14th November 2022 / By Neil Johnson

Investment banking career paths in the United Kingdom

Investment banking career paths in the United Kingdom
If you’ve got a burning desire to work in a fast-paced environment that will challenge you, force you to grow and develop quickly, pit you against the brightest and the best working on major corporate projects, then investment banking might be right up your alley.

What is investment banking?
Investment banks work on behalf of usually high-profile multinational, governmental, institutional and high-net-worth clients with complex financial needs. These range from raising capital by selling securities to investors, which then allow their clients to expand, restructure or undertake projects by reinvesting the raised funds, to providing strategic advisory and deal-making for mergers and acquisitions (M&A).

Why is investment banking a good career path for you?
Investment banking is highly coveted for its career progression possibilities, it is also highly competitive and demanding. Depending on the firm and your level of seniority, days are generally long and can be highly charged. For newcomers there is a distinct period of adjustment, but if you go in fully prepared and are undeterred by the challenges and demands, you can enjoy a long and rewarding career, both professionally and financially.

The capital markets from which investment banks raise funds are fast paced, while the companies that hire these banks pay well and expect quick results. Whether capital raising by selling securities on behalf of clients to negotiating M&A deals, the stakes are almost always high, with little room for error and time of the essence.

Within this, investment bankers are expected to meet challenges head on and to perform at a consistently high level. While this may sound ominous, it’s an ideal environment in which to test oneself, to grow and develop professionally, and ultimately forge a long and exciting career. And given the profession’s international scope, careers can easily lead overseas. Investment banks, especially the well- known ‘bulge-bracket’ firms such as Morgan Stanley, Goldman Sachs and JP Morgan have offices and regional HQs globally, so it’s very common for people to set career trajectories that take them around the world.

Does investment banking offer a good salary structure?
Investment banking is very hierarchical with a clearly defined career path (see below). You receive a very competitive salary for the long hours you work, boosted by bonuses and benefits, which will depend on yours and your team’s performance, but also the size of bank you work for.

Elite Boutiques: Generally pay the most. Evercore Partners, Jefferies, Lazard, Rothschild etc. 
Bulge brackets & top middle market banks: Goldman Sachs, JP Morgan, Morgan Stanley etc.
Regional Middle-Market Investment Banks: Pay the least but with better work-life balance.

In the UK, a first-year analyst — the entry level position — can expect to earn a base salary of £60,000, with annual bonuses ranging from £35,000 to £45,000 taking the overall take home to potentially over £100,000 — for your first year out of university!

As you move up through the investment banking hierarchy from analyst to associate to assistant vice president (VP) to vice president to senior vice president and finally to managing director (MD), or rainmaker, your salary moves very favourably too, with MDs capable of earning into the millions.

Investment banking career paths

  1. Analyst


Job Role and responsibilities
The entry level role, analysts are effectively the foot soldiers in an investment bank. They build financial models, carry out financial analysis and due diligence, create presentations and pitch books, conduct research, and handle support duties (photocopying, getting coffee or lunch etc).

Experience in the field
Analysts gain work experience in areas including equity and debt offerings, valuations, private placements, leveraged buyouts, M&A, IPOs, and other strategic advisory work.

Skills and knowledge required
Analysts need to be dedicated, self-confident, energetic and ambitious team players; they must be analytically as well as commercially astute; they need to understand corporate finance and accounting principles; they must have honed IT skills, especially of Microsoft Office, but data interrogation and financial modelling tools will go a long way too; and arguably most importantly, they need to be great communicators.

Qualifications
Generally, a 2:1 bachelor’s degree and often completion of summer internship or other work placement programmes at banks or relevant institutions.

Salary structure

First year investment banking analyst
  • Salary and bonus = £95,000 - £105,000

Second year investment banking analyst
  • Final salary = £100,000 - £125,000

Third year investment banking analyst
  • Final salary = £125,000 - £145,000

Next stage of careerAfter several years as an analyst, the next step in an investment bank is associate.

