For candidates with bachelors degrees starting out in investment banking, starting salaries will range from $60,000 to $70,000. These are for entry level positions like assistant or junior analyst.
Starting salaries for candidates with an MBA will range between $80,000 and $150,000, and these candidates would probably start in an associate position.
Obviously the salary you make will depend on the firm and the region you’re in.
Now what about bonuses? Well, these are likely to be between 10-50% of your base salary, but after some time this will probably increase to 1-3x your base salary! In more recent times, investment banking salaries have included a component of equity that would probably not be liquid for three years or so. But if you’re starting out as an analyst, this wouldn’t apply to you until later. The reason for this equity component in bonuses is because then you’re less likely to move to another bank.
In the last year or so, investment banking salaries and bonuses have come under fire because many groups feel like the high banker bonuses indirectly contributed to the financial crisis we’ve experienced over the past 2 years. Nevertheless, investment banks are still offering good bonus compensation as they believe that the situation will get better over time, and also that several investment banks weren’t involved in the financial bailouts at all.
Of course, some investment banks will pay less than others, mainly because they can. Sometimes as an entry-level hire, it’s better to think about the kind of experience you’re going to get, the people you will work with and the career potential of the firm. What you need to be thinking about is your long-term career goals, which might require you to sacrifice a lower salary right now. Who knows, maybe you’ll get the best of both worlds, so keep your options open and get as many offers as you can!
Right now, if we look at total pay, which includes salaries and bonuses, things are down by 40-80% from two years ago, which depends on the firm. Many investment bankers have lost their jobs or received little to no bonuses. However, this is likely to change soon, with bonuses expected to rise in the next year. Most likely, the bulge bracket firms will be 20-40% higher than regional and boutique firms.
So now you know what to expect when it comes to your salary when you start in an investment bank, you need to ensure that you master all your investment banking interviews. Prepare well, and have some answers ready for your interviews before you go, otherwise you may be up against some stiff competition!
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