You could say that investment banker salaries and bonuses have been “disappointing” for the past few years.
The issue isn’t so much that they’re bad by historical standards, but that they rose sharply due to inflated deal activity in 2020 – 2021 and then fell just as sharply.
I’ll provide commentary on all this, including bank and group-specific differences, but let’s start with the cold, hard numbers:
| Position Title | Typical Age Range | Base Salary (USD) | Total Compensation (USD) | Timeframe for Promotion |
|---|---|---|---|---|
| Analyst | 22-27 | $100-$125K | $140-$190K | 2-3 years |
| Associate | 25-35 | $175-$225K | $225-$425K | 3-4 years |
| Vice President (VP) | 28-40 | $250-$300K | $450-$650K | 3-4 years |
| Director / Senior Vice President (SVP) | 32-45 | $300-$350K | $550-$750K | 2-3 years |
| Managing Director (MD) | 35-50 | $400-$600K | $600-$1300K+ | N/A |
NOTE: All numbers are pre-tax for New York-based front-office roles and include base salaries and year-end bonuses but not signing/relocation bonuses, stub bonuses, benefits, etc.
These are all ranges: roughly the 25 th percentile to 75 th percentile across the “large banks,” with some adjustments (see below).
And yes, I’m aware that the elite boutiques paid above these ranges.
Now to the commentary and bank-specific differences:
In short, it was another terrible year for all the sectors this site covers: M&A, capital markets, private equity, commercial real estate, venture capital, and more.
The Investment Banking scorecard from Dealogic with deal volume by region spells it out:
This chart showing the quarterly progression from 2021 to 2023 is also useful:
This level of M&A activity represented a return to the deal volume back in the 2010 – 2013 period, right after the 2008 financial crisis:
All the usual suspects hurt deal activity:
And there were a few additional factors this past year, such as the regional banking crisis prompted by the collapse of Silicon Valley Bank and the UBS acquisition of Credit Suisse.
The bottom line is that tech and finance companies continued to be quite cautious, which hurt deal activity and hiring across the board.
Many of these firms over-extended themselves during COVID, had a bad hangover in 2022, and hadn’t quite recovered by 2023.
From compensation reports, news stories, and online discussions, a few trends stood out this year:
1) Firm Variance – While base salaries were similar across firms, there were huge differences in bonus levels.
I normally don’t like to single out specific firms, but I’ll do so here:
Meanwhile, most of the elite boutiques did great!
PJT Partners paid well above the standard ranges for Associates and VPs, and Centerview and Moelis were also quite generous.
Most of the bulge bracket banks, ex-BofA, were in the middle of this range: down from last year, but not a complete disaster (the same applies to middle-market banks and firms like RBC).
2) Individual Variance – Within specific banks and groups, the variance between top, middle, and bottom-bucket pay seems to be growing.
If you go back 5-10 years, the percentage difference between each level was not necessarily massive.
Now, however, scenarios like this are more common:
They are paying a lot more attention to individual contributions and teams, especially for Associates and VPs.
3) Bonuses Follow Hours – Although the elite boutiques paid more than the bulge brackets this year, there was a “catch”: the hours were also much longer.
For example, some Associates at “not so busy” large banks were working 50 – 55 hours per week over the past year – not even close to normal investment banking hours.
But at firms like PJT or Moelis, it was not unusual to see 70, 80, or even 90-hour workweeks, which explains why some bonuses were 2-4x higher.
I point this out because while there has always been some correlation between deal flow, hours, and pay, it was less direct in previous years, and bonuses varied far less.
I’ll go level by level and explain some of these trends in more detail, but here’s a quick reminder of the main compensation components:
For most bankers, there are five main components to “compensation”:
Based on payouts in mid-2023, Analyst pay has held up fairly well.
I listed $190K as the top of the range above, but plenty of Analysts earned above that, especially Year 2 Analysts at places like Guggenheim, Moelis, Perella Weinberg, and Evercore.
Year 3 Analysts are not that common anymore because banks changed the promotion schedule, but anyone on a $125K base salary should have easily cleared $200K as well.
Year 1 Analysts, on the other hand, were closer to $150K in total compensation, with a fair number of reports in the $130K – $140K range.
(This is why I used $140K for the bottom of the range rather than $150K.)
Overall, it was a ~5% drop; not terrible when you consider deal activity.
The real issues at this level were that:
There was a massive spread at this level, with Year 1 Associates at some elite boutiques earning bonuses that were 100%+ of base salaries (i.e., nearly $400K in total compensation) and others at closer to ~50%.
The news was even worse at firms like William Blair and BofA, where bonuses were only ~25% of base salaries in some cases.
Most other bulge brackets were in the middle of this range, with bonuses in the 50 – 70% range depending on your bucket, group, and year number.
The spreads for Vice Presidents were even wider; I found minimum total compensation of ~$325K all the way up to a maximum of ~$900K.
It’s such a wide range that it’s almost comical, and I’m not quite sure what to say.
I estimated $450K – $650K total compensation for the 25 th to 75 th percentiles above, and I think that is true for most of the bulge brackets.
However, plenty of elite boutiques paid well above this, with many reports of $700K+ or even $800K+ in total compensation.
Interestingly, the percentage of deferred compensation also varied a lot at this level, with the biggest banks being more conservative.
I have almost no data here, so I extrapolated and assumed a ~7% drop over the numbers from last year.
Directors can still earn a lot, but outside the EBs, they were mostly in the mid-to-high-six-figure range.
Whenever deal activity plummets, Managing Directors absorb the brunt of the damage, and the same thing happened this year.
You can read all about MD pay on Bloomberg or Financial News, but the short version is that many MDs’ bonuses were down 15 – 20%.
That means that many MDs this year earned closer to $500K than $1+ million.
It’s completely plausible that some VPs and Directors out-earned MDs simply because their bonuses are not linked quite as directly to closed deals.
Usually, Arkesden and Dartmouth issue good reports on London, but I couldn’t find anything updated for this past year.
But once you factor in the USD/GBP exchange rate and the always-lower pay in London, it’s reasonable to expect at least a 15 – 30% discount on all these numbers.
I am “rounding” these, and I have no idea how accurate the numbers are, but there isn’t much else out there.
Similarly, I have nothing on Asia, Australia, or other regions aside from the Bloomberg article with a few scattered references.
I made a simple prediction in last year’s bonus report:
“In the future, I expect compensation to continue to fluctuate significantly from year to year, so you should expect less of a ‘straight line’ in your career and earnings.”
And I stand by that prediction – as we’ve now seen the impact of two bad years in a row.
Companies can only be cautious for so long, and most “deal slumps” only tend to last for a few years.
That said, I am still less optimistic about deal activity and bonuses than other sources (e.g., executives at elite boutique banks) for a few reasons:
So, assuming an uptick in deal activity and no major disasters, I could see a modest bump in bonuses this year – perhaps a 10 – 15% increase.
But if you’re expecting 2021 bonuses anytime soon, you’d have better luck with a DeLorean time machine.
Finally, if you’re not deterred by these lower bonuses and you’re still committed to breaking into IB as an Analyst or Associate, our friends at Wall Street Mastermind might be able to help you out.
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