TMT Investment Banking Salary and Bonuses (2022)Published:
As you likely already know, junior investment banking salaries and bonuses have gone through quite an upheaval over the past year. Nearly every bulge bracket and elite boutique in 2021 increased total compensation by at least 20-40%. This isn't a temporary shift; the base salary increases are permanent and, as we'll discuss below, bonuses at the analyst and associate level tend to be quite sticky unless there is a serious macroeconomic shock that occurs.
While almost all banks - most notably, and ironically, Moelis - have said they're raising compensation to reflect the incredible level of deal flow they're seeing and to reward junior bankers for all their hard work, the truth is most definitely a bit less altruistic.
The reality is that the onset of the pandemic, the shift to work-from-home, and the boom in M&A activity over the last eighteen months has resulted in levels of attrition that have never been seen before.
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In this post we'll be covering what level of salary and bonus you should be expecting at the analyst and associate level in TMT banking. We've tried to caveat things as much as possible to give you a better feel as obviously every bank - especially at the associate level - will have unique bonus ranges, etc. Further, we also wrote a little section on what caused the rise in total compensation that we saw in 2021 and how you should think about it.
The base salary for everyone working at a bulge bracket or elite boutique will be the same at the analyst and associate level irrespective of what coverage group they're in.
Prior to 2021, the base salary at most bulge brackets was $85,000 and at most elite boutiques you could expect to bring in $95,000. However, in 2021 within the span of just a few months, nearly every major bank significantly raised analyst and associate base salaries.
Below are the current base salaries for investment banking analysts and associates.
|Banking Title||Salary (Low)||Salary (Mid)||Salary (Top)|
Note: The "low" reflects what most major bulge brackets are now paying (e.g., JPMorgan, Bank of America, etc.). The "mid" reflects what a few bulge brackets (e.g., Morgan Stanley) and smaller elite boutiques are paying. The "top" reflects what some elite boutiques (e.g., Evercore and Moelis) and TMT-specific boutiques are paying. Not that Goldman significantly bumped their associate comp; it's not $175,000/$200,000/$225,000 so inline with top EBs.
Note: After year one, things begin to diverge a bit depending on what bank we're talking about. So, you should view the "mid" and "top" levels as being indicative values and as having error bars of around $5,000-10,000 on them. For example, a second year at Goldman Sachs will bring in $125,000 base salary. Further, some firms like Qatalyst and Centerview will pay slightly more than the "top" reflected.
Note: There's obviously a substantial jump when moving from analyst to associate. Keep in mind that many banks will require you to do a third year as an analyst (your base salary will be $5,000-15,000 more than a second year analyst, not the mid-point between a second year analyst and first year associate).
Note: We obviously aren't reflecting signing bonuses above. When joining as an analyst, you can expect between a $15,000 and $40,000 bonus (with bulge brackets being on the low end, and elite boutiques being on the high end).
Many who haven't spent time in banking are a bit confused on how bonuses operate in investment banking. The reality is that outside of years in which a major financial crisis occurs, the bonuses of analysts and associates are quite sticky (they tend to stay within a quite narrow and well-defined range).
With that being said, bonuses can certainly go up and down by a reasonable amount each year depending on the level of deal flow the bank saw overall (unlike base salaries, which are static and tend to stay the same for quite a few years before then increasing). The amount of fluctuation in bonuses is generally, at most, 30-40% and in the vast majority of years they will fluctuate just 5-15%.
The way things work practically is that each year management will determine the bonus ranges for each employee level (e.g., analyst one, analyst two, etc.) and then break the range into three buckets into which all analysts and associates are placed: bottom, mid, and top.
Further, if you're part of a group that has had an exceptional level of deal flow (like TMT in 2021) more of that group will tend to be deemed top-bucket analysts than those in other groups. This is the way in which banks reward those that are part of the busiest group -- not by putting them into a separate bonus range or paying them a higher base salary than those in other groups.
But at the analyst and associate level it's important to realize that the difference - in particular, after tax - between a bottom-bucket bonus and a top-bucket bonus is almost always relatively small.
Note: On rare occasions someone may get a bonus well below the bottom-bucket amount. However, this is normally due to the individual doing something egregious by banking standards (purposefully missing deadlines, being totally unavailable and clearly not putting in their best effort, etc.).
Below is roughly what kind of bonuses you should expect at bulge brackets or elite boutiques. Unlike base salary, there's a bit more nuance here. The bonus range will be contingent on what type of bulge bracket or elite boutique we're talking about, and the spread between bottom-bucket and top-bucket will be slightly different between banks.
So, what we've done here is broken out the average bonuses for those at bulge brackets and those at elite boutiques into two separate tables (since there is a non-trivial spread between them). However, keep in mind that there is also variance between bulge brackets (or elite boutiques) themselves (e.g., Goldman's top bucket last year was tens of thousands higher than lower BBs).
Below are the average bonuses for analysts and associates at bulge brackets. Keep in mind that ranges at individual banks will be much more narrow (so lower-tier BBs will have top-bucket bonuses more in-line with the "mid" figure below, whereas top-tier BBs will have bottom-bucket bonuses more in-line with the "mid" figure below).
|Banking Title||Bonus (Bottom)||Bonus (Mid)||Bonus (Top)|
Note: There are always some outliers given how crazy 2021 was for deal activity and how desperate banks have been to retain people. For example, GS paid associate bonuses more inline with elite boutiques this past year (however, it's quite unlikely, given Goldman's history, for bonuses to keep inline with EBs).
