Compensation is one of the most searched topics in investment banking, and for good reason. Understanding exactly how much you can expect to earn at each level, how bonuses are determined, and how pay differs across firm types is critical for making informed career decisions. Yet most online resources either present outdated figures, conflate different firm types, or fail to explain the mechanics behind how compensation actually works.
This guide presents a complete breakdown of investment banking compensation for 2025, covering every level from first-year analyst through managing director. Beyond just listing numbers, it explains how base salaries are set, how year-end bonuses are calculated and distributed through performance buckets, why elite boutiques pay significantly more than bulge brackets at junior levels, and how geographic location affects your take-home pay. Whether you are deciding between banking and other careers, negotiating an offer, or planning your long-term trajectory, this guide gives you the real numbers and the context behind them.
One important caveat before diving in: compensation in investment banking is not static. It fluctuates with deal activity, revenue cycles, and competitive dynamics. The figures below reflect 2025 compensation levels for New York-based front-office investment banking roles, representing the 25th to 75th percentile range at most firms. Your actual compensation will depend on your firm, group, performance bucket, and the broader market environment. With that context, here is what you need to know.
How Investment Banking Compensation Works
Before looking at specific numbers, you need to understand the four components that make up total compensation in investment banking. Most people outside the industry only think about base salary, but the bonus component often equals or exceeds base pay, especially at senior levels.
Base Salary
Base salary is the fixed annual amount paid in regular biweekly or monthly installments. It is set by level and does not vary based on individual performance. When banks adjust base salaries, as Goldman Sachs did in raising first-year analyst base pay from $85,000 to $110,000 over several rounds, the change typically applies across the entire analyst class at that firm, and competitors usually match within months. Base salary provides income stability and is the foundation on which bonuses are calculated.
Year-End Bonus
The year-end bonus is where the real money comes in. Paid annually (typically in January or February for the prior year), bonuses are performance-based and represent the variable component of compensation. At the analyst level, bonuses typically range from 65% to 100% of base salary, with top performers sometimes receiving over 100%. At senior levels, bonuses can be multiples of base salary and represent the majority of total compensation. The year-end bonus is determined by a combination of individual performance reviews, group revenue, and overall firm profitability.
Stub Bonus
The stub bonus is a prorated bonus that new hires receive at the end of their first partial calendar year. Since most analysts start in June or July but bonuses are paid on a calendar-year basis, new analysts receive a stub bonus in January for their first five to six months of work. Stub bonuses typically range from $25,000 to $40,000 at bulge bracket banks, and they serve to bridge the gap before the first full year-end bonus arrives twelve months later. Think of it as a partial reward for the half-year you worked before the bonus cycle resets.
Signing Bonus
Some firms offer one-time signing bonuses to secure accepted candidates, particularly for associate hires coming from MBA programs. Signing bonuses typically range from $25,000 to $50,000 for associates and are less common (and smaller) for analysts. This component is a one-time payment and does not recur in subsequent years.
Total Compensation Formula
Your total compensation in any given year is the sum of these components:
For a first-year bulge bracket analyst, that looks like $110,000 base plus a $70,000 to $110,000 year-end bonus, yielding total compensation of $180,000 to $220,000 before the stub bonus in the first partial year.
Compensation by Level: The Complete Breakdown
The following table summarizes 2025 compensation across all levels at bulge bracket banks in New York. These represent typical ranges, with elite boutiques paying at the higher end or above these figures.
| Level | Base Salary | Bonus Range | Total Compensation |
|---|---|---|---|
| 1st Year Analyst | $110,000 | $70,000 - $110,000 | $180,000 - $220,000 |
| 2nd Year Analyst | $125,000 | $85,000 - $140,000 | $210,000 - $265,000 |
| 3rd Year Analyst | $150,000 | $100,000 - $170,000 | $250,000 - $320,000 |
| 1st Year Associate | $175,000 | $100,000 - $200,000 | $275,000 - $375,000 |
| 2nd Year Associate | $200,000 | $150,000 - $250,000 | $350,000 - $450,000 |
| 3rd Year Associate | $225,000 | $175,000 - $275,000 | $400,000 - $500,000 |
| Vice President | $250,000 - $300,000 | $250,000 - $400,000 | $500,000 - $700,000 |
| Director / SVP | $300,000 - $350,000 | $300,000 - $500,000 | $600,000 - $850,000 |
| Managing Director | $400,000 - $600,000 | $400,000 - $1,000,000+ | $800,000 - $1,600,000+ |
These are pre-tax figures for New York City front-office roles. Secondary markets (Houston, Chicago, Charlotte) typically pay 10-15% less in total compensation, while London compensation runs approximately 15-30% below New York levels.
