Investment Banking Associate Salary

Whether you are in the finance industry or planning to enter one, get ready to hear a lot about investment banks. You will be amazed to know how these investment banks work and the magnitude with which they work.

Pay here is amazing, but the number of working hours is grilling. Many of us are unaware of how these investment bankers work. There are various hierarchical levels. Each level gets paid a handsome salary. In these articles, we will focus on particular investment banking associate salaries.

• Being an investment banking associate offers good pay, the opportunity to communicate with intelligent people, an excellent lifestyle, and office spaces.
• An investment banker is a person who works in a financial institution called an investment bank. 
• Typically, investment banks raise capital for their clients, companies, governments, or other entities that provide advisory services related to mergers and acquisitions, underwriting stocks, bonds, etc.
• The disadvantages of being an investment banking associate include long working hours, lack of sleep, routine, and health hazards. Moreover, it expects 24x7 availability, a stressful environment, a rough personal life, and an absence of social life.

An investment banking associate is the one who has the required skill and knowledge to work in the financial market in terms of helping institutions raise capital, provide financial advisory services or execute transactions related to merger or acquisitions. They earn a very lucrative salary which comes with a lot of professional commitment and stress. Let us learn more about the average investment banking associate salary structure.

Formula To Pay:

• The formula for paying salaries to bankers varies from firm to firm.
• Some follow rigid formulas based on how much business a banker brings in, while others pay salaries based on a subjective allocation of corporate finance profits.

Compensation Structure:

• Furthermore, no matter how compensation is structured when business is slow, bonuses taper off swiftly.
• Some investment banking firms tend to pay less than others because they can get away with it.
• But remember that the quality of experience you get at the entry-level and the company and the strength of the people you will work with are far more important than your initial average investment banking associate salary.

Investment banking associates enjoy increasing salary numbers but fear the growing working hours. But such is the glory and the agony of working in an investment bank. We hope we have given you a glimpse of these investment banking associates and how much they paid for working in an investment bank.

An investment banker is an individual who works in a financial institution called an investment bank. Investment banks typically are involved in raising capital for their clients. Clients can be various companies, governments, or other entities that also give advisory services concerning mergers & acquisitions, initial public offerings, underwriting stocks, bonds, etc.

Following are the primary investment banking responsibilities listed:

Research:

• Investment Banking Analysts and associates conduct research activities on various companies and sectors.
• A lot of detailed analysis requires for these research activities.
• An analysis undertaken through financial modeling and valuation techniques and a recommendation report are prepared, ultimately providing a buy or sell recommendation.

Sales & Trading:

• Investment banks have trading departments to execute their clients' bonds and stock transactions.

Asset Management:

• Investment banks manage insurance companies, pension funds, or other clients.
• These investment banks have their asset management department, which selects the right mix of portfolios (stocks, debt instruments, etc.) for their clients.

Structuring

• Structuring has been a relatively recent division as derivatives have come into play.
• There are highly technical and numerate employees who create complex structured products.
• Here, the aim is to offer much greater margins and returns than the underlying cash securities.

• An investment banking associate works in an investment bank. An associate can be an analyst promoted after 3 or 4 years or directly recruited from a good business school.
• Associates work 80-100 hours a week; they work on pitch books and models all night and become experts with financial modeling using Excel spreadsheets.
• The associate’s role is similar to an analyst’s role.
• He may be responsible for serving as a link between junior and senior bankers. On some occasions, he may work directly with clients.
• It is common for an associate to work over 80 hours per week. They often work late nights and sometimes till early morning.

Thus, the above are some of the important points to remember about an associate level job in the field of investment banking.

The details below will give a detailed view of everyday job requirements in the role.

Working with Analysts

• The analysts do most of the work concerning presentations and M&A deals.
• Associates come into the picture concerning editing and quality control. They check the final prepared financial models, presentation slides, and grammatical and spelling errors.
• To get most of the tasks done, associates rely on analysts. Hence, they spend the majority of their time training them.

Delegating Tasks and Following up

• Directors, Vice Presidents, and Managing Directors contact the associates.
• So, whenever a new task comes, the associate must allocate and divide the tasks between the analysts and themselves.
• Most of their time is spent on the phone and sending and receiving emails.
• Associates require everything to do on time. Hence, they are constantly chasing everyone to get the job done.

Getting Complex Financial Models done

• Apart from doing most analyst work like preparing presentation slides or financial analysis, associates also handle complex economic models and other critical tasks.
• That is precise during the significant transactions where the Vice Presidents review the work.

Dealing with Clients

• Associate’s main job is to deal with their clients. They mostly discuss the numbers or any other financial modeling issue. They are required to prepare materials for pitching in line with the client’s requirements so that they can easily attract potential investors of clients. It helps them to connect with people who need their services.
• They also try to maintain good contact and relationship with clients. This is extremely important and associates ensure to do so because they act as a bridge between the client and the investment banking team.

