Investment Banking Salary Reality

Break down the number for us. What do you actually make?

Base salary is $110,000. The bonus for a first-year analyst at my firm was $80,000 last year, though that varies. Some people in my class got $75,000, some got $85,000. It depends on your performance rating and the firm's overall revenue. So total comp, call it $190,000 in a good year. At 23. People hear that number and they think I'm rich. My dad is a dental equipment sales rep in Grand Rapids. He makes about $95,000. When I told him my offer, he got quiet for a long time and then said "that's more than I've ever made." Which made me feel simultaneously proud and terrible.

But the number doesn't exist in isolation. It exists in New York City, where my rent is $2,850 a month for a one-bedroom in Kips Bay that is technically a junior one-bedroom, which means the bedroom fits a full-size bed and a nightstand if the nightstand is small. After federal taxes, state taxes, and city taxes, my $110,000 base is about $72,000 take-home. That's $6,000 a month. Rent is $2,850. Student loans are $680 a month. I have about $89,000 in federal loans from undergrad. Health insurance is through the firm. I put 6% into my 401k for the match. After rent, loans, 401k, utilities, phone, and groceries, I have about $1,400 a month in discretionary income. Which sounds fine until you realize that $1,400 in New York means I can eat out twice a week and buy nothing else.

The bonus helps. The $80,000 bonus, after taxes, nets about $48,000. That arrives in August. I put $25,000 into savings, paid down an extra $10,000 on the loans, and spent the rest over the following months. The bonus is what makes the math work. Without it, I'm a 23-year-old making $72,000 take-home in one of the most expensive cities in the world. With it, I'm comfortable. The problem is the bonus is announced once a year and you don't know the number until it's handed to you. You can't plan around it. My associate Karen told me to "live off the base and save the bonus." That's good advice. I follow it about 70% of the time.

You mentioned the napkin. Tell me about the hourly rate.

Right. So this was about three months in. Felix and I were at a bar and I was complaining about the hours and he said "just do the math." So I did. I work, conservatively, 80 hours a week. Some weeks are 70, some are 95. Call it 80 as an average. That's about 4,160 hours a year. Take the $190,000 total comp and divide by 4,160. You get $45.67 an hour. Before taxes. After taxes in New York, it's closer to $28 an hour.

Felix did his math. He works about 55 hours a week, makes $105,000 total. That's about $36.36 an hour before taxes. He's making less total money but more per hour. And he gets his weekends. He went skiing in Vermont last month. I built a pitch book.

I texted Felix after we left the bar: "We made a mistake." He texted back: "You made a mistake. I'm going to Vermont." He was joking. Mostly. The hourly rate thing stuck with me though. My base salary is $110,000 and my effective hourly rate is lower than the paralegal at the law firm we work with on deals. Her name is Deborah. She bills at $225 an hour. She goes home at 6.

Do you spend money on things you wouldn't if the hours were normal?

Absolutely. Seamless is probably $400 a month. I order dinner at the office four or five nights a week. The firm reimburses after 7 PM, up to $30. But I also order lunch because I don't have time to leave the building, and that's on me. Dry cleaning is $180 a month because I wear dress shirts five days a week and I don't own an iron. I take Ubers home after midnight because the subway situation at 1 AM is not something I want to deal with after a 16-hour day. That's maybe $250 a month. I pay for a gym membership I use once a week. $150 a month. My lifestyle costs are artificially inflated because the job leaves me no time to do things cheaply. I can't cook because I'm never home. I can't walk because I'm leaving too late. I can't do my own laundry because the laundromat closes at 10 PM and I'm never done by 10 PM.

The firm is subsidizing your life and profiting from the subsidy. The $30 dinner reimbursement keeps you in the office. The Uber home at midnight keeps you working until midnight. The dry cleaning exists because the dress code exists because the clients expect it. Every convenience spend is a cost of the hours, and the hours are a cost of the job, and the job pays enough that you don't notice the leak until you look at the napkin.

What's yours?

The golden handcuffs start immediately. I'm 23. I've been working for 11 months. And I already can't afford to leave. Not financially, I have savings. Psychologically. I've acclimated to the number. When I look at other jobs, jobs that sound healthier and more interesting, I immediately check the salary. And if it's below $120,000, I feel a physical contraction. I've only been making this money for less than a year and it's already changed what I consider acceptable. My dad makes $95,000 and owns a house and coached my Little League team and seems genuinely happy. I make $190,000 and order pad thai alone at my desk at 11 PM. Something about the math doesn't add up but I can't figure out which variable I'm solving for wrong.

Walk us through the comp at VP level in a middle-market bank.

