A Guide to
Investment Banking Analyst Salary
There are few entry level roles in the world as competitive as the investment banking analyst, but then there are few that pay as well, if you’re willing to put in the hours.
What is investment banking?
Investment banks provide corporations, institutions and governments with two core services: underwriting (capital raising) and consulting on mergers and acquisitions (M&A).
Does investment banking pay well?
Simply put, investment banking analyst salaries are very good. It pays very well from entry level onwards, hence jobs in investment banking are highly coveted and application processes competitive. But it’s well known that investment banking is also a work hard environment, with long hours, and a lot of pressure and responsibility. Yet this is also an appeal, because there’s a genuine buzz to performing well, while you also quickly gain valuable experience.
What are the job roles in investment banking?
This is the basic investment career path:
- Intern or summer intern.
- Vice President (VP).
- Director or Senior VP (SVP).
- Managing Director (MD).
Who is an investment banking analyst?
Banks hire investment banking analysts as graduates who will have done one or more internships at investment banks in the summers while at university. While a finance degree is relevant, it’s not a deal breaker. Top investment banks hire from all kinds of academic backgrounds. Analysts will nevertheless be bright with generally strong academic records.They will have been involved in extracurricular activities that show personality and ambition. Some might leave university to gain work experience in a related field, such as at a Big 4 professional services firm, before entering an investment banking analyst programme as a lateral hire.
What does an investment banking analyst do?
Investment banking analysts join a two-to-three-year programme in which their role is ultimately to support senior bankers, whose role is part advice, part sales and marketing, and part negotiation and deal-making, in winning and closing deals. Analysts are effectively the foot soldiers in an investment bank, who do a lot of the nitty gritty.This means supporting in areas including equity and debt offerings, valuations, private placements, leveraged buyouts, M&A, and strategic advisory work. They build financial models, carry out financial analysis and due diligence, create presentations, conduct research, and handle support duties (photocopying, getting coffee or lunch etc).
Day-to-day activities include:
- Developing presentation materials: Researching, writing and editing research reports, status reports, briefings and pitch books. Analysts will take ownership of these materials and manage their journeys through the editorial and production pipeline). PowerPoint is a key tool here.
- Financial modelling: Excel is your friend. Financial modelling combines accounting, finance and business metrics to create a forecast of a company’s future results. Analysts track financial trends, isolate business and revenue cycles, and gauge performance.
- Reviewing financial models and information to determine a deal's desirability: Using financial models to simulate possible outcomes, analysing market trends and performing due diligence, which requires deep sector understanding, as well as accounting knowledge (eg financial statements, balance sheets).
- Industry research: Supporting sector teams, eg healthcare, technology, manufacturing, by talking to company executives and investors to build cases for or against investments in specific firms or industries.
What are the skills required to be an investment banking analyst?
Successful investment banking analysts will possess or be on their way to possessing certain key skills:
- Strong communication, interpersonal and networking skills.
- Client and stakeholder management.
- Critical and analytical thinking, inquisitiveness and curiosity.
- Strong numerical and analytical skills.
- Attention to detail.
- Demonstrate integrity and ethics.
- Quantitative and qualitative research.
- Understand accounting terms and financial statements.
- Interrogate and synthesize large data sets.
- Ability to perform well in a team and individually.
- Project and time management.
- Dedication, ambition, energy, resilience and commitment.
- Self-confidence, able to make difficult decisions, and ask good questions.
- Ability to solve problems and adapt to fluid situations.
- Comfortable working under pressure, managing priorities, juggling multiple concurrent deadlines and coping well in stressful situations.
- Adapt rapidly to changing circumstances.
- Proficiency in Microsoft Office, especially Excel and PowerPoint.
- Commercial acumen, and awareness of markets and business trends.
How many years of work experience does an investment banking analyst role require?
Gaining work experience in investment banking is a must if you hope to proceed to an analyst position — 73% of graduates joining the top investment banks have been recruited via work experience programmes.
Between the top investment banks, mid-range and boutiques, there are a range of internships that are generally designed to fit around academic year. Four-to-10-week summer placements are the most common, such as those offered by Barclays, while some such as JP Morgan also offer a winter programme.
Some banks will also offer ‘off-cycle’ programmes, which are essentially outside of the academic year and can last up to six months, as is the case with JP Morgan’s seasonal internship.
It’s worth noting that such internships offer good salaries, not far off the base rate for full-time analysts (see below), however, with this, you’ll likely work the same hours as the analysts and associates you’ll work with.
Banks might also have diversity programmes, which seek to provide access to the internships from underrepresented groups. Barclays, for example, runs the two-day Discovery insight programme every April, which gives people a chance to find out about the bank, the industry and the various divisions and roles, and for Barclays to assess and select people for summer internship placements.
University students should aim to secure a placement in their penultimate year. Apply early and don’t be put off if you need to make several applications before being accepted — banking internships are highly sought after, after all, they can lead to an offer of a full-time analyst role.
Also, it’s not uncommon for people to undertake several internships and post-university work experience. There’s no hard and fast rule about how many internships or years of experience is enough to landing a role. People can be offered analyst positions while still at university if they’ve impressed in an internship, while others might have to gain more experience and broaden their networks for a year or two post-graduation.
Work experience gained in an investment bank’s back-office functions (operations, technology, finance, administration) can also be useful, as it demonstrates real commitment to a career in the industry.
So too does work experience gained in closely related fields like asset or wealth management, or in professional services firms such as Deloitte, PwC or EY, with their financial and business advisory and audit and accounting functions.
People do move from full-time roles elsewhere, but it’s not easy. You need to come from a finance background, with relevant experience, or have a good postgraduate qualification or MBA, but also with relevant work experience. There will of course be transferable skills that can make you stand out, but analyst roles are generally graduate jobs, with banks looking for trainable people early in their career journeys.
How much does an investment banking analyst earn?
1st year investment banking analyst
- Basic salary = £60,000.
- Signing bonus up to £5,000.
- Bonus: Low = £35,000 | Mid = £40,000 | High = £45,000.
- Final salary = £95,000 - £105,000.
2nd year investment banking analyst
- Basic salary = £65,000.
- Bonus: Low = £35,000 | Mid = £50,000 | High = £65,000.
- Final salary = £100,000 - £125,000.
- Basic salary = £70,000.
- Bonus: Low = £55,000 | Mid = £65,000 | High = £75,000.
- Final salary = £125,000 - £145,000.
What determines an investment banking analyst’s bonus?
Year-end bonus sizes, calculated as a percentage of base salary, depend on several factors:
- Individual performance — the bucket dictates the bonus (see below).
- Group performance — Team success.
- Firm-wide performance — good or bad year for deal sizes, counts and revenue.
- Firm type — boutique to big player.
Individual analyst performance is generally put into three buckets:
- Top-bucket — top performers, they get 100% of their bonus, sometimes more.
- Mid-bucket — 85% of their base salary as a bonus.
- Bottom-bucket — the weakest, getting just 70%.
Investment banking analysts move to associate after two to three years, or they exit into jobs in private equity, asset or wealth management, hedge funds, trading and so on. It’s a tough few years, but it can fast track rewarding and successful careers in global or local financial services.