Investment Banking Associate Salary Guide

What is an Investment Banking Associate?

An Investment Banking Associate is a mid-level professional who serves as the critical link between junior analysts and senior bankers. Typically joining after completing an MBA or working 2-3 years as an analyst, these professionals are crucial in executing complex financial transactions such as mergers and acquisitions (M&A) and managing deal teams.

The key roles of an investment banking associate include:

• Leading deal execution and financial modeling: Associates oversee the entire financial modeling process, from initial company valuation to complex LBO and M&A models. They’re responsible for ensuring accuracy and providing strategic insights based on the analysis.
• Managing junior analysts and coordinating with senior bankers: Associates typically manage 2-3 analysts, providing technical guidance and professional development while serving as the main point of contact with VPs and Directors. They’re responsible for work delegation, quality control, and team productivity.
• Direct client interaction and relationship management: Unlike analysts, associates regularly participate in client meetings, lead presentation sections, and manage ongoing client relationships. They’re expected to handle client queries professionally and maintain strong working relationships.
• Supporting M&A transactions, IPOs, and other capital market activities: Associates are especially responsible for due diligence, transaction structuring, and deal documentation. They coordinate with legal teams, manage data rooms, and ensure all deal requirements are met within tight deadlines.

Investment Banking Associate Salary Overview

Investment banking associates earn among the highest compensation packages in the financial services industry. According to Glassdoor, the average investment banking associate earns $122,781 per year but will typically see upwards of $400,000 depending on several factors, including firm size, location, and performance.

Here’s what an investment banking associate’s total earnings are comprised of:

Base Salary

The base salary for investment banking associates depends on their experience level with the firm. Base salaries typically increase by 10 to 15% annually, with regular raises reflecting industry standards and individual performance. This means that top performers at premier firms see higher yearly raises for their base salary.

• First-year associates: The base salary for a new associate is typically $150,000- $175,000. However, this will depend on firm size. For example, at bulge bracket banks, the starting base salary is at the higher end of this range, with top performers receiving raises within six months to a year.
• Second-year associates: Second-year associates typically earn a base salary between $175,000 and $200,000. The increase reflects growing expertise and responsibility, with some top performers reaching upwards of $200,000 by the mid-year mark.
• Third-year associates: Senior associates approaching VP promotion can earn base salaries ranging from $200,000 to $225,000, particularly in competitive markets. 

Bonuses

A significant portion of an investment banking associate’s salary comes from yearly bonuses. There are several types of bonuses an associate has to look forward to, depending on the firm and their experience level. These bonuses include:

• Annual cash bonus: Annual cash bonuses are the standard, ranging from 70% to 100% of the base salary. Bonus percentages typically increase with more experience and seniority and can exceed 100% for top performers at leading firms.
• Special deal bonuses for completed transactions: Additional bonuses for significant deals, particularly in M&A and IPO transactions, are also common practice in investment banks. Special deal bonuses can range anywhere from $10,000 to $50,000 or greater, depending on the firm and the deal being made.
• Sign-on bonuses: Sign-on bonuses aren’t common but are typically reserved for MBA hires. The amount offered in a sign-on bonus will depend on the firm but is often competitive to help offset lost income during MBA programs to attract and retain top talent.
• Additional stock compensation: Larger firms often offer restricted stock units (RSUs) and other equity compensation that typically vest over three to four years. This bonus, in particular, is meant to encourage employee retention.

Factors Influencing Investment Banking Associate Salaries

As mentioned above, several factors will impact a banking associate’s salary. Here’s an overview of those factors:

Bank Size

Investment bank sizes range from boutique (smaller niche firms) to bulge bracket (enterprise-level investment firms):

• Bulge bracket banks: Bulge bracket banks, such as Goldman Sachs and Morgan Stanley, offer the highest base compensation and typically the largest bonus pools. Investment banking associates can expect their total compensation to be up to 20% higher than the industry average.
• Middle market banks (MMs): Middle market banks include recognizable industry names like Solomon Partners and Lincoln International. Their compensation packages are typically 10% to 20% lower than bulge bracket firms, but they tend to offer faster promotion tracks as well as more direct client exposure.
• Boutique banks: Boutique banks include smaller elite firms like Lazard and Evercore and typically offer lower base salaries but higher bonus potential tied to deal success. 

Location

Investment banks in capital markets hubs typically offer higher compensation than those in regional spaces. 

For example, New York City sets the industry standard for compensation, with the highest base salaries, bonus potential, and cost of living adjustments built into the base compensation. London offers base compensation similar to NYC, although the tax implications and cost of living adjustments vary significantly. Hong Kong and Singapore’s base salaries often match or exceed New York’s levels to attract talent, with additional benefits like housing allowances, which are considered standard compensation practices.

