The Top 10 Highest Paying Investment Banks in 2023
Dig through our top 10 list of the highest-paying investment banks in 2023.
5 minute read
We’ve compiled a list of the top 10 highest-paying investment banks based on their estimate compensation for first-year analysts (bankers hired just after their undergraduate degree). And no, Goldman Sachs is not the highest-paying investment bank on the list (It’s not even in the top 5).
Investment Banking: The Ivy League of Wall Street
If you’re a business or finance major, then you’ve probably heard of the field of “investment banking” from ambitious upperclassmen and university finance gurus.
The field is quite popular amongst top-performing students as first-year investment bankers have consistently held the top spot for new grad compensation (for business majors).
Some new to the investment banking space might have already heard of household names like Goldman Sachs, JP Morgan, and Morgan Stanley. That said, those same people might not be aware of this subcategory of investment banks known as “elite-boutique banks”, which cover smaller, specialized banks, that perform really well, but also pay their analysts top dollar for their work. You’ll see some of these boutique banks near the top of the list later on in this article.
Investment Banking Firms Ranked by Pay
Below is a summary of the top 10 investment banks by first-year analyst pay (New York) in 2023:
- Centerview
- Evercore
- Lazard
- Rothschild
- Guggenheim
- Bank of America
- Citi
- Goldman Sachs
- JP Morgan
- Morgan Stanley
First-year investment banking analysts are typically paid a signing bonus, a base salary, and a performance bonus. The following company list will break down analyst pay by base salary and bonus compensation.
Note: Compensation figures in this list were compiled from various online sources which include Litquidity, Levels.fyi, and other personal references. Actual compensation for individual analysts, particularly when it comes to annual bonuses, will vary by location as well as individual and bank performance (often linked to bank deal activity and overall economic conditions).
#10 Morgan Stanley – $170,000
Morgan Stanley first-year investment banking analysts are paid about $170,000 in total compensation. And yes, it’s not a typo, the number 10 spot on our list is already well over the 6-figure mark.
Morgan Stanley is a bulge bracket investment bank headquartered in New York City. The firm made some big waves last year with its record-breaking advisory deal on TD Bank’s $13 billion acquisition of First Horizon Corp.
- Annual Salary: $100,000
- Annual Bonus: $70,000
- Total Compensation: $170,000
#9 JP Morgan – $175,000
JP Morgan is a bulge bracket investment bank led by chairman and CEO, Jamie Dimon. The bank founder, J.P. Morgan himself, was famous for his “Morganization” process where he took over failing businesses and restructured them into profitable organizations.
- Annual Salary: $110,000
- Annual Bonus: $65,000
- Total Compensation:$175,000
#8 Goldman Sachs – $178,000
Goldman Sachs is a bulge bracket investment bank led by David Solomon who operates as the bank’s CEO by day and New York’s wealthiest DJ by night. Earlier this year, the firm was put under the spotlight for laying off 3,200 employees, the largest layoff in its history since the 2008 financial crisis.
- Annual Salary: $110,000
- Annual Bonus: $68,000
- Total Compensation: $178,000
#7 Citi – $180,000
Citi is a bulge bracket investment bank headquartered in New York City. The bank seems to bring in consistent deal flows with a particularly reputable Industrials and Mergers & Acquisitions team.
- Annual Salary: $110,000
- Annual Bonus: $70,000
- Total Compensation: $180,000
#6 Bank of America – $186,000
Bank of America is a large bulge bracket bank headquartered in Charlotte, North Carolina and currently runs its investment banking operations under subsidiary BofA Securities out of the famous Bank of America Tower in New York City. Bank of America’s 2022 mergers and acquisitions performance saw smaller year-over-year declines relative to some competing banks that saw declines closer to 20-30%.
- Annual Salary: $110,000
- Annual Bonus: $76,000
- Total Compensation: $186,000
#5 Guggenheim – $190,000
Now things are starting to get interesting as we start to approach some of the elite boutique investment banks where first-year analyst compensation climb closer to the $200k mark.
Guggenheim is a notable elite boutique investment bank headquartered in New York City. The firm currently provides services in investment banking, asset management, and capital markets.
- Annual Salary: $110,000
- Annual Bonus: $80,000
- Total Compensation: $190,000
#4 Rothschild – $198,000
Rothschild & Co is a multinational boutique investment bank controlled by the historic French and British branches of the Rothschild family. The firm is very well regarded as one of the best investment banks in Europe, especially when it comes to its mergers and acquisitions and restructuring operations.
