How Much Does An Investment Banker Make?
The duties and responsibilities of an investment banker are very different from that of a traditional banker, so compensation for this type of financial sector job isn't the same as the typical pay rates for retail banking jobs. Traditional bankers focus on assisting individuals and business customers with deposit accounts, loans, safe deposit boxes, etc., and typically work a standard nine-to-five (or so) workday. Investment bankers, on the other hand, support corporations, businesses, organizations, and even governments in their efforts to raise significant capital needed for growth and development.
This means investment bankers may be involved in such duties as offering bonds, issuing stock shares, helping with mergers and acquisitions, or advising on asset divestitures, as well as helping clients implement strategies to prevent bankruptcy or avoid having their stocks delisted. This type of position requires long hours in a consistently fast-paced, high-stakes environment. The work of an investment banker can start very early in the morning and go late into the evening, and this career may often require weekend work.
Not only do investment bankers need to be knowledgeable about the financial services industry as a whole, but they also need expertise in securities regulations and the stock market, excellent analytical abilities, and outstanding communication skills (especially persuasive communication). Pay for these individuals tends to be higher than many other financially focused jobs, but you should definitely be prepared to work long hours if you go into this field.
The average pay rate for investment bankers
So just how much do investment bankers in the United States get paid? According to Glassdoor, investment bankers typically earn a total compensation ranging between $169,000 and $308,000 per year. This includes a base pay (salary), bonuses, commission, profit sharing, and/or other additional pay. Average annual compensation for investment bankers is $228,834: $143,032 in salary, plus $78,802 in additional pay. (See Money Digest's roundup of 30 high-paying jobs in the U.S.)
Keep in mind this is a snapshot of average pay in the field, meaning it includes compensation for entry-level, senior-level, executive investment bankers. The path to becoming an investment banker usually starts with working as a junior banker or a financial analyst. The median average salary for financial analysts is $96,220, or $46.26 an hour, according to the Bureau of Labor Statistics. There's also potential to earn $70,000 or more in year-end compensation, though this pay isn't guaranteed.
Path to an investment banking career
Pursuing a career as an investment banker typically requires, at minimum, a bachelor's degree in finance, economics, or a closely related field, as well as finance-related work experience. Note that some financial institutions offer internship programs to college students, which can be a good way into the field for those lucky enough to secure a position. Keep in mind that internships are highly competitive, and there is no guarantee of being hired after completing one.
If you're unable to secure an entry-level job in investment banking immediately upon completing college, focus on gaining experience in other finance-related fields while you continue to apply for investment banking roles. Working as a financial analyst or an investment consultant can be a good way to gain relevant experience. The Bureau of Labor Statistics reports employment for financial analysts is forecast to grow by 8% in the decade between 2022 and 2032, which is faster than the national average for all occupations.