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Analyst Compensation: Your First Three Years
The analyst program is where most investment banking careers begin. Compensation rises meaningfully each year as you gain experience and take on more responsibility, and the spread between top and bottom performers widens with each annual bonus cycle.
First-Year Analyst
First-year analysts at bulge bracket banks earn a base salary of $110,000. This is the current industry standard after Goldman Sachs, JPMorgan, and others raised base pay from $85,000 in several rounds between 2021 and 2023. Most competitors matched quickly, making $110,000 the floor at major banks.
The first-year experience includes a stub bonus of $25,000 to $40,000 paid in January after starting the previous summer. Your first full year-end bonus arrives roughly twelve months later and typically ranges from $70,000 to $110,000 depending on your performance bucket. Top-bucket first-year analysts at strong groups can see total comp approaching or exceeding $220,000, while bottom-bucket analysts might land closer to $180,000.
A common question is whether the stub bonus "counts" as part of your first-year compensation. Technically it compensates for your first partial year (July through December), while your year-end bonus compensates for the following full calendar year. In practice, most analysts think of their first full year of total comp as $180,000 to $220,000 at bulge brackets.
Second-Year Analyst
Base salary bumps to approximately $125,000 in the second year, reflecting increased responsibility. Second-year analysts are expected to run their own workstreams, manage interns, and require less hand-holding from associates and VPs.
Year-end bonuses for second-year analysts typically range from $85,000 to $140,000, with stronger performance differentiation than in the first year. Banks have more data to evaluate your work quality, reliability, and client interaction skills by this point. Total compensation for second-year analysts runs $210,000 to $265,000 at bulge brackets, with elite boutique second-years often earning $250,000 to $300,000 or more.
Third-Year Analyst
Not all banks have a formal third year (the traditional program was two years with a promote to associate), but the trend toward three-year analyst programs has become common. Third-year analysts earn base salaries of approximately $150,000 with bonuses of $100,000 to $170,000, bringing total comp to $250,000 to $320,000.
At this stage, you are essentially doing associate-level work: running deal processes, building complex models, managing junior analysts, and interacting directly with clients. The compensation reflects that increased contribution. Many third-year analysts also begin receiving interest from private equity firms, hedge funds, and other buy-side opportunities, which gives context for evaluating whether to stay or pursue exit opportunities.
Associate Compensation
Associates enter the role either through promotion from the analyst program ("promote associates") or directly from MBA programs ("direct-hire associates"). Compensation is similar for both paths, though promote associates sometimes negotiate slightly higher starting comp based on their existing relationships and track record.
First-Year Associate
First-year associates earn base salaries of approximately $175,000 with year-end bonuses of $100,000 to $200,000, yielding total compensation of $275,000 to $375,000. The wide bonus range reflects significant variation by firm type and performance. At firms like PJT Partners, top-ranked first-year associates have earned approximately $400,000 in total compensation, while associates at smaller bulge brackets might fall closer to $275,000.
Direct-hire MBA associates typically receive a signing bonus of $25,000 to $50,000 that partially offsets the opportunity cost of business school. At elite boutiques, associate base salaries are approximately $25,000 higher than bulge bracket equivalents, reflecting the premium these firms pay to attract talent from top MBA programs and competing offers.
Second and Third-Year Associates
Base salaries progress to $200,000 in the second year and $225,000 in the third year, with bonuses scaling from $150,000 to $275,000. By the third year, total compensation reaches $400,000 to $500,000 at strong-performing groups. Associates at this level are expected to manage full deal processes, supervise analyst teams, and begin developing client relationships that will matter at the VP level.
The associate-to-VP promotion is a critical inflection point because it marks the shift from execution-focused work to a hybrid role that includes business development. Your compensation trajectory from VP onward depends increasingly on your ability to generate revenue rather than just execute transactions well.
Deferred Compensation Begins
Starting at the associate level, a portion of year-end bonuses is typically paid in restricted stock or deferred cash rather than immediate cash. Associates see roughly 10-20% of their bonus deferred, with the deferred portion vesting over two to four years. This structure aligns your incentives with firm performance and serves as a retention mechanism, since leaving before vesting means forfeiting unvested compensation.
VP, Director, and Managing Director Compensation
Senior compensation in investment banking becomes increasingly variable and increasingly tied to revenue generation. The predictable progression of analyst and associate pay gives way to much wider ranges driven by individual performance, group revenue, and market conditions.