Base salary is $250,000. Bonus last year was $140,000, so all-in was $390,000. The bonus is discretionary, tied to group revenue and my individual performance. My MD, Bennett, does the bonus allocation for our group. He's transparent about the methodology, which is more than I can say about the bulge bracket I came from, where the bonus was a number that appeared in an envelope and you were expected to say thank you regardless of whether it made sense.

Bennett explained it to me my first year: the group generates revenue, the firm takes its cut for overhead and partner distributions, and what's left gets allocated across the deal team based on seniority and contribution. In a year where our group closes five deals, the pool is bigger. In a year where we close three, it's smaller. Last year we closed four. $140,000 was at the high end of the VP range for our firm. I know because Adriana, the other VP in a different group, and I compared numbers over drinks, which you're not supposed to do but everyone does.

How does Charlotte change the math?

Dramatically. When I was in New York, I was making $310,000 total as a third-year associate at a different bank. My rent was $3,800. Federal, state, and city taxes took about 42% of my gross income. After rent, taxes, and living costs, I was saving about $4,500 a month. In Charlotte, I make $390,000 total. My mortgage is $2,900 on a house I own. North Carolina state income tax is 4.5% versus New York's combined state and city rate of about 11.5%. No city tax. After taxes, mortgage, and living costs, I'm saving about $9,200 a month. My savings effectively doubled on an $80,000 raise.

The cost-of-living arbitrage is the financial unlock that nobody in New York talks about because leaving New York feels like admitting defeat. When I told my team I was moving to Charlotte, my associate at the time, a woman named Priyanka, looked at me like I'd said I was joining the Peace Corps. She said, "But what will you do there?" I said, "Save money and walk my dog." She thought I was joking. I was not.

Is there a comp ceiling at a middle-market bank?

Yes. And it's real. At a bulge bracket, a VP can make $400,000 to $500,000 in a strong year. At my firm, the VP range tops out around $420,000. The MD range here is maybe $600,000 to $900,000 in a good year. At a bulge bracket, a top-performing MD can clear $2 million. If I'm optimizing for peak lifetime earnings, I should have stayed in New York at a bigger bank. If I'm optimizing for wealth accumulation, meaning savings rate, not income, Charlotte wins. I'll hit $1 million in liquid savings this year. I'm 33. I don't know many bulge bracket VPs in Manhattan who can say that, because their $500,000 income gets eaten by a $5,500 apartment and $1,200 dinners and a lifestyle that scales with the number.

My husband Marcus, he's a physical therapist. He makes $78,000. Together we're at about $470,000 household income in a city where the median household income is $70,000. We're not "Charlotte rich," which is apparently a phrase. We're just comfortable in a way that felt impossible in New York on more money. The house has a front porch. I drink coffee on the front porch. That sounds like nothing, and it is, and it's the best financial decision I've ever made.

You compared bonuses with Adriana. How did that conversation go?

We were at a wine bar in South End. She started. She said, "I'll tell you mine if you tell me yours." Which is how all compensation conversations happen among women in banking, in my experience. Men just check Wall Street Oasis and assume the number is accurate. We share actual numbers because the forums are unreliable and we've learned that underpaying happens disproportionately to people who don't ask.

Adriana got $125,000. I got $140,000. Same title, same firm, different groups. The $15,000 gap was entirely because my group had higher revenue that year. She wasn't underpaid. I wasn't overpaid. But without the conversation, neither of us would have known where we stood. Three years earlier, at the bulge bracket, I found out that a male associate in my group with the same start date and similar ratings made $25,000 more in bonus than I did. That conversation happened at a holiday party after three glasses of champagne and I spent the next week wondering whether to raise it with HR. I didn't. My mentor, a senior VP named Lorraine, told me, "Don't file a complaint. Just be undeniable." Problematic advice, maybe. But it worked. I got the VP offer. The gap corrected. Whether it corrected because I was undeniable or because they knew I knew, I can't say.

What's yours?

How fast "enough" moves. When I was an analyst making $190,000, I thought: if I could just make $300,000, I'd feel secure. When I hit $300,000, the number moved to $400,000. Now I'm at $390,000 and the number has moved to $500,000. It doesn't stop. The lifestyle inflates to match the income and the target inflates to match the lifestyle. Marcus and I have no kids, no debt besides the mortgage, and $960,000 in savings, and I still feel like we need more. That's not a financial reality. That's a psychological one. And it's particular to this industry because everyone around you makes a lot of money and the culture rewards consumption as a signal of success. Bennett drives a Porsche Cayenne. I don't know what it costs. I know that I noticed it, and I know that noticing it is part of the problem.

What does MD comp actually look like at a boutique?

My base salary is $400,000. That is guaranteed. It shows up every two weeks. The bonus is entirely discretionary and tied to the deals I personally originate and close. Last year, I originated and closed three deals with total transaction values of about $1.1 billion. The firm's advisory fees from my deals were approximately $7.2 million. My share of that, after the firm takes its overhead allocation and partner split, was about $1 million. So total comp last year was $1.4 million.

