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Investment Banker Salary: How Much Do Investment Bankers Make

In this blog post, you will learn about investment banker, investment banker salary or how much do investment bankers make or earn.

What is Investment Banker

According to Wikipedia, an investment bank is typically a private company that provides various financial-related and other services to individuals, corporations, and governments such as raising financial capital by underwriting or acting as the client’s agent in the issuance of securities.

Or you can say that An investment banker is an individual who works in a financial institution that is in the business primarily of raising capital for companies, governments and other entities, or who works in a large bank’s division that is involved with these activities, often called an investment bank.

Investment bankers come from a variety of backgrounds, but a strong foundation in mathematics is important. Prospective investment bankers may have bachelor’s degrees in finance, accounting, or mathematics, for example, but may come from other fields like computer science or physics as well.

Investment bankers receive a great deal of their training through their employer. Recent graduates of bachelor’s degree programs typically start in analyst roles and complete a training program before they begin their job. These training programs can last several weeks and introduce new analysts to principles of accounting, risk, markets, financial statement analysis, and financial modeling. Analysts also learn negotiation, communication, and presentation skills. After they complete their initial training, analysts often take part in continuing education that is also provided by their employer.

What an Investment Banker do on day to day

You might be asking what do investment bankers do, and the answer to your question is discussed below.

Investment Banker

Investment banks mediate between companies that issue securities and the individuals or entities wishing to purchase them. In this respect, investment banks operate along two main lines: a “buy” side and a “sell” side. “Buy” side operations include services such as securities trading and portfolio management. “Sell” side activities include underwriting new lines of stock, marketing financial products, and publishing financial research.

To illustrate an investment bank’s “buy side” role in securities trading, suppose an investor wants to purchase 100 shares of company XYZ. They can solicit the services of an investment bank, where a stock broker can place an order and deliver these shares.

To illustrate an investment bank’s “sell side” role as an underwriter, suppose company XYZ plans to issue new shares of stock in an initial public offering (IPO) XYZ can solicit an investment bank to underwrite the shares, market and sell them to their clients. This way, the investment bank raises the funds that company XYZ hopes to gain from the issue of the new shares.

Investment Banker Salary/How much do investment bankers make

Before you can join an organization or indulge in a business, how much money or profit you will gain from there is one major question we do ask. Likewise in investment banking, one will ask how much investment bankers make or earn or investment banker salary. The answer to your question is also discussed below.

The Bureau of Labor Statistics estimates that financial analysts working for investment banker salary earned an average annual salary of $102,220 as of May 2011. The BLS categorizes higher-level bankers as financial managers and estimates they earn an average annual wage of $169,850. More precise salary estimates are available at Careers in Finance, an Internet service providing comprehensive information on specialty business careers. It forecasts a salary range for a first-year investment banking analyst at $100,000 to $150,000 annually, with an average annual salary of $110,000, including bonuses. At the upper end of the scale, the salary range for a managing director with a minimum of seven to 10 years of experience is $500,000 to $2 million, with an average annual salary of $1.2 million, including bonus. Bonuses are a major factor and easily average one to three times or more a banker’s annual salary.

A director at an investment bank might make only $350,000 (though the average is around $100,000) a year as a base salary—hey, we said relative—but in a good year, that director might have sold five mergers and managed two IPOs. Collectively, those deals will have put a billion dollars of investment money into the bank’s proprietary hedge funds. Shouldn’t the director get a piece of that pie?

Investment Banker

And note that the more senior you get, the more volatile the spread becomes between salary and bonus; a second year analyst might see a bonus of 100% or even 200% of his base; but it won’t be 20,000%. Not yet, anyway. Think about these numbers on a per-hour basis—an average orthodontist works forty-five hours a week and makes maybe $200,000.

An average investment banker salary in a modest group at an average bank might make $500,000, but they live in Manhattan (usually) where costs of living are crazy high (ever had a $26 hamburger in Omaha?); taxes are huge (half your pay goes back to Uncle Sam); and they work around twice the amount of hours as the orthodontist.

You are planning on becoming an investment banker, the above will help or guide on investment banking, how it works, investment banker salary or how much do investment bankers make.

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