Pay & Lifestyle
The often large starting
salaries of an investment banker are no secret. Neither are the long
hours seemingly necessary to reap the financial rewards. Life as an
investment banker can be stressful and the working environment is
competitive but also meritocratic. Many
banks are trying to adjust their level of flexibility, being all too
aware of the pressures of combining a successful career with family.
Investment Banking: Salaries
Starting salaries in investment banking positions after bonus
(assistant or junior analyst position) range from £35,000 to £40,000.
Starting salaries with an MBA degree range after bonus (associate
position) range from £60,000 to £135,000. These salaries vary with
firms and with the region of the country you are in. Bonuses typically
would be 10 to 50% of salary to start and can move to one to three
times salary later. Lately, salaries have increasingly included an
equity component which may not be liquid for up to three years,
although as an analyst you would typically be sheltered from this. This
is good for the banks because it makes it much harder for people to
move around.
Compensation - UK
Investment Bankers receive the highest starting salary of any
graduate-level job in the United Kingdom - whilst the average starting
salary for graduates in the top 100 AGR blue-chip firms is £23,000 (and
closer to £15,500 for all graduates according to Prospects.co.uk),
investment banking graduates can enjoy a starting salary of £35,000 -
on top of this, a £5,000 "golden handshake" is typical, with an
end-of-year bonus up to a further £30,000 for some 'front office'
divisions. This puts a year-one salary for most graduates at £70,000 -
4.5 times the average for a graduate. In some banks PhD Researchers can
expect a higher starting salary.
Whilst the £35,000 base salary
only rises by four figures annually, bonuses for the best performers
rises exponentially, being many multiples the size of their base
salary, so that many in Corporate Finance, Trading and Sales can expect
six-figure pay packages in their 3rd year, when promoted to Associate
level.
Graduates with a Bachelors or Masters degree begin as
Analysts on around £35,000 base salary, those with PhDs or MBAs but no
experience begin as Senior Analysts on around £45,000 and those with
MBAs and prior experience begin as Associates on around £60,000 (and
six-figures when including a bonus). At the upper end, most Managing
Directors expect a seven-figure salary.
Compensation for bankers
who work in the Sales & Trading division varies much more than in
actual investment banking. Because compensation is closely attached to
the profit generated by each trader, a star Associate with a good
relationship with his Managing Director can sometimes earn more than
other (presumably less profitable) Managing Directors at the Firm.
Those involved in the more complex, structured Derivatives side tend to
earn more than those involved in flow products, due to the considerably
higher profit margins of using financial "Options".
Generic salary advice
Some firms tend to pay less than others because they can get away
with it. You might actually be better off taking less. Obviously don't
give yourself away but at the entry level, the quality of experience
you get and the strength of the people you will work with are far more
important than how much you get paid. You are trying to maximize the
present value of your future earnings and enjoyment. This may involve
taking lower pay now. Or, if you're lucky, it might not.
| Job Description |
Salary (£) |
Salary ($) |
Percentage Bonus |
Years Experience |
| |
|
|
|
|
| chief executive |
£200,000-£1m |
$320-$1.6m |
500%+ |
15 years+ |
| managing director |
£90-200,000 |
$140-320,000 |
500%+ |
10 years + |
| director |
£80-120,000 |
$130-190,000 |
300-500% |
10/11years |
| vice president |
£70-100,000 |
$110-160,000 |
150-300% |
8/9 years |
| associate director |
£55-70,000 |
$88-110,000 |
70-150% |
6/7 years |
| associate (post MBA) |
£45-55,000 |
$72-88,000 |
45-70% |
3/5 years |
| analyst (pre MBA) |
£25-30,000 |
$40-48,000 |
5-45% |
2/3 years |