- Annual Salary: $113,000
- Annual Bonus: $85,000
- Total Compensation: $198,000
#3 Lazard – $205,000
Alright, now we’re starting to break into the 200k mark as compensation starts getting pretty serious with these top-tier elite boutique investment banks.
Lazard is one of the world’s largest boutique investment banks with key offices in New York, London, and Paris. The firm has a very well-regarded mergers and acquisitions practice that competes with many large players in Goldman Sachs, Bank of America, and Morgan Stanley.
- Annual Salary: $120,000
- Annual Bonus: $85,000
- Total Compensation: $205,000
#2 Evercore – $210,000
Evercore is a prestigious boutique investment bank headquartered in New York City. The firm has advised on several notable merger and acquisition deals, including Tesla’s acquisition of Solar City, Amazon’s acquisition of Whole Foods, and T-mobile’s acquisition of Sprint.
- Annual Salary: $120,000
- Annual Bonus: $90,000
- Total Compensation: $210,000
#1 Centerview – $220,000
Centerview Partners is an elite boutique investment bank known for paying the absolute top dollar for first-year bankers on Wall Street. The firm has advised on many notable deals and transactions which include: Walt Disney’s acquisition of 21st Century Fox, LVMH’s acquisition of Tiffany & Co., and Pepsi’s acquisition of Rockstar energy drink.
- Annual Salary: $130,000
- Annual Bonus: $90,000
- Total Compensation:$220,000
Note: Centerview offers first-year analysts a $50,000 signing bonus in exchange for a commitment to the firm for 3 years.
Additional Resources
If you’re interested in developing your technical finance knowledge to apply for competitive investment banking roles, consider checking out our Complete Finance & Valuation Course to join our students who have landed jobs at Goldman Sachs, UBS, Bloomberg, and other top-tier companies.
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How Do Wealth Managers Make Money with Different Compensation Models
Wealth managers can make money through various compensation models, each with its own unique structure and benefits.
Asset-based fees are a common model, where wealth managers charge a percentage of the client’s assets under management, typically ranging from 0.50% to 2.00% annually.
This fee structure incentivizes wealth managers to grow their clients’ wealth, as higher asset values result in higher fees.
Some wealth managers also use performance-based fees, which are tied to the investment returns of the client’s portfolio.
How Wealth Managers Get Paid
Wealth managers get paid through a variety of fees, which can be complex but are essentially a percentage of the assets they manage. These fees are charged to clients in exchange for the wealth manager’s services.
The most common fee is the ongoing charge fee, which takes a percentage of the total assets under management. For example, if a fund has $100m in assets and an OCF of 0.8%, the manager would charge $800,000 in fees.
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Performance fees are another way wealth managers get paid. These fees are charged when the fund outperforms its target, and they can be a percentage of the additional returns. For instance, if a fund aims to outperform the FTSE 100 index by 2% annually and achieves a 6% return, the manager might charge a 20% performance fee on the extra 4% return.
Wealth managers may also apply initial and exit charges when clients invest in or withdraw from a fund. These charges are usually a percentage of the sum invested or withdrawn.
Types of Wealth Managers
Wealth managers cater to a range of clients, including private clients and wealth managers themselves.
Their clients can be institutional, such as pension or sovereign wealth funds, or retail, like individual investors.
Wealth managers offer investment solutions to these clients through pooled investments, often mutual funds or exchange-traded funds.
These investments can be actively or passively managed, depending on the client’s needs and preferences.
By providing investment solutions, wealth managers can charge fees that represent a percentage of the assets under management.
Investment Advisor Representatives
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Investment Advisor Representatives are also known as IARs, and they must affiliate with a state or federally regulated investment advisory firm.
These advisors charge fees for services, which can take various forms, such as a percentage of assets managed on behalf of a client, called AUM (assets under management).
An AUM fee is charged to a client, for example, 1% annually, by the investment advisory firm, and a portion of the fee is then paid to the financial advisor.
Fees range based on the level of management, platform, firm, and the types of assets held in client accounts.
IARs can also charge flat consulting or financial planning fees, which cover consultative financial advising, often used when working with businesses.
Hourly and monthly subscription fee models are also used by investment advisory representatives.
With any of these fee models, the consumer pays a direct fee to the underlying investment advisory firm, and a portion of that fee is then paid to the financial advisor.
Financial advisors charging fees are required to act as fiduciaries and put their client’s best interest before their own.
Registered Representatives or Insurance Agents
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Registered Representatives or Insurance Agents earn a commission from their underlying broker/dealer or insurance company when a customer purchases a product like a mutual fund or life insurance policy. This commission is built into the price of the product.
The commission amount varies greatly by type of product, with life insurance policies paying higher first-year commission rates than mutual funds. They tend to pay higher rates than mutual funds.
