by Brian DeChesare Comments (8)

Investment Banker Salary and Bonus Report: 2021 Update

Investment Banker Salary

Let’s skip the clever introduction and look at the full, updated numbers for investment banker salary and bonus data as of 2021:

Position TitleTypical Age RangeBase Salary (USD)Total Compensation (USD)Timeframe for Promotion
Analyst22-27$85-$95K$130-$200K2-3 years
Associate25-35$150-$200K$250-$450K3-4 years
Vice President (VP)28-40$250-$300K$400-$700K3-4 years
Director / Senior Vice President (SVP)32-45$300-$350K$600-$1,000K2-3 years
Managing Director (MD)35-50$400-$600K$1,000K+N/A

UPDATE: As of mid-2021, banks have increased Year 1 Analyst base salaries to $100K, with bumps to $105K and $110K for Year 2 and Year 3 Analysts, so the figures presented here will be higher going forward. It’s not yet clear how these higher base salaries will affect year-end bonuses, but we’ll update this article once the data is available. Some banks have also increased Associate base salaries.

These are average ranges at bulge bracket and middle market banks in the U.S.

Yes, the elite boutiques often pay above these ranges.

Yes, if you’re at a regional boutique, you’ll often earn below these ranges.

And yes, the numbers are different in places like London and other non-U.S. locations.

We’ll describe these variations and what to expect at other banks and in different regions below, but I want to start with how compensation works at a high-level:

Investment Banker Salary and Bonus Levels: The Main Components

For most bankers, there are six main components to “compensation”:

  1. Base Salary: This is what you earn via paycheck or direct deposit every two weeks. It increases a bit each year, and it’s a stable, reliable income source because it does not change based on your performance (well, unless you get fired).
  2. Stub Bonuses: Since Analysts and Associates graduate from university or MBA programs and start working in the middle of the calendar year, they receive “stub bonuses” for their first ~6 months on the job. These are typically a low percentage of Year 1 base salaries, such as ~20-30%.
  3. End-of-Year Cash Bonus: You earn this after your first full year of work, and as an Analyst or early-stage Associate, it’s paid 100% in cash. At some elite boutiques and other, smaller banks, it remains 100% cash as you move up the ladder. But at the bulge brackets and other publicly-traded banks, a high percentage turns into deferred, stock-based compensation. The year-end bonus is a percentage of your base salary, and it varies heavily based on deal flow, your performance, and industry-wide compensation. It might be as low as 50% of your base salary or as high as 200% (or more!), depending on your level.
  4. Stock-Based/Deferred Bonus: Starting as a Year 2 or 3 Associate at the larger, publicly-traded banks, a portion of your total bonus (maybe ~20%) will become deferred and paid in stock that vests over several years. This deferred percentage will increase as you move up. Banks do this partially for regulatory reasons and partially to incentivize you to stay at the firm.
  5. Signing Bonuses: This one applies to Analysts and Associates who graduate and accept full-time offers. This signing bonus might be around $10-$15K at the Analyst level and $50-$60K as an Associate.
  6. Benefits: Finally, you’ll get health insurance, vacation days, and potential participation in the firm’s profit-sharing or 401(k) retirement plans. These are useful in the U.S., but not quite as valuable in places with universal healthcare – or, at least, “better healthcare” – such as Canada, Australia, and Europe.

Recent Changes and How COVID Affected Investment Banker Salaries

When the pandemic began last year (2020), everyone freaked out about deal activity and wondered how bonuses and total compensation would be affected.

While M&A activity fell off a cliff for a few months, equity and debt issuances surged as central banks committed themselves to endless money printing.

And then M&A activity rebounded in the second half of the year as companies realized that the pandemic would not mean the end of human civilization.

As a result, the numbers didn’t change by a huge amount, but there were some notable differences:

  • Pay Starts to Vary Even More Widely: Increasingly, different banks and groups are paying different base salaries and bonuses, so it’s a bit difficult to determine the proper “ranges” these days. For example, bulge bracket compensation wasn’t that great this year, but elite boutiques and certain middle market banks paid quite well – sometimes well above the compensation at larger firms.
  • Senior Banker Pay Up and Analyst Pay… Sideways? Base salaries at the Associate level and beyond are up slightly over the past few years, while Analyst base salaries haven’t changed much at the BB banks. The bonus range for Analysts also seems to be wider now (“COVID impacted different groups differently!”), which means that the average entry-level compensation be down a bit.
  • Faster Promotions: Banks have been accelerating the Analyst to Associate promotion timeline and even the Associate to VP and VP to Director promotions, all to incentivize long-term careers.

