Remember Me
forgot your password?

Investment Banking Salaries: Just How High Are They?

Just how much do investment bankers actually earn? Most of the people who want to break into investment banking have no idea how much money is really involved.

Sure, the Managing Directors and other senior people make several million a year on average; group heads can make $10 million or more. And the CEO of an investment bank can make upwards of $20 million, with Goldman Sachs CEO Lloyd Blankfein making over $70 million in 2007.

But what does an entry-level investment banker - an investment banking analyst - actually make? Making six figures as a 23-year old just out of college is nice, but if you have to work 120 hours per week, you can't possibly be making that much per hour, right?

I honestly didn't know, so I had to investigate this and do some math myself. Could you actually make more working at McDonald's than you could at Goldman Sachs, at least on an hourly basis?

For investment banking analysts, the best case scenario ever happened in 2007. Base salaries were $60,000 and bonuses were $90,000, for a total of $150,000 in compensation. Again, not bad for a 23-year old's first "real-world job."

But what about the hours? Typically, entry-level bankers work around 90-100 hours per week in their first year. This could be off by a bit, but we'll go with it for now.

With 52 weeks of work per year (nope, no vacation) and 90 hours per week, you would have earned $32.05 per hour in the 2006-2007 year. If you had worked 100 hours, that would have dropped to $28.85.

Even if you had worked 140 hours a week, every week, you would still be at $20.60 per hour. And realistically it's impossible to work that much consistently, so you could have only done better than that.

But times have not always been that good. After the Nasdaq crash and at the start of the last major recession, investment banking took a turn for the worst and bonuses disappeared.

In 2001-2002, Analysts were lucky to get $10,000 for their bonuses. They still worked a lot, but mostly on marketing and pitching clients rather than doing deals and bringing in revenue.

A $10,000 bonus and $60,000 salary means $14.96 per hour at 90 hours a week. Believe it or not, that's still above McDonald's wages and is actually not even that bad relative to a lot of jobs in the US.

But if you had worked 140 hours per week, consistently, back then? You would have made 9.62 per hour.

According to a Wiki Answers page on McDonald's, the wage is $9.30/hour for those under 17 and $9.57/hour after "4 months of training."

This is a very low wage, and it looks like even in the worst possible years of investment banking, hourly analyst wages never dropped this low.

Actually, the above is not strictly true. What if you earned $0 for the bonus and only made the base salary of $60,000 while working 140 hours each week?

That would be $8.24 per hour. Finally: below McDonald's wages. So theoretically it is possible to earn less than a McDonald's worker as an investment banking analyst, though not terribly likely.

It could only happen if you worked a ridiculous amount in the very worst years of investment banking and got absolutely nothing for your bonus.

Even with a looming US recession, this scenario seems unlikely to return anytime soon. So your hourly wages as an investment banking analyst should be safe.

Ian Spellfield

Ian Spellfield, a former investment banker, advises students and young professionals on understanding investment banking and how to earn high investment banking salaries.

Rate this Article: 1 / 5 stars - 3 vote(s)
Print Email Re-Publish

Add new Comment



Captcha

  • Latest Careers Articles
  • More from Ian Spellfield

The Pros and Cons of Becoming a Travel Nurse

By: Adriana N. | 25/11/2009
A travel nurse is a licensed health care provider who works different short term assignments that call for traveling. Travel nurses usually works with an agency that coordinates jobs for the nurse. A travel nurse can work any where from a hospital, physician's office, or even on individual assignments. These...

Locum Tenens Positions Help to Combat Stress

By: Adrianna Noton | 25/11/2009
It is widely known that the medical profession is one of the most stressful ones in existence. Long hours, having to see more patients in less time and increasing pressure from insurance and pharmaceutical companies are some of the factors that lead to physician stress. Doctors and other medical professionals...

Surveying As a Career Choice is Exciting and Stable

By: 10x Marketing | 25/11/2009
Maps and geometry take up a large portion of taking surveys and interpreting them. If this interests you, consider surveying for your career.

Resume Tips: Improving Your Resume

By: Neil Morrical | 25/11/2009
Your resume is going to be the single most effective tool that you have at your disposal when you set out to get a new job. The resume that you submit is going to be the very first impression that potential employers will have of you and for this reason,...

Avoiding the Common Resume Mistakes

By: Neil Morrical | 25/11/2009
A resume is a vitally important tool; it is in fact the single most powerful first impression that you are likely to make when applying for a new job opening. Your resume will be the first thing that the hiring managers see when trying to fill a new position. Given...

A Career in the cleaning industry

By: jon richards | 25/11/2009
When you are working within the cleaning industry you will, obviously, have to have good standards of cleanliness. If you cannot complete this part of your job well then this is not the job for you. You need to be able to achieve and maintain high standards throughout your working day as if you do not complete this job well, it will be obvious to your employer.

Avoiding the Common Cover Letter Mistakes

By: Neil Morrical | 25/11/2009
Many people have attributed the success of landing a job to the fact that they wrote and delivered a strong cover letter. This cover letter could be the very first thing that a hiring company reads and therefore, could end up serving as the first impression you make. When you...

Investment Banking Salaries: Just How High Are They?

By: Ian Spellfield | 05/03/2008 | Careers
How much can you really make as an investment banker? A comparison of investment banking salaries, per hour, vs. what you could earn with a minimum wage job.

10 Ways To Get Cheap Life Insurance

By: Ian Spellfield | 01/03/2008 | Insurance
Overview of 10 ways to save on life insurance, avoid hidden costs and get the lowest cost premium available to you.

Lasik Surgery Risks: Just How Serious Are They?

By: Ian Spellfield | 01/03/2008 | Medicine
Overview of the risks associated with lasik surgery and how to decide whether or not it's right for you.

How To Answer Investment Banking Fit Interview Questions

By: Ian Spellfield | 01/03/2008 | Careers
Overview of the key points to get across in your investment banking interviews: you work hard, don't make mistakes, and love business.

Guide To Technical Questions In Investment Banking Interviews

By: Ian Spellfield | 01/03/2008 | Careers
Overview of accounting, valuation, and financial modeling questions that may be asked in investment banking interviews and how best to answer them.

How To Get An Investment Banking Job As A Lawyer

By: Ian Spellfield | 01/03/2008 | Careers
Overview of the paths you can take to get into investment banking from law and how to get interviews and sell yourself.

How To Write A Private Equity Resume

By: Ian Spellfield | 01/03/2008 | Careers
Overview of how to write about your investment banking experience on your resume and get the attention of private equity recruiters.

Caring for Pets with Arthritis

By: Ian Spellfield | 27/02/2008 | Pets
Older pets frequently develop arthritis. It's important to understand the signs of arthritis as they appear, and to combat them with the proper therapy options.

Submit Your Articles Free: Signup
Article Categories




Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.04, 1, w2)