The year before that, I closed one deal. One. A $180 million transaction with a fee of about $1.2 million. My share was about $220,000. Total comp that year was $620,000. Still a lot of money by any reasonable standard. But when you're budgeted for $1.4 million and you get $620,000, the delta is what you feel, not the absolute number. That's the part about MD comp that people outside the industry don't understand: the volatility. My income can swing by $800,000 from one year to the next based on whether two deals close or one deal closes.

How do you budget around that?

You don't, is the honest answer. You can't budget around a bonus you don't control. What I do is: Elaine and I live off the base. Our mortgage is $4,800 a month on a house in River Oaks that we bought in 2021. Two kids, Colton is 12 and Maggie is 9. Private school tuition for both is $56,000 a year, combined. Car payments, insurance, property tax, Elaine's practice overhead. Our fixed monthly expenses are about $18,000. The base salary, after taxes, covers that with about $5,000 to spare each month.

The bonus goes into the Schrödinger account and we allocate it after it arrives. Good year: max out retirement accounts, fund the 529 plans, put $200,000 into taxable brokerage, and take a family trip. Last year we went to Costa Rica. Bad year: fund the retirement accounts, put some into savings, and skip the trip. The year I got $220,000 in bonus, after taxes it was about $130,000. We funded the 529s and that was basically it. Maggie asked if we were going on vacation that summer and Elaine said "we're doing a staycation" and Maggie said "that's just regular staying home" and she was not wrong.

$1.4 million. Does it feel like $1.4 million?

No. I mean, I'm aware of the number. I'm aware that my father was a high school football coach in Beaumont who made $52,000 and that I make more in a good month than he made in a year. But the number doesn't translate to the feeling of wealth the way you'd expect. The lifestyle is expensive. The house, the schools, the country club membership that is actually a business development tool because that's where I meet CFOs and founders. My buddy Clint, he's a managing director at a different firm, he calls it "the overhead of the role." You spend money to make money. The country club dues are $18,000 a year. The client dinners I pay for personally because the firm doesn't reimburse at the MD level, you're expected to invest in relationships. Those run $8,000 to $12,000 a year. The suits. The travel. The events.

When I net it all out, on the $1.4 million year, after taxes (about $520,000 in total federal, state, and estimated tax payments), after fixed expenses, after the overhead of the role, I saved about $340,000. On a $1.4 million gross income, saving $340,000 is a 24% savings rate. That's fine. It's not what people imagine when they hear $1.4 million. They imagine private jets. I drive a 2022 Tahoe and most of my client dinners are at steak houses where the bill is $380 and the client orders the tomahawk.

You've seen the comp at every level. What would you tell someone optimizing for money?

I'd tell them to go to tech. I'm serious. The all-in compensation at a FAANG company for a senior engineer is $350,000 to $500,000 with 40-to-50-hour weeks, equity that vests predictably, and no client dinners you have to pay for yourself. A senior product manager at Google makes what a VP at a middle-market bank makes, with better hours, better equity liquidity, and no bonus volatility. Banking pays well at the junior levels relative to other entry-level jobs, but the hourly rate is poor and the lifestyle cost is high. Banking pays very well at the senior levels, but only in good years, and the overhead eats a meaningful chunk.

If you want to make money in banking, the play is: do two years as an analyst, go to private equity, stay in PE for 20 years, and get carried interest. Or: do ten years at a bulge bracket, build relationships, leave, start a boutique, and eat what you kill. That's what my co-founder Mitchell did. The first path is the $20 million outcome. The second path is the $3-to-5-million-a-year outcome with massive volatility. Both paths require you to be in the top 5% of your cohort. The other 95% make good money but not life-changing money, and they give up their twenties and thirties to earn it.

What's yours?

The year I made $620,000, I felt poor. I need to say that out loud because it sounds insane and it is insane and it happened. I made $620,000 and I felt the pinch. I looked at the 529 balance and it wasn't where I wanted it. I looked at the brokerage account and it had grown less than I'd projected. I deferred the Costa Rica trip. And I felt, genuinely felt, financial stress. On $620,000.

That's what this industry does to your relationship with money. It recalibrates your baseline every year. The good year becomes the floor. The bad year becomes the crisis. Elaine runs a physical therapy practice with two employees and she makes $165,000 and she has never once expressed financial anxiety. Not once. She budgets. She plans. She knows what comes in and what goes out. I make four times what she makes and I worry about money more than she does. That's not a compensation problem. That's a corruption of perspective. I grew up watching my dad be happy on $52,000. I make $1.4 million and I check the Schrödinger account in February like it's a medical test result. Something went wrong somewhere. I just can't tell whether it's the industry or me.