Finally, work from home (WFH) has proven to be a double-edged sword.

Working from home is nice if you already know the job, your team, and your clients, but it is not the ideal way to onboard new hires.

It’s fair to say that morale is down, and turnover is up at most banks.

Some groups have even struggled to retain new hires in this environment.

Investment Banker Salary: Analysts

UPDATE: As of mid-2021, banks have increased Year 1 Analyst base salaries to $100K, with bumps to $105K and $110K for Year 2 and Year 3 Analysts, so the figures presented here will be higher going forward. It’s not yet clear how these higher base salaries will affect year-end bonuses, but we’ll update this article once the data is available. Some banks have also increased Associate base salaries.

The “standard” progression for Analyst base salaries is $85K, $90K, and $95K over three years at the large banks, with bonuses that might be ~50% to ~100% of base salaries.

BUT there are plenty of exceptions.

For example, some of the elite boutique banks start at $95K base salaries and move up from there, and 3rd Year Analysts might end up with base salaries more like $110K or $115K.

Some of the EB banks also pay bonuses that represent more than 100% of the base salary, so some EB Analysts could earn over $200K.

On the other hand, if you’re at a regional boutique bank, your base salary might be closer to $70K or $75K.

You’ll probably earn at least $100K total even at that level, but it will be a closer call.

That might not be too bad because $100K in Ohio is very different from $100K in NY, but you should be aware of these differences.

Investment Banker Salary: Associates

At the Associate level, base salaries tend to start at $150K and progress up to $200K in $25K annual increments – but there is some variation.

For example, some Associates might start at a lower base salary in the “stub period,” such as $125K or $140K, and then move up to $150K in their first full year.

Bonuses are usually around 70% to 125% of base salaries at this level, but they could be as low as 50% depending on the bank, group, and your performance.

And some elite boutiques – and even stronger groups at certain middle market banks – pay bonuses worth more than 125%.

So, there are examples of IB Associates earning more than $450K, though they’re not the norm at most banks.

Investment Banker Salary: Vice Presidents

At large banks, investment banking VPs usually start at $250K base salaries.

Some banks increase this base salary by $25K per year, while others keep it flat at $250K even as the VP advances.

At smaller banks and in regional offices, VPs might start with base salaries closer to the $200K – $225K range.

Bonuses tend to represent 100% – 150% of base salaries, but the percentage could be lower at smaller firms and in regional offices.

Also, some smaller firms pay base salaries below these numbers but offer higher bonuses if enough deals close.

Investment Banker Salary: Directors

I’ll be honest: I couldn’t find much good data for Director / SVP salaries and bonuses, so I’ve assumed a modest bump over the previous levels.

Base salaries do not necessarily advance a huge amount at this level (maybe a $50K bump over VPs?), but bonuses can grow substantially.

Of course, the percentage of your bonus that is deferred and paid in restricted stock also grows substantially, at least at the large, public banks.

Investment Banker Salary: Managing Directors

Managing Director compensation is highly variable because the year-end bonus could be almost anything.

It’s linked directly to the deals you close and the fees you generate, so average compensation at other banks doesn’t matter.

In a bad year, the year-end bonus might be $100K or even $0 – but it could also be $1 million or into the low millions.

On average, across all banks and firms in the U.S., MDs who perform decently probably earn around $1 million total per year.

And if you want that money in cash rather than restricted stock, work at a privately held elite boutique bank.

Regional Differences and London Compensation

If you’re in the U.S. but outside major financial centers and/or at a smaller bank, you should expect discounts to all the figures above.

You’ll still probably break $100K as an Analyst, but total compensation at each level might be 25-50% lower.

We get questions about pay in London, and I always respond by pointing out the Arkesden compensation reports.

In case you’re too lazy to click through and read:

  • Analyst: £50K – £60K base salaries and total compensation of £80K – £120K.
  • Associate: £80K – £120K base salaries and total compensation of £150K – £220K.
  • VP: £150K – £160K base salaries and total compensation of £240K – £330K.

At a 1.39x GBP/USD exchange rate, these translate into much lower numbers.

