Money is not the reason you should break into investment banking – but let's be honest, it's not irrelevant either. Understanding the compensation structure matters because interviewers will expect you to know what you're signing up for, and because it tells you a lot about how banks value different levels of seniority.
This guide covers the full compensation ladder from Analyst to Managing Director, across bulge brackets, elite boutiques, and middle-market firms in both London and New York.
How Investment Banking Compensation Works
IB compensation has two components: base salary and bonus. At junior levels, the split is roughly 50/50 to 60/40 in favour of base. As you move up, the bonus becomes the dominant component – Managing Directors can earn bonuses that are multiples of their base salary.
Bonuses are discretionary and tied to three things: overall firm revenue, your group's performance, and your individual contribution. In strong M&A years, bonuses swell. In downturns, they compress. This is why total comp figures are always given as ranges rather than fixed numbers.
In London, there's an additional wrinkle: bonuses are often partially deferred and paid in stock or restricted cash, particularly at VP level and above. The EU bonus cap (which historically limited bonuses to 200% of base salary) has been relaxed in the UK post-Brexit, but many firms still maintain internal caps.
If an interviewer asks 'why investment banking?' and you lead with money, you've already lost. But if they ask 'what are your salary expectations?' and you clearly have no idea what the role pays, that's a red flag too. Know the numbers – just don't lead with them.
Analyst (Years 1 – 3)
The Analyst role is your entry point. In London, first-year Analysts at bulge bracket banks typically earn a base salary of £60,000–£70,000, with a year-end bonus of £25,000–£50,000 depending on bank performance and your review. Total first-year comp ranges from roughly £85,000 to £120,000.
In New York, base salaries start at approximately $110,000–$120,000, with bonuses of $50,000–$120,000+. Total first-year comp: $160,000–$240,000.
Elite boutiques like Evercore, Centerview, and PJT generally pay at the top of these ranges or above. Middle-market firms pay below – typically 10–25% less than bulge brackets.
Comp increases each year at the Analyst level. By your third year, base salary has typically increased by £5,000–£10,000, and bonus expectations are higher because you're now running workstreams and training incoming Analysts.
Associate (Years 4 – 6)
Associates earn a meaningful step up. In London, base salary sits at £90,000–£130,000, with bonuses of £50,000–£120,000+. Total comp: £140,000–£250,000.
In New York, base salary ranges from $175,000–$225,000, with bonuses of $100,000–$200,000+. Total comp: $275,000–$425,000.
Associates who join from MBA programmes typically start at the same level as promoted Analysts, though some firms differentiate slightly. The work shifts from execution to project management and some client interaction.
Vice President (Years 7 – 10)
VP is where the job changes fundamentally. You're managing deal teams, owning client relationships, and responsible for deal execution quality. In London, base salary is £130,000–£200,000, with bonuses of £80,000–£250,000. Total comp: £210,000–£450,000.
In New York, base is $225,000–$300,000, with bonuses of $150,000–$400,000. Total comp: $375,000–$700,000.
At this level, a meaningful portion of bonus may be deferred – paid in restricted stock or deferred cash that vests over 2–3 years. This is the bank's retention mechanism.
Director / Senior Vice President (Years 10 – 14)
This level is sometimes called Director, sometimes SVP, sometimes Executive Director – titles vary by bank. In London, total comp ranges from £400,000 to £800,000. In New York, $600,000 to $1,200,000+.
At this level you're expected to be developing your own client relationships and contributing to revenue generation, not just executing on deals that senior bankers originate.
Managing Director (Year 14+)
MD compensation is almost entirely driven by revenue generation. Base salary is relatively modest compared to bonus – in London, base is typically £250,000–£400,000, but total comp can range from £500,000 to several million pounds. The very top rainmakers at elite boutiques can earn £3–5m+ in exceptional years.
In New York, base is $300,000–$500,000, with total comp of $1m–$5m+ at bulge brackets and significantly higher at top-performing boutiques.
The classic follow-up: 'Given the hours, is the hourly rate actually good?' At Analyst level, you're working 80–100 hours per week. At £100,000 total comp and 85 hours/week, that's roughly £22/hour – comparable to some far less stressful jobs. This improves significantly at senior levels where hours decrease and comp increases dramatically.
How Compensation Varies by Bank Type
Bulge Brackets (Goldman Sachs, JPMorgan, Morgan Stanley, Bank of America): Standardised pay scales, large bonus pools, strongest brand recognition. Pay is competitive but rarely the absolute highest.
Elite Boutiques (Evercore, Centerview, PJT, Lazard, Moelis): Often pay above bulge brackets at all levels. Smaller teams mean individual contribution is more visible, and bonus differentiation between top and average performers is more pronounced.
Middle-Market Firms (Jefferies, Houlihan Lokey, William Blair, Baird): Pay 10–25% below bulge brackets at junior levels. The trade-off is often better deal experience earlier, more responsibility, and – in some cases – better hours.
UK-Specific Banks (Rothschild, NM Rothschild, Barclays): Generally pay below US banks for equivalent roles in London, though Rothschild's advisory business is competitive with elite boutiques on comp.
London vs New York: The Real Difference
Raw numbers are higher in New York, but the gap narrows significantly after tax and cost of living. London Analysts pay ~30–35% income tax plus National Insurance. New York Analysts pay federal, state, and city income tax that can reach 40%+ combined. After tax and rent, the disposable income gap is smaller than the headline numbers suggest.
The bigger difference is bonus structure. US banks tend to pay a higher percentage of comp as cash bonus. UK banks defer more, particularly at VP and above.
What About Exit Opportunities?
Compensation context matters because it shapes your career decisions. PE Associates typically earn similar or slightly higher total comp than IB Associates, with the addition of carried interest that can be worth millions over a fund's life. Hedge fund comp is more variable – top performers earn significantly more, but average performers may earn less than in banking.
Corporate development, strategy, and industry roles typically pay 20–40% less than banking in cash terms, but offer significantly better hours and lifestyle.
Exploring a career in finance?
Commence helps you prepare for whichever path you choose. Start free.