To recommend a product, financial advisors earning a commission must believe that the product is in their customers’ best interests.
Compensation Models
Wealth managers make money through various compensation models, each with its own pros and cons. There are five main categories of business models, including investment advisor representatives, registered representatives of a broker/dealer firm, agents of an insurance company, salaried professionals representing a financial service company, and a combination of the above roles.
Financial advisors can be paid in different ways, such as through fees or commissions. For example, Ana, a financial advisor and investment advisor representative, charges a one-time $2,500 financial planning fee and an annual 1% AUM fee on her client’s account. This means Ruben, her client, would pay Ana’s investment advisory firm $12,500 this year.
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Some financial advisors charge fees for their services, while others receive commissions for selling financial products. For instance, Michael, a financial advisor and registered representative of a broker/dealer, does not charge any fees but provides retirement planning advice and works with annuity products. He earns a commission from the annuity company, which can be up to 6% of the initial purchase.
Understanding how your wealth manager is paid can help you create a level playing field when evaluating their services. Asking questions like how they will be paid, whether they charge fees, and if they receive commissions can give you valuable insights.
Here are some common compensation models used by wealth managers:
- AUM (Assets Under Management) fee model: a percentage of the client’s assets is charged annually, typically ranging from 0.5% to 2.0%.
- Commission-based model: wealth managers earn a commission for selling financial products, such as insurance policies or investment products.
- Fee-only model: wealth managers charge a flat fee for their services, without any commission-based income.
- Hybrid model: a combination of fee-based and commission-based income.
It’s essential to understand your wealth manager’s compensation model to ensure their interests align with yours.
What Wealth Managers Do
Wealth managers are professionals who help clients manage their wealth and investments. They work closely with clients to understand their goals and develop a customized strategy to achieve them.
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A wealth manager’s role is more than just providing a year-end review. They are engaged in all financial decisions and provide guidance as the client’s life requires. This can include helping the client reassess their goals and adjust their strategy as needed.
Wealth managers typically charge fees that are a percentage of the assets under management. This can range from 1% to 2% or more, depending on the client’s needs and the complexity of their investments. They may also charge flat consulting fees or hourly fees for specific services.
Here are some questions to consider when selecting a wealth manager:
- What advice are you looking for?
- What goals do you want to accomplish?
- Do you need assistance in developing your personal Investment Policy Statement?
- How will you and your wealth manager measure success when it comes to managing your finances and assets?
- How can you develop a plan that will fit your situation and your objectives?
- How high or low is your risk tolerance?
What Does a Wealth Manager Do?
A wealth manager is more than just a person who reviews your finances at the end of the year. They collaborate with you to understand your goals and develop a customized strategy to manage your wealth.
A quality wealth manager is engaged in all your financial decisions and provides guidance as your life changes. They help you reassess your goals and adjust your strategy as needed.
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To get the most out of your wealth manager, you should consider asking them questions like what advice you’re looking for and what goals you want to accomplish. You should also discuss how you’ll measure success and how to develop a plan that fits your situation and objectives.
Your risk tolerance is also an important consideration, as it will impact the decisions your wealth manager makes on your behalf. A wealth manager can help you determine your risk tolerance and create a plan that aligns with it.
Here are some questions to consider discussing with your wealth manager:
- What advice are you looking for?
- What goals do you want to accomplish?
- Do you need assistance in developing your personal Investment Policy Statement?
- How will you and your wealth manager measure success when it comes to managing your finances and assets?
- How can you develop a plan that will fit your situation and your objectives?
- How high or low is your risk tolerance?
What Do Asset Managers Invest In?
Asset managers typically focus on a specific asset class or market segment, and their investment offerings can vary depending on the size of the company. Smaller firms may specialize in a particular area, such as emerging markets or a specific investing style like value or growth.
Larger asset management companies, on the other hand, often offer a broader range of products across both active and passive investment spaces. For example, BlackRock, the world’s largest asset manager, has assets under management totaling over $1tn and provides products across multiple asset classes, including fixed income, equities, and alternatives.
Understanding Wealth Management
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Wealth management companies offer a range of solutions to their clients, including pooled investments like mutual funds or exchange-traded funds. These investments are often managed actively or passively.
Wealth managers cater to a variety of clients, such as retail investors, institutional clients like pension or sovereign wealth funds, insurers, banks, private clients, and other wealth managers.
Fees for wealth management services typically represent a percentage of the assets under management. This means that the more assets a client has, the more they’ll pay in fees.
Lower fees can be a benefit of working with larger wealth management firms due to economies of scale.
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