Vice President
VPs earn base salaries of $250,000 to $300,000 with total compensation of $500,000 to $700,000. At the VP level, you are managing deal teams, maintaining client relationships, reviewing all analytical work, and beginning to contribute to business development. Your bonus depends on a combination of deal execution quality, client management, team leadership, and the overall revenue of your group.
VP is often called the "toughest level" in banking because responsibilities expand dramatically while the path to further promotion narrows. Not everyone who makes VP will make Director, and the compensation range reflects that uncertainty: top-performing VPs in strong groups can approach $700,000, while VPs in weaker groups or with limited client relationships might earn closer to $450,000.
Deferred compensation at the VP level rises to 20-30% of the bonus, with larger banks deferring a higher percentage than boutiques.
Director and Senior Vice President
Directors (the title varies by firm, with some using SVP or Executive Director) earn base salaries of $300,000 to $350,000 with total compensation of $600,000 to $850,000. At this level, revenue generation expectations become explicit. You are expected to source new deals, maintain a book of client relationships, and bring in mandates. Your bonus is increasingly tied to the fees your deals generate.
The Director level is where many career bankers plateau. Those who develop strong client relationships and consistently source deals get promoted to Managing Director, while others remain at this level or leave for corporate development, private equity operating roles, or other opportunities.
Managing Director
MDs represent the pinnacle of the investment banking career ladder and the widest compensation range by far. Base salaries of $400,000 to $600,000 are almost secondary to bonuses that can range from $400,000 to well over $1,000,000 depending on deal activity and revenue generation.
The median MD at a bulge bracket bank earns total compensation of approximately $800,000 to $1,200,000, but the range extends far beyond that. Top-producing MDs at elite boutiques who lead major advisory mandates can earn $2,000,000 to $5,000,000 or more in strong years. The M&I compensation report notes that MDs have the highest "beta" relative to deal activity: "when deal activity and fees are up, they benefit the most, and when they fall, they also take the most damage."
MD compensation is heavily deferred, with 30-50% of bonuses paid in restricted stock or deferred cash vesting over three to five years. This deferred component can represent hundreds of thousands of dollars in any given year and ties senior bankers to long-term firm performance.
How Year-End Bonuses Are Determined
Understanding the bonus determination process is critical because it drives most of the variation in compensation at every level. Two analysts at the same firm with the same base salary can receive bonuses that differ by 40-70% depending on their performance bucket.
Performance Buckets
Most banks sort employees into three to five performance buckets at each level, ranging from top bucket to bottom bucket. Your bucket placement determines your bonus as a percentage of a target number (usually expressed relative to base salary).
At the analyst level, a typical breakdown looks like:
- Top bucket: 90-105% of base salary as bonus (some firms exceed 100%)
- Upper-middle bucket: 80-90% of base salary
- Middle bucket: 70-80% of base salary
- Lower-middle bucket: 60-70% of base salary
- Bottom bucket: 50-65% of base salary
The spread between top and bottom is significant. For a first-year analyst with a $110,000 base, the difference between top bucket ($105,000 bonus) and bottom bucket ($60,000 bonus) is $45,000 in a single year. Over a two or three-year analyst stint, top-bucket performers can earn $100,000 to $150,000 more in cumulative bonuses than their bottom-bucket peers.
What Determines Your Bucket
Several factors influence your performance bucket placement:
Quality of work product: Accuracy of models, thoroughness of analysis, attention to detail in presentations. Mistakes in live deal materials damage your reputation quickly.
Reliability and responsiveness: Senior bankers value analysts who respond fast, deliver work on time, and can be trusted to execute without constant supervision. Being "the person who always delivers" matters more than occasional brilliance.
Volume and complexity of deals: Working on more deals or more complex transactions (live M&A rather than pitch books) signals higher contribution. Analysts staffed on marquee deals often land higher buckets.
Attitude and team dynamics: Being pleasant to work with, volunteering for assignments, and supporting teammates affects reviews. Senior bankers explicitly comment on cultural fit in performance evaluations.
Client interaction: Analysts who handle client requests professionally and contribute in meetings stand out, especially at the second and third-year level.
Group Revenue and Firm Performance
Individual performance determines your bucket placement within your group, but the overall bonus pool available to your group depends on group revenue and firm-wide profitability. A top-bucket analyst in a group that had a weak revenue year might receive a smaller absolute bonus than a middle-bucket analyst in a group that generated record fees.
This is why group selection matters for compensation. An analyst in an M&A or restructuring group at a top firm during a strong deal market will likely earn more than an analyst in a slower coverage group, even with similar individual performance. Understanding industry cycles and group dynamics when choosing between offers can have meaningful compensation implications over a multi-year stint.