Other U.S. cities like Chicago, San Francisco, and Los Angeles typically see 10 to 20% lower compensation than New York, with other regional centers offering proportionally lower (15% to 30%) packages. However, regional locations also tend to be associated with a lower cost of living and better work-life balance.

Performance

Both an individual associate’s performance and the overall bank’s performance can directly affect the bonus portion of the annual compensation.

Individual Performance Impacts:

• Annual bonus allocation: Top performers can receive 20-30% above peer average bonuses, while underperformers may see significantly lower bonuses.
• Promotion timelines: Strong performance can also accelerate promotion to senior positions within 12 months, with corresponding compensation increases.
• Long-term career trajectory: Consistent top performance opens opportunities for fast-track promotion and transfer to premium groups or locations.

Bank Performance Affects:

• Overall bonus pool size: Bank-wide performance directly impacts annual bonus pools, with strong years potentially increasing bonus percentages by 20% to 30%.
• Stock compensation value: Bank stock performance affects the value of RSUs and other equity compensation, which is particularly important for more senior associates.
• Special incentive programs: Many banks will offer additional bonus pools or special compensation programs during particularly strong years.

Education and Experience

While an MBA isn’t strictly required to become an associate in an investment bank, many employers prefer it and will consider this degree when hiring and determining promotions and base compensation. Generally, individuals with an MBA in finance, accounting, or a related field see base salaries up to 10% more than standard associate levels as industry expertise and specialized industry knowledge command premium compensation. 

Experience level and relevant certifications, such as Chartered Financial Analyst (CFA) or advanced Financial Modeling & Valuation Analyst (FMVA) certifications, will also directly affect an associate’s compensation. Second-year-level associates and those who pursue relevant certifications in the field typically receive higher base salaries and experience accelerated promotional tracks than entry-level associates with no certifications.

Acquiring language skills can also contribute to premium compensation as it allows for international work experience in global financial markets.

The Benefits and Challenges of an Investment Banking Associate’s Salary

Having a career as an associate investment banker is both rewarding and challenging. While it’s associated with a high salary, the rewards go beyond compensation. Of course, the challenges that come with higher compensation are also something to consider as it’s a demanding career.

The Benefits:

• Rapid skill development in finance and business
• Exposure to high-profile deals and transactions
• Strong professional network building
• Premium exit opportunities, including private equity, hedge funds, and venture capital
• Global career mobility
• Accelerated career progression
• Access to senior executives and industry leaders
• Development of transferable skills

The Challenges:

• 80-100 hours in a typical workweek
• High-pressure environment with strict deadlines
• Limited work-life balance
• Constant availability requirement
• Intense competition and performance expectations
• Regular weekend work
• High-stakes responsibility
• Steep learning curve
• Potential for demanding clients and senior bankers

Career and Salary Trajectory of an Investment Banking Associate

The career progression for top-performing associate investment bankers typically happens within just a few years. Tied to this trajectory are different levels of compensation, which can look like this:

Associate Level

Investment banking associates typically progress from entry-level to senior associates over the course of three years. The initial years revolve around developing technical financial expertise and team management skills, with progress measured by increasing independence in deal execution and client interaction. 

The compensation for an associate can range from $120,000 to $450,000 during this time.

Vice President

After three years as an associate investment banker, the next level of progression is Vice President (VP). At this level, the focus shifts more toward client relationships, deal origination, and team management. Top-performing associates can typically progress to VP by their fourth year and remain in this position for up to seven years.

The compensation for a VP can range from $450,000 to $700,000 during this time.

Director and Managing Director

Directors and Managing (or Executive) Directors are the most senior-level investment bankers. Top-performing VPs can progress to Director after seven years and typically remain in this position for two to three years, where they’ll progress to Managing Director around year 10. Both roles focus primarily on team performance, client relationships, and new business developments while managing multiple teams and deals.

Compensation for each role can vary significantly based on deal flow and market conditions. However, Directors typically see compensation ranging from $700,000 to $1,000,000, and Managing Directors’ compensation can range from $1,000,000 to upwards of $3,000,000.

Is an Investment Banking Associate’s Salary Worth it?

The career of an investment banking associate is both challenging and rewarding, with excellent advancement and exit opportunities for those who perform well. However, the compensation directly reflects the amount of time, responsibility, and hard work required by the role. 

If you’re ready to become an investment banking associate, CFI’s investment banking courses and certifications offer comprehensive skills training in financial modeling, valuation, and essential investment banking skills. Review our course catalog to get started.

Additional Resources

Thank you for reading CFI’s guide to Investment Banking Associate Salaries. To keep advancing your career, the additional CFI resources below will be useful:

Investment Banking Associate MBA Interview

Investment Banking Analyst Job Description, Hours, & Salary

Investment Banking Job Description

Investment Banking Training

See all career resources