How to get promoted
You need to be able to prove leadership skills by mentoring first year analysts and summer interns. Impress bosses and senior bankers by earning more than the bank pays you and generally making their lives easier by doing a great job.

2. Associate

Job Role and responsibilities
Associates perform more of a checking than doing role, that is, checking analysts’ work in Excel and PowerPoint and less time creating the product. This direct line management for analysts means more responsibility over deliverables and managing projects, and therefore more communication with senior bankers.

Experience in the field
Client interaction will increase as you begin to attend more meetings and pitches, and become the first point of contact for queries regarding modelling.

Skills and knowledge required
As with analysts, but with more leadership, time and project management, and communication expertise.

Qualifications
Analysts will be promoted to associate, or associates are often hired from MBA programmes.

Salary structure
First year investment banking associate
Salary and bonus = £155,000+

Second year investment banking associate
Full package = £190,000+

Third year investment banking associate
Full package = £210,000+

Next stage of career
After several years as an associate, the next step is assistant vice president.

How to get promoted
You will have by now proven a technical competence for investment banking, your network and client relationships will be expanding, and you will have won strong ties with senior bankers/mentors.

3. The VP years: assistant VP; VP; senior VP

Job Role and responsibilities
The VP years are the gateway from junior to senior banker. Time spent in Excel and PowerPoint will be at a minimum, with VPs assuring the quality of work carried out by analysts and associates. You spend more time with senior bankers to understand what they want and how to deliver it. It’s more of an office political role, as VPs will manage workflow division for analysts and associates and settle disputes.

Experience in the field
You will talk more with clients and potential buyers, sellers and investors, and handle deal-related requests. As you move through the gears into senior VP, ahead of moving up to MD, you will also start to develop relationships with potential clients and seek out deals.

Skills and knowledge required
You will work more collaboratively with other teams in the bank as you develop and deliver pitches and launch processes. You will start to become more sociable with clients and begin acting as a lead in key areas. A strong leadership and management skillset will also be critical.

Qualifications
Hired from third-year associate, VPs will often have an MBA.

Salary structure
Recruitment firm Dartmouth Partners says that in 2022 VPs at major banks in London, who are generally around 28 years old, can expect an average salary of £167,000 plus an average bonus of £228,000 — a 10% salary bump on 2021 and 30% increase to bonuses. This translates to a total package of £395,000, which rises to £439,000 in just two years when senior VP is achieved.

Next stage of career
From senior VP to MD.

How to get promoted
People spend four-five years in the VP roles before seeking the big move to MD. They will be judged fit by proving that they’ve always wanted it, that, in fact, they’re effectively already operating at that level. Your contact book will be thick and valuable, and you’ll have senior supporters within the bank who want to see you make MD. You’re a fantastic salesperson who lives and breathes the bank’s values.

4. MD — rainmaker

Job Role and responsibilities
So called rainmakers for obvious reasons — they bring the rain, the pay dirt, the deals, the profit. They are the revenue-generating heart of a bank. MDs originate and lead the execution of M&A and IPO advisory, and capital raising. Perhaps most importantly, they bring a broad network and a proven track record with which they generate new business.

Skills and knowledge required
With often a minimum of 15 years investment banking experience in the rear view mirror, these are the generals who task the VPs and associates with deal management, while they focus on business development and deal execution, with MD bonuses based almost entirely on what they win and execute.

Salary structure
Top of the food chain for the front end of investment banking. The annual take home (salary plus bonus) for MDs can range from up to £500,000 for first year MDs to £2 million for those with three+ years under their belt.

Conclusion
If a challenging but highly rewarding career in financial services, with overseas opportunities and the chance to work your way up to deal maker appeals, a career in investment banking might just be the right path for you. If the slog to the top of an investment bank seems too daunting, there are many opportunities for exits into hedge funds or private equity after years spent as an analyst.