In 2024, global investment banking revenue increased 30-37% year-over-year, driven by recovering M&A activity and strong capital markets. JPMorgan reported a 49% increase in IB revenue and Goldman Sachs saw profit rise 105%. Despite this, total compensation increased only 10-15% across most levels, as banks remained cautious about resetting pay expectations too aggressively after the 2021 compensation spike.
Compensation by Firm Type
Not all investment banks pay equally. The three main categories of banks differ meaningfully in both the level and structure of compensation. Understanding these differences helps you evaluate offers and set realistic expectations.
Bulge Bracket Banks
Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America, Citi, and Barclays set the baseline for industry compensation. The numbers in the main comparison table above represent typical bulge bracket ranges. These firms offer predictable compensation progression, large analyst classes, comprehensive benefits, and the strongest brand recognition.
The tradeoff is that bulge bracket banks have larger deal teams (meaning less individual responsibility per junior banker), more bureaucratic structures, and greater competition for top-bucket placement. You are one of many analysts, and differentiation is harder when your class size is 50 to 100 people.
For a deeper comparison of different bank types, see the full guide to bulge bracket vs boutique vs middle-market banks.
Elite Boutiques
Firms like Centerview, Evercore, PJT Partners, Lazard, and Moelis consistently pay a 20-40% premium in total compensation over bulge brackets at the analyst and associate levels. Centerview is widely reported to pay the most of any investment bank, often 20-30% above the second-highest payer.
Why do elite boutiques pay more? Several structural factors drive the premium:
Smaller deal teams mean each junior banker handles more responsibility per deal, justifying higher pay. An analyst at Centerview might staff two deals with a lean team, while a Goldman analyst might be one of four analysts on a larger deal team.
Pure advisory focus generates higher margins than the diversified business models of bulge brackets (which include lower-margin capital markets and sales and trading). More revenue per banker means more compensation per banker.
Leaner hierarchies mean fewer layers between analysts and senior leadership, with bonus pools divided among fewer people.
Competitive recruiting pressure forces elite boutiques to pay premiums to attract talent that might otherwise default to Goldman or Morgan Stanley brand names.
At the associate level, elite boutique base salaries run approximately $25,000 higher than bulge bracket equivalents. PJT Partners top-ranked first-year associates earned approximately $400,000 in total compensation in 2024, well above the bulge bracket associate range.
Middle-Market Banks
Firms like Jefferies, William Blair, Piper Sandler, Houlihan Lokey, Lincoln International, and Harris Williams typically pay 15-25% less in total compensation than bulge brackets. A first-year analyst at a strong middle-market bank might earn $150,000 to $180,000 in total compensation versus $180,000 to $220,000 at a bulge bracket.
The compensation discount comes with potential advantages: better hours (though still demanding), more deal responsibility at junior levels, less bureaucracy, and often stronger regional deal flow in specific sectors. For candidates who value lifestyle, mentorship, or specific industry exposure, the lower compensation can be a worthwhile tradeoff.
Middle-market compensation also has a wider range than bulge brackets because firm size and profitability vary more. A top-performing group at Houlihan Lokey might pay comparably to a bulge bracket, while a smaller regional boutique might pay meaningfully less.
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Geographic Compensation Differences
Where you work affects your take-home pay, though the relationship between location and compensation is more nuanced than a simple cost-of-living adjustment.
New York City
New York is the benchmark for all investment banking compensation. The figures throughout this guide reflect NYC front-office pay. The city commands premium compensation because it has the highest concentration of banking activity, the most competitive talent market, and the largest deal volumes. Approximately 65-70% of all U.S. investment banking jobs are based in New York.
Other U.S. Cities
Secondary markets like San Francisco, Houston, Chicago, Charlotte, and Dallas typically pay 10-15% less in total compensation than equivalent NYC roles. Base salaries are often identical (firms maintain national base salary scales), but bonuses tend to be lower due to smaller deal volumes and less competitive pressure for talent. The lower cost of living in cities like Houston or Charlotte partially offsets the compensation discount, with some bankers reporting better quality of life despite lower nominal pay.
London
London investment banking compensation runs approximately 15-30% below New York levels in USD terms. First-year analyst base salaries are approximately 60,000 to 70,000 GBP with total compensation of 95,000 to 145,000 GBP depending on year and performance. The discount reflects a combination of lower industry-wide pay norms in Europe, different tax structures, and a less aggressive competitive dynamic among banks for talent.
Hong Kong and Singapore
Asian financial centers pay competitively, often matching or approaching New York levels for analyst and associate roles. However, senior compensation (VP through MD) tends to be lower due to smaller deal sizes and lower advisory fee pools. The living cost advantage in Singapore relative to New York makes equivalent compensation stretch further, while Hong Kong's cost of living is comparable to NYC.
