How Much Do Investment Bankers Make? A Definitive Guide
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Working as an investment banker can be a lucrative career choice with the right training, education and experience. Depending on their employer and specialisation, investment bankers may receive impressive benefits packages, bonuses and other opportunities to increase their earnings. Understanding how much investment bankers make can help prospective bankers determine if this career is a good choice for their financial future. In this article, we answer the question, "How much do investment bankers make?" by exploring their salaries, employment levels and skills.
How much do investment bankers make?
If you're wondering "How much do investment bankers make?", the average salary of an investment banker is $1,192,305 per year. Some investment bankers also earn bonuses or commissions, depending on their employer. Working with clients can also provide extra opportunities to earn commissions. An experienced investment banker typically serves multiple clients, potentially increasing their income pool. Since investment bankers primarily raise capital for organisations and businesses, they might also have an opportunity to invest in new businesses and earn a secondary income through investments.
Related: How to Become an Investment Banker
What factors influence an investment banker's salary?
There are several factors that can influence an investment banker's salary, including:
Investment bankers often have a bachelor's degree in a financial discipline, such as economics, accounting or financial management, or business-focused subjects, such as business administration. Higher educational credentials may allow bankers to earn higher salaries. For example, an investment banker that holds a master's degree in economics may have more advanced knowledge and skills to benefit their employer or clients, which can result in higher earnings and more clients to serve. Some employers may require specialised financial training and certifications.
Experience is another primary factor in an investment banker's salary. A banker with minimal experience typically earns an entry-level salary, whereas an experienced banker might earn a much higher salary for their expertise in the industry. Mid-level bankers, with between two and five years of experience, can also earn more than entry-level candidates, provided they've become competent in their field and can apply their skills and knowledge for the benefit of their clients. Employers or clients often prefer an investment banker with more experience, as they may have a better understanding of the job and the nuances of banking.
Some investment bankers earn a base salary with benefits, such as commission, performance bonuses and stock compensation. Depending on an employer's specific offerings, an investment banker may earn a higher salary when factoring in benefits. For example, an investment banker earning one million dollars per year as a base salary may also earn an additional half-million per year through bonuses. Factoring in non-cash benefits, such as paid vacation, retirement options and sick days, investment bankers often have attractive salary packages.
Some investment bankers may offer their services to personal clients as an asset manager or other financial expert. By expanding their list of clients and branching into other areas of the financial industry, investment bankers can increase their income streams and earn a higher salary. For example, an investment banker might offer asset management services outside of work, generating extra income and expanding their professional network for more job opportunities. Depending on specific employer policies, investment bankers may face restrictions on what services they can offer outside of their main role with a company.
What levels of employment are there for investment bankers?
There are investment bankers in many specialisations, such as equity financing and capital allocation or merger and acquisitions. The job also includes different levels of employment, which require different skill levels and education. Here are the different levels of investment bankers:
Analysts are entry-level investment banking professionals who are typically recent graduates. As an investment analyst, you may work closely with experienced associates, bankers or other financial professionals analysing the viability of investments, requests for capital and other transactions. Analysts help gather important data that can influence a bank's decision on whether to invest in certain companies or provide capital allocation services. Analysts typically hold at least a bachelor's degree in some financial discipline.
Experienced analysts have at least a few years in the industry. They might serve as project managers, team leaders or analysts for higher-level projects. Their experience and skills may allow senior analysts to earn a higher salary than their entry-level counterparts. The difference in responsibilities between this role and regular analysts depends on the employer, the size of the team and the skills and experience of the senior analyst.
Associates are more experienced investment banking professionals. These are typically bankers and asset managers that help clients find the funding they need, manage wealth and portfolios, or offer pertinent advice on investment strategies. Associates work directly with analysts and junior and senior team members, such as vice presidents or directors. An associate's salary typically varies, depending on the scope of their responsibilities and their level of experience. Associates often help oversee analysts to guide them on how to complete their duties for a project.
The vice president serves as an advisor and assistant to the bank's president while acting as a leadership figure for their team of analysts and associates. A vice president usually works directly under a director-level banker who sets the overall goals and tasks of a team for the vice president to oversee, which can include writing policies, managing funds or investments and developing staff to be more productive. Depending on their specific duties, a vice president can earn various bonuses and may have additional perks in their position.
A director of an investment bank usually oversees the daily operations of a specific department. They provide insight, guidance and thought leadership for the organisation and help determine the goals of their division. Directors are often an investment bank's most experienced professionals, with between ten and twenty years of financial experience and often a master's degree in finance or economics. A director's salary often depends on various factors, including their education, experience, the success of their division and the number of clients they helped secure. Directors often receive stock-based compensation.
How can bankers earn a higher salary?
Investment bankers can increase their earnings in various ways, such as applying their skills to different financial pursuits or through specialising in more complex financial products. Here are some ways investment bankers may increase their earnings:
Pursuing higher education: Clients and employers may offer a more attractive salary for investment bankers with a master's degree or higher in their discipline. Consider specialising in certain financial products, such as derivatives or debt instruments.
Earning financial certifications: Besides educational credentials, bankers can pursue financial certifications, such as a certified public accountant certification or a certified financial analyst certification.
Excelling in their work: Many employers offer lucrative bonus opportunities for bankers who meet or excel in their quotas, providing additional income.
Expanding network: Many investment banks offer commissions for bankers who can secure clients on their own. Expanding your network of potential clients can increase the chances of securing competing offers from different employers.
Key skills for investment bankers
Investment bankers typically need the following skills to excel in their industry and increase their earning potential:
Strong mathematical skills: Investment bankers consistently work with numbers and use complex mathematical formulas to calculate financial ratios and make comparisons between investments.
High computer proficiency: Investment bankers often use computer software to research, manage accounts and funds and perform other functions, which requires strong computer skills and understanding of common financial software, such as spreadsheets.
Strong financial management skills: Investment bankers understand how to raise capital and manage large sums of money to help their clients make the optimal financial decisions.
Investing acumen: Investment bankers have acumen in investing and understand returns, market caps, supply and other complex investment concepts.
Strong interpersonal skills: Since investment bankers work closely with other people, including clients and colleagues, they require strong interpersonal skills, such as communication and empathy to build strong professional relationships.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location. Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.
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