Investing bankers are financial specialists utilized by banks to attract and service the financial needs of clientele, including public and private companies, governments, non-profits and wealthy individuals. Working in teams, bankers perform services that include deal structure, raising money through securities underwriting activities, mergers and acquisitions and overall investment and asset management. Investment banks maintain a specific hierarchy, starting with analysts at the entry level and progressing to managing directors at the executive management level. Compensation varies depending on the type of investment bank, position and other factors.
Investment banking is demanding and offers a salary range that is virtually unmatched. Entry level candidates start as financial analysts. The Bureau of Labor Statistics estimates that financial analysts working for investment banks earned an average annual salary of $102,220 as of May 2011. The BLS categorizes higher-level bankers as financial managers and estimates they earn an average annual wage of $169,850. More precise salary estimates are available at Careers in Finance, an Internet service providing comprehensive information on specialty business careers. It forecasts a salary range for a first-year investment banking analyst at $100,000 to $150,000 annually, with an average annual salary of $110,000, including bonuses. At the upper end of the scale, the salary range for a managing director with a minimum of seven to 10 years of experience is $500,000 to $2 million, with an average annual salary of $1.2 million, including bonus. Bonuses are a major factor and easily average one to three times or more a banker's annual salary.
Type of Bank:
The type of employer a banker works for plays a major role in compensation. Investment banks range from small groups to those with thousands of bankers providing a full array of investment-banking services for clients worldwide. Goldman Sachs and similar banks are among a small, elite group of investment banks referred to as “bulge bracket" firms. All others are categorized as boutique firms, which tend to specialize by product, industry or the size of a deal or client. Bulge bracket firms garner the lion's share of lucrative investment banking business and pay a 20 to 40 percent compensation premium over the majority of boutique firms, according to Careers in Finance.
The investment banking environment is among the most competitive of any profession, with bankers expected to work demanding schedules averaging 90 to 100 hours a week and more. Analysts are at the bottom and generally remain at that level for three years. According to Careers in Finance, a third-year analyst averages $145,000. Bankers advancing become associates and are expected to have an MBA. Compensation ranges from $170,000 in the first year to $310,000 for a third-year associate. Vice presidents are expected to have three to six years of experience and earn an average annual salary of $450,000. Directors are expected to have five to 10 years of experience and they earn an average annual salary of $700,000. Managing directors sit atop the hierarchy.
The BLS estimates that investment banking jobs will grow by 15 percent from 2010 to 2020, approximately matching the average growth rate projected for all U.S. industries. Globalization is a major factor expected to influence demand for the profession, as more international companies seek access to the capital markets.