The Hours Question: What You Earn Per Hour
A common criticism of investment banking compensation is that the high absolute numbers obscure the reality of extreme hours. To put compensation in context, consider the effective hourly rate:
For a first-year analyst earning $200,000 in total comp and working 80 hours per week:
That $48 per hour is respectable but far less impressive than the $200,000 annual figure suggests. By comparison, a management consultant earning $120,000 and working 55 hours per week has an effective hourly rate of approximately $42 per hour, making the gap much smaller than the headline salary difference implies.
The hourly rate improves significantly at senior levels because hours moderate (VPs and Directors typically work 55-65 hours per week) while compensation increases dramatically. A VP earning $600,000 and working 60 hours per week achieves an effective hourly rate of approximately $192 per hour, more than four times the first-year analyst rate.
This dynamic is why many bankers describe the analyst and associate years as an "investment" that pays off in senior compensation. The question is whether the three to eight years of intense hours are worth the eventual payoff, a calculation that depends on your personal priorities and alternative career paths.
How IB Compensation Compares to Exit Opportunities
Investment banking compensation is competitive at the entry level but becomes less exceptional when compared to top buy-side roles. Understanding these comparisons helps contextualize whether staying in banking or pursuing exit opportunities makes financial sense.
Private Equity
Post-MBA private equity associates at large funds earn $300,000 to $400,000 in total compensation, comparable to banking associates. The difference emerges at senior levels: PE principals and partners participate in carried interest (a share of fund profits) that can generate millions of dollars in successful fund vintages. A partner at a large PE fund can earn $5,000,000 to $20,000,000 or more in strong years, significantly exceeding even top banking MD compensation. For context on how PE compensation ties to deal mechanics, see our guide on LBO modeling.
Hedge Funds
Compensation at hedge funds is the most variable in finance. Junior analysts at top hedge funds earn $200,000 to $400,000, competitive with banking. Senior portfolio managers with strong track records can earn $1,000,000 to $10,000,000 or more based on fund performance. However, the distribution is highly skewed: many hedge fund professionals earn less than their banking counterparts, while a small number earn dramatically more.
Corporate Development
Corporate development roles at Fortune 500 companies typically pay 30-50% less than equivalent banking levels in total compensation, with the tradeoff being significantly better hours (45-55 hours per week), more predictable lifestyle, and exposure to strategic decision-making from the corporate side. A corporate development VP might earn $250,000 to $400,000 versus $500,000 to $700,000 for a banking VP, but work 20 fewer hours per week.
Key Takeaways
When evaluating investment banking compensation, keep these points in mind:
- First-year BB analysts earn $180,000 to $220,000 in total comp ($110,000 base plus $70,000 to $110,000 bonus), with a stub bonus of $25,000 to $40,000 in the first partial year
- Compensation roughly doubles from analyst to associate ($275,000 to $500,000) and reaches $500,000 to $700,000 at VP, $600,000 to $850,000 at Director, and $800,000 to $1,600,000+ at MD
- Elite boutiques pay 20-40% more than bulge brackets at junior levels, with Centerview, Evercore, and PJT Partners consistently topping compensation rankings
- Middle-market banks pay 15-25% less but offer advantages in deal responsibility, hours, and mentorship that may justify the discount for some candidates
- Performance buckets drive 40-70% variation in bonuses at the same level, with top-bucket analysts earning up to $45,000 more per year than bottom-bucket peers
- Bonuses average 65-100% of base at junior levels, with group revenue and firm profitability setting the overall pool size and individual performance determining bucket placement
- Deferred compensation increases with seniority: 0% for analysts, 10-20% for associates, 20-30% for VPs, and 30-50% for MDs, tying senior bankers to long-term firm performance
- New York pays 10-15% more than secondary U.S. markets and 15-30% more than London for equivalent roles
- Effective hourly rate for first-year analysts is approximately $48, rising to $192 or more for VPs as hours moderate and pay increases dramatically
- Exit opportunity compensation varies widely: PE offers comparable junior pay but dramatically higher senior comp through carried interest, while corporate development pays 30-50% less but with meaningfully better lifestyle
The bottom line is that investment banking is one of the highest-paying career paths available to recent graduates, but the compensation comes with significant lifestyle demands. The analysts who capture the most value from their banking experience are those who understand the compensation structure, position themselves for top-bucket performance, choose their firm and group strategically, and make intentional decisions about whether to stay in banking or leverage their experience into buy-side or corporate roles at the right time. Understanding these tradeoffs early gives you the information to make decisions that align with your financial goals and personal priorities.
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