A Primer on Investment Banking Careers
An investment banking job is among the most sought after professions in financial services. People employed at investment banking companies like Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, JPMorgan Chase and UBS command the respect and admiration of others. This is not only because investment bankers are at the epicenter of Wall Street but also because of the pressure that an investment banking career brings.
Potential for Massive Compensation
If you are seeking a career that affords a relaxed environment, with a fixed work schedule and free weekends, investment banking is not for you. On the other hand, if you are someone who thrives in a highly competitive environment and has the fortitude to work long hours and six-to-seven days a week, you’re a good fit for a career in investment banking.
Investment bankers enjoy an iconic stature. The high pressure and high risk in an investment banking career is accompanied by high status and compensation. Compensation packages for investment bankers are among the highest in any industry. According to the Bureau of Labor Statistics’ report, investment banking paid an annual average compensation of over $400,000. However, investment banks typically pay lower base salaries, while offering huge bonuses in order to motivate people to be more productive.
Compensation in the investment banking industry would vary with the size of the organization. So, compensation packages at Goldman Sachs, JP Morgan, and Merrill Lynch may be very different from those offered by boutique investment banks.
Common Roles in Investment Banking Firms
The standard path to an investment banking job for undergraduates seeking to enter the industry is an internship. According to BusinessWeek’s ranking of the best US companies for undergraduate internships, Ernst & Young, Deloitte & Touche, KPMG and Goldman Sachs ranked among the top five. A company’s summer internship program is very often the primary entry point to full-time employment.
Interns or summer analysts typically earn a salary of approximately $5,000 USD per month, plus a housing allowance of between $1,000 and $2,000. Interns could also be eligible for overtime and could earn up to an additional $2,000 per week.
A larger number of analysts are recruited by most investment banks than interns. So, this could be the entry point for a person aspiring for a career as an investment banker. Analysts typically work for up to three years before being promoted to the associate level. A significant number of investment banks let go analysts who are not promoted after a specified period of time. The option then is to go to business school or change careers.
First-year analysts usually get paid a basic salary of up to $60,000 USD per year. They may be eligible for a signing bonus of $10,000, which could accompany their first paycheck. Benefits such as health insurance, life insurance, travel insurance and meal allowances are also offered. Once a person becomes an analyst, bonuses tend to be very lucrative. The average bonus paid to analysts with less than one year of experience is $25,000. While the basic salary does not change much for analysts with experience of between one and four years, the median bonus rises to over $30,000.
While an analyst may be promoted to the associate level, a large number of associates are recruited directly out of top business school MBA programs.
First-year associates usually get paid a base salary range of $80,000-$90,000. The average bonus paid to associates with less than one year of experience is over $20,000. Associates with experience of between one and four years can receive bonuses of $40,000 or as high as six figures (taking their total compensation over $200,000).
Vice Presidents and Managing Directors
Investment banking companies may have two to three ranks after the associate level. Here the funnel narrows significantly, while the compensation increases exponentially.
Vice Presidents of investment banking companies receive an average salary of approximately $110,000. Depending on experience, median bonuses are about $135,000. The compensation package for Managing Directors, however, could reach anywhere between $400,000 and tens of millions per year.
At the top, there really is no limit to income. Jamie Dimon, Executive Chairman and CEO of JPMorgan Chase & Co, has received a total cash compensation package of over $15 million. Goldman Sachs has paid its Chairman and CEO Lloyd Blankfein almost $54 million for one year of work.
If you would like to find an investment banking job opportunity, you could look at the numerous investment banking jobs available. You can do this by browsing sites like Job Search Digest. You can also get in touch with leading executive search consultants for details of current vacancies. www.JobSearchDigest.com provides its members with a database of niche investment banking recruiters.