'Stub-Year' bonus, will be based on the five months spent with the firm from the summer until the end of the year. These bonuses tend to be valued at between $30,000 and $40,000 at New York-based firms.

In the first full year, an investment banking associate can expect to earn between $255,000 and $275,000 in total, including the base salary, signing bonus, and stub bonus. In subsequent years, bonuses can increase significantly. For example, first-year investment banking associate bonuses in New York can range from $90,000 to $130,000.

Progression: analysts can become associates

Analysts who join investment banks straight from business master's degrees typically do so on a two- or three-year programme, after which they can decide to move into associate roles. Those who choose to stay in the industry can expect a significant jump in their compensation packages.

Associates are more experienced and have a higher salary than analysts. They review the grunt work assigned to analysts and lend a hand with Excel and PowerPoint on complicated assignments. They also have more client interactions and are part of more meetings.

The average base salary for associates starts at about $150,000 and increases to about $200,000 over the years. Bonuses can be about 50% of the base, but some elite boutique banks award bonuses of over 100%.

Associates with some experience at publicly traded banks receive part of their total bonus in stock that vests over the years. This portion becomes more significant as they move up the ranks and serves a dual purpose: compliance with regulations and incentivising employees to stay at the firm.

Associates also receive higher signing bonuses than analysts, ranging from $50,000 to $60,000.

In their first full year following the stub year, associates will earn the same salary ($150,000 at bulge bracket banks in New York), but their end-of-year bonuses will increase significantly. Bonuses in the first year can range from $90,000 to $130,000.

For second-year associates, salaries tend to increase to $175,000. Bonuses fluctuate significantly in the second year, with top performers taking home bonuses that exceed their salaries. In the bottom performance bracket, bonuses will be around $100,000, while mid-level performers will see a figure in the range of $140,000 to $180,000. The highest earners will net up to $215,000 in bonuses alone.

Three years after joining as associates, MBA grads can reach a salary of $200,000. Third-year associates will earn bonuses of around $120,000 at the lower end of the scale, with the best performers taking home more than double that at up to $250,000.

Frequently asked questions