Compensation is significantly lower for a few reasons:

  • Currency Fluctuations: Banks set salaries in London when the GBP was much stronger against the USD, and they never adjusted as the GBP kept falling.
  • Better Lifestyle/Hours (maybe?): While the hours are still intense, it’s fair to say that you’ll be working less in London than in New York. There’s more of a cultural acceptance of “free time” and concepts such as vacations.

Investment Banker Salary and Bonus Levels: Is the Money Worth It?

Whenever I publish a salary and bonus update, the comments inevitably turn to two main questions:

  1. But I’m in Region X, not the U.S. or U.K. How does the pay compare?
  2. Is finance a good career? And is investment banking the best option if you want to become wealthy quickly?

The investment banking industry is so much bigger in the U.S. and U.K. than it is in other regions that there isn’t much data from other places – so I don’t have firm answers to the first question.

In general, however, you should assume anything from a modest discount to a substantial discount to the U.S. numbers.

For example, IB compensation in Australia tends to be in between the London and NY numbers.

But if you’re in an emerging market like Mexico, expect substantially lower numbers (think: 75% discount) because the cost of living is so much lower.

As for the second question, it depends on what you mean by “wealthy” and “quickly.”

In a place like NY, taxes and the cost of living are high, so you will not be able to save much of your base salary until you move up the ladder.

Therefore, as an Analyst or Associate, most of your savings will come from your year-end bonus.

If you stay in the industry for 4-5 years, perform well, and avoid spending like a drunken sailor, you could save up a few hundred thousand USD.

That puts you in a great position for your age group.

On the other hand, you’re not going to hit a net worth of $10 million by age 30 just from IB salaries and bonuses and modest saving/investing.

Realistically, you might reach that level if you get promoted to Managing Director and perform solidly over a long period or have a few blowout years.

OK, But How Easy Is It to Advance to the MD Level?

It’s quite difficult, and the vast majority of people who enter IB as Analysts or Associates quit, switch to other jobs, or fail to get promoted.

For more about the skills required, see the article on the IB Managing Director job.

It’s not that challenging to advance to the Associate or early VP levels, but promotions beyond that become increasingly difficult.

If you hate the job, you will not make it past the mid-levels.

I’d also point out that the hours, lifestyle, and morale have gotten worse over the past year due to the shift to working from home.

Even if you don’t like the job itself, going into the office each day makes it more tolerable.

You’re in a separate space, you probably have a few friends there, and you can interact with people face-to-face before they start giving you work.

By contrast, working from home all day… every day… with no real-life interactions… is depressing.

I’m sorry, but video calls are not substitutes for in-person human relationships.

I realize that working from home won’t “last forever,” but it has gone on far longer than anyone predicted.

Even if bankers eventually return to offices, WFH is likely to continue for at least part of the time.

The bottom line is that you need to take an honest look at your personality and goals to decide whether or not the money is “worth it.”

If your goal is to earn, say, $200K to $300K per year and have a comfortable lifestyle, there are plenty of other ways to do that.

For example, you could join a large tech company, work in commercial real estate, go into corporate development, or go to a direct lender or another credit-related role.

And then there’s the quant fund route if you’re more technical.

The internet is obsessed with IB careers, but they’re not right for most people.

On the other hand, if you want to earn significantly more than $200K to $300K per year as quickly as possible – even if it means killing yourself – few options beat IB.

So, you should probably ignore all these considerations and pursue your goal relentlessly.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Are this base salary based on yearly earnings or monthly?

    1. All numbers are annual.

  2. Very accurate!

  3. WFH has been bad for onboarding new hires. Is there anything you can suggest ?

    1. Honestly, not really. Maybe a hybrid model? It’s just not possible to build real relationships remotely (and I say this as someone who practically lives online…). I think even a few days in the office per week would help a lot over 100% remote.

  4. Does corporate banking offer a better work life balance? Any idea on the pay cut at a BB for comparable positions in IB? Also how do bankers make it long term without suffering actual health issues, stress and cardiac problems?

    1. Yes, corporate banking offers a better work/life balance. There are salary estimates here: https://www.mergersandinquisitions.com/corporate-banking/

      Expect around 50% lower compensation with a cap at around $500-$600K for MDs in exchange for a better lifestyle.

      Many bankers do get health problems in the long term. But it’s a bit easier to deal with the job as you move up because the hours tend to follow clients’ schedules more often. By the time most people are at the senior levels, they don’t want to quit because most other jobs would represent big pay cuts, so they tolerate health problems.

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