Aged 27 in IBD, you should be earning £260k ($325k)
Lest there were ever any uncertainty about the uncanny appeal of investment banking careers to hundreds of thousands of students globally, the latest London investment banking division (IBD) salary and bonus survey from recruitment firm Dartmouth Partners helps explain the draw. It's the pay. If you go into banking aged 21, you should be earning £260k ($325k) six years later.
The chart below from Dartmouth Partners reflects the compensation landscape. After just two years in banking (as an analyst two) you can expect to earn £100k. Stick around until you become a first year vice president (VP1) and you'll be on the £260k figure. If all goes to plan, you could be earning over £325k in total compensation (salary plus bonus) as a third year vice president (VP3), aged around 30.
Total compensation, investment banking division, London
Source: Dartmouth Partners
Of course, this doesn't mean you'll automatically earn these kinds of sums if you work in a bank. Dartmouth's figures apply only to a very specific subset of banking jobs - those in M&A, equity capital markets or debt capital markets (the investment banking division). They also apply only to first (and maybe second) tier investment banks. If you get a risk management job at a French bank in the expectation of earning these sums, you will be disappointed.
Even so, Darmouth's figures help explain ongoing disapproval with pay in banking, which is perceived by many as still too high after the financial crisis. They also show that this is a good time to be an investment banker in your 20s: pay has never been higher.
Naturally, bald figures say nothing about working conditions. Yes, you might want to earn hundreds of thousands as a young banker - but do you also want to work 80 hours a week? The complaint among junior bankers is always that they pay is not so great after all when the harsh working hours are factored in. Yes, you'll be earning a lot but you'll also be working twice as hard as many of your peers.
Presuming you do - or you think you do - the chart above also reinforces a point we've made before. - If you manage to achieve a job in an investment banking division, and you survive the excoriating first two years, you might want to stick with it for another five years at least. Pay in IBD rises exponentially and if you leave prematurely, you will have had all the harshness of the analyst years with none of the big pay packages that come from being a senior associate or vice president (VP).
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