Below are the average bonuses for analysts and associates at elite boutiques. Notice how the ranges are much more narrow than the bulge bracket bonuses listed above. This is because almost all elite boutiques (e.g., Evercore, Moelis, etc.) use very similar ranges.
|Banking Title||Bonus (Bottom)||Bonus (Mid)||Bonus (Top)|
Note: Without a doubt bonuses across the analyst and associate level last year were substantially higher than in preceding years. This was done entirely to try to retain employees and pacify them during the heaviest periods of deal flow in 2021. So, while the base salary increase of 2021 will never decline, bonuses are likely to modestly decline if there is a slowing of overall M&A activity.
Note: As you'd expect, analyst bonuses are sticker than associate bonuses. So, for example, at a top elite boutique (e.g., Evercore) while your total compensation as an year one analyst will fluctuate a bit based on market conditions, it will be comfortably over $200,000 (top-bucket will reliably get you slightly north of $250,000).
The unprecedented level of attrition we saw in banking in 2021 is a function of a few different things which are worth briefly touching on.
First, part of what makes the analyst and (to a lesser extent) the associate years bearable is the sense of camaraderie you develop with your peers. Being a junior investment banker isn't always fun, but at least you're with similarly-minded people and can blow off steam as you're waiting to turn comments at 2am for the third night in a row. With the rise of WFH, this dynamic was entirely shifted as you no longer really got to know your peers in the same way.
Second, the first year in banking - whether you're coming in as an analyst or as an associate - is always rough. You feel slightly incompetent and constantly have a feeling of overwhelm. But there is a certain novelty to getting up and heading into a bustling and glistening office building to work. However, when you're just getting up and taking a few steps over to your desk, any novelty that exists quickly evaporates.
Third, recruiting timelines have shifted considerably. While five years ago it was quite rare to see someone not finish out their analyst stint, these days if you really want to move to the buy-side you can probably land an offer and get out of banking in a year or so. You'll miss some of the on-cycle opportunities, but these aren't nearly as alluring to many as they used to be (as mega-fund PE will get you slightly less hours, but more stress than banking).
Fourth, there has also been an unmistakable sentiment shift among those coming into banking. You can definitely see this in coverage groups like TMT. In years past most joined TMT groups because it'd give them the best shot at prestigious L/S hedge fund and MF private equity opportunities. However, many join TMT groups today because they're looking to do some kind of strategy or corp-dev style role (whether at Google or at a startup). Getting these kinds of roles doesn't require you staying long in banking. Realistically after eight months or so you can probably begin getting some interviews.
Fifth, there was just an unprecedented level of deal flow in 2021. Just within the TMT space, there was well over $1.5 trillion in M&A activity. Further, with the rise of work-from-home all of a sudden managing directors were no longer flying all over the place to pitch deals, but could do it from the comfort of their home office. Thus, increasing the amount of pitches they could conduct easily in a day (which means more junior work in preparing all of these presentations).
So, the level of attrition we've seen through 2021 (which has caused banks to respond by raising compensation significantly) can be summarized as being due to three things: more hours, less glamor associated with the job, and better exit opportunities being available earlier than in years past.
While folks can argue about what the exact thing was that lit the fire for almost all banks to raise compensation in lock-step during 2021, one could certainly point to the presentation leaked out of Goldman Sachs TMT titled "Working Conditions Survey". The presentation gets to the heart of how many analysts and associates felt and why so many were leaving. So, banks responded in the only way they knew how: by raising salaries and giving bigger bonuses.
With all that being said, the most important thing is to come into banking with your eyes wide open. You get paid (especially now!) an almost comical amount of money, and in return you're expected to work an almost comical amount of hours. Further, by doing this for just a year or two you open up a wide set of opportunities both within finance and outside of it (in particular if you're in a coveted group like TMT).
For those who started their stints in banking even just a few years ago, it's almost hard to believe how much junior banking compensation has gone up over the past year. However, as we stressed in the prior section, this rise in compensation is not due to heavy deal flow itself. Rather it's due to the effects of that deal flow on junior bankers (even longer hours), how the rise of work-from-home made the lives of juniors more stressful, and great exit opportunities being available to many sooner than in years past (especially in groups like TMT). All of these things led to the record breaking levels of attrition we saw in banking last year, which is ultimately why banks were forced to raise total compensation in order to stem the outflow.
To be clear, we aren't trying to paint too rosy or too pessimistic of a picture about what it means to join IB in 2022. The new level of compensation - in conjunction with the optionality that banking comes along with - still make it a phenomenal place to be. Further, it's important to note that as we all get back to the offices, and as deal flow naturally returns to a more normalized level, the stressors of 2020/2021 will be somewhat alleviated.
A topic of constant chatter is what future total compensation will look like at the analyst and associate level. While it's unequivocal that the new base salaries will persist at their current levels, bonuses could be stepped down a bit in future years. However, as was mentioned before, bonuses are relatively sticky. There's no way total compensation dips back to where it was in 2019/2020 -- it's simply a fact that we're in a new normal with perennially higher levels of comp.
Hopefully, this all helps to paint a picture of where junior banking comp is today. Keep in mind that there's quite a bit of variance between where banks have set their comp (especially at the associate level). We've tried to illustrate this in the notes below the salary and bonus figures so you can get a better feel for what to expect depending on where you land an offer. So, for example, there will be non-trivial difference between elite boutiques and bulge brackets (although some BBs, like Goldman, have closed the gap considerably relative to where they were before).