Handling the Admin Tasks

• Associates are involved in recruiting analysts. They deal with the compliance and internal legal teams when a live transaction occurs.
• They communicate with other banks, lawyers, accountants, advisors, etc.
• They should also take care of adherence to rules and regulations and ensure that all transactions are carried out within the legal boundaries.

A typical investment banking associate’s salary ranges from $75,000 to $250,000 annually.

Associates make more money if they work for a larger investment firm, generally a ‘bulge-bracket’ firm.

The table below shows the figures for investment banking associates’ salaries. (Averaged over the last few years)

Let us now see some actual salary figures of some leading Investment Banks. (2015)

Source: www.poetsandquants.com

Thus, the above data gives us a good idea about the pay package drawn by professional working in this designation is the companies mentioned above.

You can say that these two things influence the bonus component: -

• Individual performance
• Group/firm performance.

It implies that even if you have performed more than 100%, your bonus will suffer if your firm is not closing the deals and bringing business.

In scenarios where there are few deals, the workload remains the same. That may bring down your morale as you are not getting paid even though your performance is top-notch.

In Investment banking, Corporate Finance, and M&A:

• Ability to perform DCF valuations.
• Finding comparable companies.
• Advanced Excel expertise.
• Getting the logistics right.
• Arranging client meetings.
• Skills to network within the firm and befriend key people like lawyers, IT individuals, and compliance experts.

In Equity and Debt Capital Markets:

• Pricing up new deals for bonds, convertibles, or any other instruments
• Tracking past trades and pricing to know where the market is going
• Due diligence coordination.
• Preparing documents on debt and equity deals
• Generating pitch books.
• Checking and developing weekly newsletters in some cases

In Sales and Trading:

• Knowing where prices are!
• Working with options pricing models
• Making clients feel comfortable

The following are some important factors that these professionals need to keep in mind if they wish to become successful in this field.

• Working in a chaotic environment and getting things done.
• Taking the initiative and working on doing the job better.
• Maintaining a good work relationship with clients may bring you more business.
• Having an excellent network within the firm.
• Being a computer wizard.
• Good dressing sense.
• And last but not least: Always make your boss look good!

The following are some important skills that the associates are required to possess so as to put their skills and knowledge to optimum usage in this field.

• Investment banks want employees with a combination of strong interpersonal skills, sales skills, communication skills, analytical skills, ability to synthesize, and creative ability.
• Hours are regularly long and often unsocial. Weekend work is common as deals approach crucial stages.
• Fifteen-hour days are not unusual at an investment bank. Investment bankers work up to 100 hours a week.
• The working environment can be extremely stressful as it sets high targets. The investment banking industry is connected strongly to the economy. Thus, job availability and losses fluctuate depending on the economy's health.
• Many investment banks have global offices and offer trainees the chance to work overseas within the first two years. Once qualified, an investment banker may spend substantial time working overseas.

• Investment banking associates must be geniuses due to the math, finance, and other challenging subjects they learn in college.
• They should have a very strong approach to analytical and quantitative skills. They should be comfortable in dealing with numbers.
• Most associates have master’s degrees in business administration, finance, or statistics.
• Some may even have a doctorate in business, finance, or economics.
• Having proficiency in Microsoft excel, being thorough with its various functions and other forms of databases, is an added advantage.
• They should have a great attention to detail which will help them in identifying any loopholes or discrepancies in various processes and deals that will be handled in the job.
• Investment banking is not just a cup of tea. And that is why the associates must be smart and quick. They often have to undergo training sessions to keep their knowledge updated.

These will be the general question that you may expect during your interview:

• What do you know about investment banking and this industry?
• Why are you interested in a career in investment banking industry?
• What do you know about our firm?
• What about our culture and company appeals to you?

Following are the resume-related questions that one may ask:

• Your strengths and weaknesses with proper justification and examples of the same.
• Application/use of your power to investment banking
• Your greatest accomplishment
• How would you describe failure? Experience, if any, and what did you learn from it?
• What qualities can you bring to your team? Examples for the same.
• How would your colleagues describe you?
• How would your manager at a previous job define you?
• What is your leadership style?

Pros & Cons of an Investment Banking Job:

Investment Banking Jobs Upsides

• Good pay
• Opportunity to interact and work with really smart people
• Excellent investment banking lifestyle
• Great office spaces

Investment Banking Jobs Downsides

• Long working hours
• Lack of sleep, lack of routine, and health hazards associated with it
• Expectation to be available 24X7
• Stressful environment
• Rocky personal life
• No social life

Guide to what is Investment Banking Associate Salary. We explain the functions of investment banking, who is an associate & everyday job.

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