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This is how much you should earn as an investment banker in your 20s, 30s and 40s

Pay in banking

It won't be long before you can afford to eat at Pret every day

Former bankers who’ve left the industry have taken to issuing warnings to 20-something students who are thinking of joining. Banking is boring, they say. The learning curve is steeper elsewhere. The jobs are all disappearing as the things banks used to do fragment and are taken over by technology firms.  You can do better deeds as a socially-minded entrepreneur. You can be more sexy working for a tech unicorn.

Right, but you can still earn a lot of money working in banking.

By averaging the latest total compensation figures for investment banking division (IBD) jobs (ie. jobs in M&A and capital markets) from Dartmouth Partners and Arkesden and combining them with figures for sales and trading and more senior roles from pay benchmarking firm Emolument.com… we’ve come up with the compensation chart below.

It shows, roughly, how much you can expect to earn in a front office investment banking job throughout your career. As you will see, it is a lot – and it increases exponentially.

Between 22 and 25, as you go from analyst 1 to associate 2, you can expect your pay to rise from £60k ($77k) to £101k ($130k). Between 25 and 30, as you go from associate 2 to vice president (VP), you can expect your pay to rise £206k. From 30 to 35, as you go from VP to director, you can expect your pay to rise to £338k. And 35 to 40, as you go from director to managing director (MD), you can expect your pay to rise £494k. If you stick it out and manage to become a senior MD and head of department, it could rise higher still.

Of course, it might not happen this way. These figures are for front office investment banking jobs only – you won’t get anywhere near these numbers if you work in, say, risk. This is the fantasy compensation trajectory. Firstly, the figures from Dartmouth and Arkesden are for top tier banks, and therefore skew the numbers on the upside. – You’re going to get less if you’re working for a tier two or three player.  You also might get chucked out in your late 20s or early 30s and either way you probably won’t get promoted to managing director. Goldman Sachs employs 12,0000 VPs and promotes around 400 of them to MDs biannually. If this is the case, your pay might stick around the £250k, or less, until you leave.

There’s also a chance, however, that you might end up earning even more than the charts below suggest. Goldman Sachs, for example, paid its 512 most senior bankers in the UK an average of $2.7m in 2015, the last year for which figures are available.

Photo credit: City of London, London, UK by Paco Romero-Ferrero is licensed under CC BY 2.0.

Comments (7)

Comments
  1. Absurd…Why not pay people for their investments and interest on their deposits, instead of lining pockets that are no more deserving than anyone else?

  2. Maybe because the people who become investment bankers work their socks off and get good grades and then make money wheres people who make investments barely do anything in their lives.

  3. MainMan — If you say things such as this simply to see if you can get a reaction … consider yourself “successful.”

    However, as one who was an investment banker (and probably made a lot more than you), and is living comfortably in semi-retirement (I am on the Board of a few public firms), I find your arrogance abhorrent. In addition to probably NOT “… get[ting] good grades …” (your punctuation and grammar are atrocious, I doubt seriously that you “… work[ed your] socks off ….”

    I recognize that this article must be significantly out of date (else, how is your posting dated “24 December 2014 11:53pm GMT”?), but, regardless, the only matter at hand is “what will the market bear?” If some firm wants to pay an exorbitant amount, so be it; we can excoriate the payer, not the recipient.

    You, on the other hand, should be pilloried for your utter arrogance and contemptible attitude.

  4. What they don’t tell you is how thin it is at the top. The number of people that make it is few and far between . The main reason is the lack of technical skills coupled with sales skills. The only way you can justify your millions in salary and bonus is bringing in at least 3x that amount.

    I tell junior bankers all the time that a) technical skills is a given. You need to know how to run a DCF, LBO model etc. Beyond that, you need to network and become a thought leader. Build a “industry landscape” or some other thought piece that get’s passed along or clarifies the myrid of competitors to strategic investors.

    If you are just starting out, grab a free financial model (private equity models .com) and learn the basics of investment banking and private equity.

  5. i think rtw is right. and my comments : its an interesting career, if you want to make money. the point of an investment, banker, is that they manage someones investments, many peoples investments, and its probably real estate. for many customers. so houses, and real estate. that tey manage and protect. for many `

  6. not many people earn those numbers in banking. People have realised that investment bankers add no value and their job could easily be automated. They don’t manage investments as people have said, they merely act as middle men on deals, no more useful than an estate agent.

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