Investment Banking Salaries in the US 2024

As an aspiring investment banker or a professional looking to advance your career, you've probably spent countless hours scouring the internet for accurate and up-to-date information on salaries in the industry. Somehow, every website, blog, and forum seems to have its own set of figures.

That's understandable because IB salaries are tricky to pin down. Most firms don't publish their pay rates in job postings, and there are variations in compensation based on position, firm type, location, individual performance, and other factors.

But you still deserve accurate numbers to establish effective benchmarks for negotiations and know your earning potential. That's why we've compiled data from trusted sources, conducted interviews with industry insiders, and analyzed the latest trends to bring you a comprehensive guide to IB salaries for 2024. 🚀

How Is the Salary Structured in Investment Banking?

Investment banking salaries are heavily performance-based, and that's part of what makes the industry lucrative. The compensation package typically consists of a base salary and year-end bonus. Here's a complete breakdown of the IB pay structure.

• Base pay or salary: This is the guaranteed income earned biweekly, regardless of performance or industry situation. It varies, but the average base salary for IB analysts is between $100,000 and $125,000.
• End-of-year bonus: This is a key component of investment banking pay structures. It's a performance-based payment given to employees at the end of the fiscal year based on factors like an individual's performance, deal flow, and the bank's profitability. For most banks, it amounts to 50% to 100% of an analyst’s base salary. Firms often give the entire bonus as cash.
• Stub bonus: For new hires who start mid-year and have not worked a full year, they get a fraction of the yearly bonus. Typically, this amounts to 20%-30% of the first-year base salary.
• Deferred and stock-based bonus: Some established and publicly traded banks have a policy for employees to receive part of the bonuses as stocks. The stake increases as one climbs the ladder and it also serves as an incentive to make them stay in the firm. For instance, the Bank of America offers stocks as a part of the incentives.
• Signing bonus: Once offered a position in an investment bank, the firm normally pledges a lump sum payment if you accept the job.
• Other benefits: IB positions also have additional perks just like other jobs, including retirement plans, vacation days, 401(k), and retirement plans.

Understanding Bonuses in Investment Banking

You can't talk about IB salaries without mentioning bonuses as they can significantly increase total compensation. Sometimes the total end-year bonuses can even exceed the base pay, especially for senior bankers.

However, bonuses are discretionary and fluctuate due to boom-and-bust cycles. For instance, the pay skyrocketed in 2021 as the government stimulus programmes and low interest rates pushed the industry to new heights.

Then last year became quite problematic for the industry with collapsing banks, job cuts, and slipped deal flow. The result was firms, including big players, like JPMorgan Chase and Citi, cutting the bonuses by as much as 25%.

The deal making business is still at a 10-year low, as the impact of higher interest rates and struggling economies continue to be felt. So the bonus outlook for 2024 isn't very promising, especially for M&A activity.

Which Factors Influence Your Salary in Investment Banking?

Different unique factors influence the base salaries and bonuses. When looking at each of them, you'll understand why it can be difficult to give a single figure for IB salary in the US. Let's explore the primary ones below.

Location

IB salaries vary significantly depending on the location of the investment bank. Major financial hubs such as New York, London, Hong Kong, and Singapore typically offer higher compensation. But this is often due to higher cost of living and the concentration of top-tier financial institutions resulting in competition for top talent. A first-year analyst in New York may earn a base salary of $119,000, while one in a smaller market gets salaries that are 10-20% lower.

Firm Size and Reputation

Another determinant for IB salary levels is the size and prestige of the firm. Bulge bracket firms (Goldman Sachs, JP Morgan, Barclays, etc.) generally offer the highest salaries and bonuses. This is often the case because they're able to get great deal flow, strong networks, and access to high-profile clients. Giving the best in industry rates is also part of their plan to attract and retain top talent.

Elite boutique banks can also provide competitive pay, sometimes close or higher than some big names. Then smaller or mid-tier firms typically offer lower compensation as they might not get high-profile deals and significant transactions consistently.

Experience and Role

The IB career path is very hierarchical, starting with summer interns on the lower end and managing directors on the higher side. Experience increases the likelihood of climbing the ladder, and hence more pay.

Entry-level analysts can expect base salaries ranging from $70,000 to $100,000, with total compensation (including bonuses) potentially reaching $200,000 in the first year, depending on performance. As analysts advance to associate and vice president roles, the salaries can double or triple, reflecting the increased responsibilities and contributions.

Performance

We've talked about bonuses earlier, which can constitute a substantial portion of total compensation. Besides the performance of the overall business or industry condition, bonuses are also tied to individual performance. High-performing bankers can receive up to 100% of their base salary, especially in strong financial years.

In short, the investment banking industry has a meritocratic culture that rewards high achievers. There might even be other incentives like commission, tips, performance shares, restricted stock units, and profit sharing depending on the company. All these additional payouts are linked to targets like deals closed, client satisfaction, and revenue generation. As such, you might find top bankers who took home hefty amounts even in the worst years.

