So How Much Do These Kids Make, Anyway?
Because of competition between firms, salary and bonus structures for analyst programs are fairly consistent throughout the investment banking world. According to several of our sources, including investment bankers and college counselors, in the 2006-07 fiscal year, a first-year analyst made a base salary of $60,000, with a signing bonus of $10,000. A second-year analyst made $70,000, and those promoted to a third year made $80,000—not bad jack for a twenty-four-year-old. But wait, there's more.
For analysts, yearly bonuses are awarded at the end of June, at the close of the fiscal year, and can often exceed base salary. Bonuses are awarded in three-tier "buckets" for each level, determined by an analyst's performance that year. Sums are supposed to be kept confidential, but word often gets out. Banks might use the lowest bucket to send a message to underperforming analysts who haven't been weeded out by attrition.
The bonuses, though, hinge on the strength of the market. The value is referred to as "the Street," because the major players on Wall Street generally set the bar. In 2006-07, bonuses set a record high and exceeded all expectations. Street value for a first-year analyst bonus ranged, approximately, from $65,000 to $95,000; the figures were $70,000 to $110,000 for the second year, and $110,000 to $145,000 for the third. Uptown condo, anyone?
With the dire state of the economy, analysts, like their superiors all the way up to the top of the ladder, were expecting a significant hit in their bonus figures at the end of June, perhaps by as much as 40 percent from last year's totals. Slightly smaller uptown condo, anyone?