Updated: Oct 19
Investment banking has long been a career associated with impressive compensation packages. Recent adjustments at major firms like JPMorgan and Goldman Sachs provide updated insights into what finance professionals can expect to earn in London. This article delves into these numbers, breaking down salaries and bonuses by seniority, from first-year analysts all the way to managing directors.
Analyst Salaries in London's Investment Banking Sector
First-year analysts at bulge bracket firms like Goldman Sachs and JPMorgan can anticipate a fixed salary of around £65k-£70k. Additionally, bonuses tend to range between 50-75% of the base salary, approximately adding another £39k. This sums up to a total compensation package of around £104k.
For a second-year analyst, the base salary rises to £80k. With an average bonus of £48k, the total compensation amounts to £128k.
By the third year, the fixed salary for analysts climbs to £85k, with an average bonus of £51k. This results in total compensation of £136k.
Associates in their first, second, and third years can expect base salaries of £110k, £125k, and £130k respectively. Bonus percentages hover around 65% of the base, which translates to bonuses in the range of £72k-£85k. Thus, total compensation packages for associates can span between £171k and £202k.
Vice Presidents, spanning from VP1 to VP3, can anticipate base salaries ranging from £155k to £170k. Bonuses can make up around 90% of the fixed salary, resulting in bonus figures around £140k-£153k. Total compensation for Vice Presidents typically ranges from £300k to £320k.
Investment Banking Directors in London can expect a base salary ranging from £200,000 to £250,000. Bonus structures are performance and origination-based, ranging from 100% to 200% of the base salary.
At the Managing Director level, base salaries rise to a range of £250,000 to £350,000. Bonuses are generally calculated as 20% to 30%+ of revenue generation, leading to substantial additional earnings depending on performance.
Bulge Bracket vs Elite Boutiques
Elite boutiques often outperform bulge bracket firms in terms of bonuses for (junior) bankers and they also tend to offer 100% cash bonuses, which can be more attractive compared to bulge brackets, especially for more senior roles. It's worth noting that at the analyst level—where many employees exit the industry—both types of firms commonly offer 100% cash bonuses. At the associate level and higher, bulge brackets often start to introduce bonuses paid partially in deferred stocks. For associates, it's not uncommon for about a third of their bonus to be paid in stock, vesting in three equal instalments over three years. This deferred compensation model can impact longer-term financial planning and is an important consideration for those who plan to climb the corporate ladder within the investment banking sector.
While financial compensation in the investment banking sector is undoubtedly lucrative, it's vital to remember that this is just one factor in your overall career decision. The type of firm you work for can greatly influence your daily work experience and long-term career trajectory. From the company's culture to the learning curve and invaluable skills you acquire, each firm offers a unique value proposition beyond the allure of a hefty pay cheque. Many analysts exit investment banking after a one to three years, leveraging their accrued skills for roles in other high-paying sectors like private equity or hedge funds. Therefore, it's important to consider other variables like exit opportunities and the quantity and quality of deals you'll be exposed to. These factors can have a significant impact on both your job satisfaction and long-term success in investment banking or alternative career paths.