How much will you really make as an analyst or associate in the investment banking division (IBD) of a bank in London in 2019? And which banks pay more (or less) than others?
London recruitment firm Dartmouth Partners has released its summer salary and bonus survey for banks in 2019. As ever, it confirms that working in M&A or corporate finance can be a very lucrative (if sometimes gruelling) career. In the first year out of university new hires in London can expect to make up to £91k ($113k) in total compensation (at Bank of America Merrill Lynch - BAML) or £92k at Goldman Sachs. Six years later, as senior associates, they can expect to make up to £250k (also at BAML)
Logan Naidu, Dartmouth Partner's CEO, says analysts and associates were happy this summer. And that the general sentiment was positive. Some were happier than others, though: Morgan Stanley seemed to cut first year analyst bonuses and among Goldman Sachs' second year analysts there seems to have been some disappointment with pay.
Analyst salaries and bonuses
Dartmouth's figures for analyst salaries and bonuses in years one to three highlight the similarities between base pay (salaries) at this level. Bonus figures aren't always comparable at this level due to differing bonus payment schedules between banks.
During your first year in the investment banking division of a major bank, your salary will be £50k. Fixed pay is remarkably uniform at this level. Your bonus will be between £30k and £40k for the full year, but European banks with different payment schedules give you a six month bonus to tide you over.
In the second year of your investment banking career, you’ll get a pay rise. Your salary should rise to £55k (unless you’re at Goldman, where a new £60k salary has been introduced) and your total compensation (salary plus bonus) should rise to over £100k, although there are variations between banks.
By year three as an analyst in an investment bank (aged around 25), you should be earning total compensation of well over £110k.
Associate salaries and bonuses
At associate-level, the discrepancies pay between banks become clearer. The exception to this is the associate 0 year, when analysts transition to associates. Analysts are frequently paid bonuses at a different time of year (summer) to associates (winter), which means that associate 0s are paid a ‘stub’ bonus to keep them going during the 18 hungry months since their last analyst bonus and their first real associate one. To make matters even worse, associate 0s who join after an MBA qualification also get a sign-on bonus...
By year five of your career in M&A at a leading bank, you’ll be a proper ‘first year associate’ At this level, you can expect to earn around £163k. – More if you have the very good luck to be at Bank of America.
As a second year associate you can expect to breach the £200k threshold if you work for a U.S. bank, but to remain below this if you don’t.
And, finally, as a third year associate, you might be expected to hit £230k-£250k at a U.S. bank. This is 7 years into your front office investment banking career (working a major bank in M&A or corporate finance). At this stage, you'll probably be aged in your late 20s.
This will undoubtedly sound very appealing if you’re a graduate in another industry on £35k, there are two things to bear in mind. Firstly, you will work a lot harder in an investment bank (think 80 hour weeks+, late nights and weekends). Secondly, only some survive this far. – It’s not unusual for at least 50% (often more) of an analyst class to drop out by the time you’re into associate level. Getting into a bank is hard. Getting to these pay levels is harder still.
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