Market Conditions

The overall health of the financial markets and economic conditions can affect salaries. During times of high merger and acquisition activity, banks often offer larger bonuses and higher salaries to attract and retain the best talent.

Conversely, in economic downturns, compensation packages may be more conservative. Top performers might still be well-rewarded though even in such times to retain them.

Negotiation Skills

Instead of posting the exact pay on job postings, most hiring managers ask successful candidates about their pay expectations during interviews. This is where your knowledge of the industry benchmarks and negotiation skills come in handy.

You can bag a competitive package by being able to effectively communicate your value and articulate your accomplishments. Besides the strong negotiation skills, you'll need to prepare yourself with data including:

• The firm’s compensation structure
• Firm's performance metrics
• Industry salary benchmarks

That's the only way you can present a compelling case for a higher salary or bonus and maximize your earning potential.

What Are the Top Paying Investment Banking Firms in the US?

Top Paying IB Banks: Bulge Bracket Bank

Among the big names, the ones that offer the most competitive IB analyst salaries and bonuses are Goldman Sachs, JPMorgan Chase, and Morgan Stanley. Barclays is also quite generous with bonuses. Bank of America Corp (BofA) and Citi Institutional Clients Group offer lower base salaries, ranging from $92K to $100K. Overall, Goldman Sachs and JPMorgan Chase lead the pack in terms of total compensation, with Morgan Stanley and Bank of America Corp following closely.

Top Paying IB Banks: Elite Boutique & Mid-Size Banks

When it comes to the elite boutique and mid-size investment banks, Evercore leads as the best bank for overall IB analyst compensation with an average of $209K per year. It’s followed by Perella Weinberg Partners, Moelis, Jefferies, and Centerview. In terms of bonuses Evercore, Moelis, and Perella Weinberg Partners lead the pack. The firms offering the least IB analyst total pay include Guggenheim ($161K), Harris Williams ($168K), and Rothschild & Co ($169K).

Notably, most of the boutique banks offer higher IB analyst salaries than the bulge bracket banks.

How Does Location Influence the Investment Banking Salary in the US?

Geographic locations bring about a disparity in IB salaries, even if you're working for the same company. Below are some of the factors that bring about this difference.

• Financial centers or hubs: These are cities (like New York and San Francisco) with headquarters or offices for the largest banks, investment firms, and financial institutions in the country. The high concentration for financial companies creates strong demand for top talent, driving up salaries. Top professionals can easily shift employers if not well compensated, yet each firm wants to retain the top talent.
• Cost of living: The cost of living in a particular city directly correlates with salary levels. Again, the financial hubs tend to have high cost of living, and firms have to offer higher salaries to offset expenses. On the other hand, cities with a lower cost of living tend to offer lower salaries.
• Sector focus: Certain sectors within investment banking, such as Technology, Media, and Telecommunications (TMT), may offer higher salaries in specific locations. For example, investment bankers working in TMT teams generally earn more than their peers in other sectors, influenced by the concentration of tech firms in areas like Silicon Valley.

Comparing Investment Banking Salaries Across Cities in the US

The average base pay for investment banking analysts doesn’t vary much across different cities in the U.S. However, there are those leading like Chicago and Los Angeles with $128K. From the list, the least paying city is Boston with $115K.

How Do Investment Banking Salaries Progress with Experience?

Investment banking salaries skyrocket with increasing experience and rise in hierarchy. Typically, the hierarchy goes from a summer analyst, first-year analyst, associate, vice president, senior vice president, and lastly managing director.

Moving from a summer intern to a first-year analyst increases the minimum base pay from $60,000 to $100,000. The bonuses also increase with ranks, with the intern having the least percentage of 10% and managing director more than 100%. The pay progression highlights the increasing responsibilities and expectations as professionals advance through their careers.

Investment Banking Salaries in Comparison to Other Industries

Investment bankers earn higher pay packages compared to other professions, including some healthcare workers and developers, when looking at all experience levels.

Key Takeaways – How Much Can You Make in Investment Banking?

• Investment banking is a lucrative industry, and the compensation packages certainly reflect this.
• In 2024, the average salary for investment banking analysts in the U.S. falls between $100,000 and $200,000. This broad range underscores the various factors that influence your earnings in this field.
• The Investment banking industry is very meritocratic in culture. Income and promotions are rewards of performance. Bonuses that often make up the largest portion of their income also support this culture.
• The typical investment banker salary comprises a base pay and annual bonuses and discrete additional perks.
• Exploring the factors affecting IB salaries in detail can help you gain valuable insights into your earning potential and establish effective benchmarks for negotiating your worth.
• Most elite boutique banks and mid-size banks offer better total compensation for IB analysts than the bulge bracket firms. So, the allure to go for the big names is beyond the pay package.

👉 Are you looking to start your career in investment banking? Check out our further resources on the The Ultimate Guide to Crafting an Investment Banking Resume​ and How to Write the Perfect Investment Banking Cover Letter. We wish you much success for your application!