Sunday, March 4, 2007

Investment Banking Salary

Investment Banking Salary
Who’s Making Money and How Much?

Investment Banking Salary Overview
Investment bankers’ income package usually consists of base salary and bonus. While salary is paid monthly, bonus is paid annually. Hence if you leave your job before bonus pay day, you’ll loss your bonus which usually contributes a major portion of your total annual income. However this is usually part of the deal when you negotiate with your potential employer. Sign-on bonus are usually paid as compensation.

Investment banking salary package becomes sophisticated as your position goes higher. Compensation would include housing, stock options, healthcare, club membership, auto etc. If relocation involves, home leave, children’s education and COLA (cost of living standard adjustment). The monthly COLA amount can excess some normal people’s monthly salary. One of my candidates had his COLA as high as US$4,000 per month.

Investment Banking Career Map
While “investment banker” is a general term, there are actually many specialized work areas. Depends on your strength, interest and the opportunities you are exposed to, you can develop expertise in any of the following areas. However all these jobs have few things in common: long working hours and some of the deals go on round the clock, very stressful and extremely high pay.

Equities - sales, trading, research

Fixed Income - sales, trading, research

Foreign Exchange - sales, trading, research

Investment Banking - corporate finance, M&A, DCM, ECM

Fund Management / Asset Management - portfolio management, hedge fund management

Private Banking / Wealth Management

Private Equities

Investment Banking Salary / Career
Investment banks usually recruit fresh graduates as entry level analysts. Though many are promoted to associate level within five years, there isn’t a standard rule. UK hedge fund Marshall Wace’s youngest partner Anthony Clake is only 25.

Few people made their way to regional head before 40, but there are exceptions. The youngest regional head I ever placed was only 36 when he became the head of Asian equities of a US bulge bracket in 2002. His guaranteed package was US$2.5 million. Therefore the kind of money and position to earn is all depend on YOU.

What kind of investment bank salary would you expect? Entry level analysts usually make around US$60,000 in the first year. Performance is the major factor to determine future earnings.

I am going to give you some real figures of people with 10 years of experience or less. I placed these people in 2006, the numbers included base salary and bonus.

Investment Banking Salary – Real Samples

Candidate #1

Title: Quantitative Analyst
Client: US Investment Firm
Package: US$350,000
Banking experience: 6 years
Qualifications: B. Eng., M. Sc., CFA

Candidate #2
Title: VP, Equity Trading
Client: US Bulge Bracket
Package: US$500,000
Banking experience: 8 years
Qualifications: M. Politics, M. Economics, banking & finance, CFA

Candidate #3
Title: MD, Country Head
Client: US Hedge Fund
Package: US$1,250,000
Banking experience: 10 years
Qualifications: B. Law

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Investment Banking Salary

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