Investment Banking Salaries Don’t Tell The Whole Story

Looking at Salaries in Investment and Brokerage Firms? I was too…

When I was in college (and before), I was very interested in getting a job that would make me a lot of money. I had a book of 500 careers and I lookd for the one that said it had the highest earning potential (Investment Banking) and chose that as the job to set my sites on.

After my junior year in college (as an Economics Major) I was fortunate enough to have an Internship in an investment banking firm. That’s when I found out that the lifestyle (100 hour work weeks) was not for me. I wanted a family and didn’t like living in Manhattan – well, it was fun for a summer in college, but I didn’t want to raise my family there.

Investment Banking and Brokerage Salaries

How much do you suppose those who work at investment banks earn? Do not get me wrong; I am not talking about the likes of Goldman Sachs CEO Lloyd who makes over $70 million a year. I am talking about entry-level college graduates and how much they should expect to be earning in a few years time. Upon investigation I came upon some very interesting facts on investment banking salaries.

Consider a 2007 case scenario where base salaries and bonuses totaled to $150,000 in compensation. While the figure may not look that bad, what about the hours? If you were in entry-level, it would mean that you would have to work between 90 and 100 hours per week. It seems however that there is a drop in pay per hour compared to 2006. As you realize, times have not been good and the recession has only made it worse. While the dark ages of the dot com crash seem to have been behind us, investment banking salaries were seriously affected and bonuses almost disappeared. However, things do not seem to be that hard as it stands.

In my research, I discovered that investment banking salaries are affected by a number of factors. The most common determinants of how much you should expect in an investment bank or in a brokerage firm are years of experience, practice area, certification, city and employer type. Based on experience, you cannot expect to earn more than 50,000 if you have less than one year of experience. This figure does not change even at four of experience. However, beginning from the fifth year, expect to start earning from $70,000. 20 or more years of experience is slightly above $80,000.

Recently, though, there has been a lot of volatility in Investment banking. A college friend of mine who went into that industry in 2002 has switched firms several times and there have been a lot of layoffs there recently. Now she’s getting her MBA and looking to regroup – maybe hoping to work with a venture capital company.

The practice area shows huge margins in certain sectors. For example, investment banking salaries in the litigation and appeals area can only go as far as $40,000 while those working in finance, securities, tax offices and real estates can expect to earn a stunning $120,000 and above. That is more than 3 times extra. Consider also your province. If you are working for a brokerage in New York, expect to earn some of the highest salaries while if you live in a state like Florida, your pay could be half of that of a New Yorker. Other factors that have been shown to determine investment banking salaries include company size, hourly rate of billing and the stock exchange.

Look at More Than The Investment Banking Salary To Decide If It’s The Right Job For You

At the end of the day, money is only money, you can always earn more… but you can’t get more time and you can’t reclaim your youth. Investment banking firms can be a bit of a grist mill and are known for working their young employees hard for the 2-years they generally have them before they go on to grad school or jump ship. Investment banking is great experience, but staying the course and working your way up into the management areas can be hard.

Try to do some informational interviews and talk to people in the field before you decide whether investment banking is right for you.

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