The investment banking salary story is always about more than the numbers on your paycheck. It’s a constantly shifting balance between market pressures, regulation, and the competition for talent – especially in a business that’s seeing its global fee pools shrink and is still battling to hold on to its best people.
The numbers give important context. The global advisory fee pool was about $80 billion in 2024, a 6% drop from the prior year. Higher interest rates and geopolitical tension drove this decline, prompting banks to rethink how they allocate compensation.
When bulge-bracket banks account for 55% of a shrinking pool and boutiques go after 18%, the squeeze on pay-per-banker intensifies. In response, top investment banks cut headcount by 4%, shifting resources to asset management and other areas where margins are better.
There are important regional differences. The Americas still bring in 60% of IBD revenue, but Europe’s 25% share and Asia-Pacific’s 15% mean pay changes aren’t spread equally. While London and Hong Kong continue to pay a 20–30% discount to U.S. levels, they offer a potential arbitrage for those willing to relocate.
The pressure from regulation adds another complication. Basel IV and increasing compliance costs squeeze net fee margins, right as shareholders want leaner cost structures. Compensation committees face a tough decision: keep star talent, or keep costs down.
First-year analysts are often the first to see changes in banking compensation. In 2025, base salaries at top U.S. banks have flattened at $105,000–$110,000.
This sounds high, but the real cost includes lost time earning elsewhere and the demanding lifestyle required.
Bonuses for analysts are averaging 65% of base pay, up a bit from 62% in 2023, but well below the 80% highs during the 2021 hiring boom. This drop isn’t accidental – banks are managing variable costs tightly.
Regional pay highlights the cost of relocating:
New York/Boston: Base $105k–$110k, bonus 60–70%
London/Frankfurt: Base €75k–€80k, bonus 50–60%
Hong Kong/Singapore: Base HKD 800k–850k, bonus 55–65%
These pay differences reflect taxes, local economics, and living costs. A key trend is the decline in deferred bonuses at this level – only 12% of analysts received deferred payouts in 2024, down from 20% in 2021, showing banks prefer up-front pay for juniors now.
| Region | Base Salary | Bonus (% of Base) | Deferred Share (%) |
|---|---|---|---|
| U.S. | $105k–$110k | 60–70% | 10–15% |
| Europe | €75k–€80k | 50–60% | 8–12% |
| Asia-Pacific | HKD 800k–850k | 55–65% | 5–10% |
For standout analysts, performance multipliers can go up to 1.5x the group pool, while average performers are paid closer to base targets. The gap between top and average performers is now wider, as banks are more selective with their pay.
Associates coming in post-MBA are facing more measured salary growth than before. In major U.S. cities, base salaries now run $145,000–$155,000, with bonuses of 80–95%. The previous turbo-charged pay bumps have cooled, and growth is steadier.
Elite boutiques pay slightly lower base but offer more upside on bonuses – sometimes over 110% of base in good years. It’s a tradeoff: more jackpot potential with boutiques or more cash certainty at bulge-brackets.
U.S. Bulge Bracket: Base $150k, bonus 85–95%
U.S. Boutique: Base $140k, bonus 90–110%
Europe: Base €95k–€105k, bonus 70–85%
Asia-Pacific: Base SGD 180k–190k, bonus 75–90%
A rising share of associate bonuses – now about 18% – is deferred. Deferred shares and cash vest over two to three years, serving as retention tools in leaner deal years.
Specialist knowledge and execution skills also affect pay. Associates who can handle complex three-statement financial models or advise on sector-specific transactions secure a premium, even if it’s not easily captured in surveys.
Vice Presidents are in a key position: they play a big role in deals, but still face promotion pressure. U.S. VPs earn $200,000–$210,000 in base pay, with bonuses from 100% to 140%.
The difference for boutiques is more variable – the base might be $185,000–$195,000, but bonuses range higher at 120–150%.
Business originators at this level can earn override payments or carry, growing total pay 20% above base. Those who don’t originate deals typically see less upside.
Retention awards are common, with 25% of VP bonuses in 2024 tied up in restricted stock or deferred cash – vesting over three to five years. These programs force VPs to commit for the long run, while preserving important client and deal relationships for the banks.
The “up-or-out” model is real: VPs who do not reach Executive Director within about four years may lose unvested deferred comp, which pushes retention but could also anchor underperformers.
Reviewing current pay ratios:
Associate to Analyst: about 1.4x base
VP to Associate: about 1.35x base
MD to VP: about 1.8x base
These ratios are tighter than in previous years, primarily because junior analyst and associate hiring has dropped, while more of the budget shifts toward mid-career and managing directors (MDs) who can drive revenue.
Comparing investment banking pay to other finance paths is important for retention.
Top associates in private equity can get $300,000 plus carry, while hedge fund associates often earn base near $200,000 with highly variable bonuses. Still, investment banks offer more reliable cash pay and brand value – highly valued in riskier or uncertain times.
There are several major forces at play:
Deal Volume Recovery: As inflation slows, renewed IPOs and M&A could raise bonus pools by 5–10%. But this is tightly linked to central bank actions and geopolitics, so future pay is uncertain.
Compliance Costs:</strong> New regulations, especially Basel IV, add fixed costs, so banks are forced to balance pay with tighter margin requirements.
Digital Transformation: Increased automation in financial modelling for M&A and in trading lowers the need for junior hires. More pay and budget is shifting to senior advisors.
<strong>Talent Mobility: There’s increased willingness among bankers to relocate to higher-paying markets, though pay gaps by region persist.
Retention vs. Flexibility: Deferred comp structures and multi-year vesting are being used more often to keep key mid-tier and senior professionals on board.
Today’s banker needs to look beyond base and bonus figures. With flatter compensation curves at the junior level and higher pay concentrated in fewer, more specialized roles, career strategy matters more than ever.
Building technical skills for advanced modelling, sector expertise, and deal execution can help people stand out in a competitive pool. Networking, internal mobility, and moving between regions are often required to maximize pay. Those looking for alternative finance paths – such as hedge funds or private credit – should factor in the tradeoff between cash and long-term equity or carry.
Understanding the mix of fixed and variable pay, recognizing the true impact of deferred compensation, and weighing promotion possibilities against risk are central to evaluating opportunities in this evolving industry.
Investment banking compensation in 2025 reflects a tougher market, tighter margins, and a greater focus on performance and retention.
Pay remains attractive, but regional and seniority spreads have narrowed.
For those with the right combination of deal skills, sector knowledge, and flexibility, it’s still one of the best-paying careers in finance – provided you know how to read the signals and act accordingly.
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