Investment Banking

Investment banks help companies issue securities, help investors purchase securities, manage financial assets, trade securities and provide finical advice. The leading investment banks including Merrill Lynch, Salomon Smith Barney, Morgan Stanley Dean Witter and Goldman Sachs are said to be in the bulge bracket.

Other investment banks are regionally oriented or situated in the middle market (e.g. Piper Jaffray). Others are small, specified firms called boutiques, which might be oriented toward bond trading, M&A advisory, technical analysis or program trading. Firms have lots of different areas and group within them. In most firms, there is sales and trading which works with owners of securities (firms and governments) and capital markets which goes in between the other two.

Starting salaries in investment banking positions with a bachelors degree after bonus (assistant or junior analyst position) range from $25,000 to $50,000. Starting salaries with an MBA degree range after bonus (associate position) range from $60,000 to $135,000. These salaries vary with firms and with the region of the country you are in. Bonuses typically would be 10 to 50% of salary to start and can move to one to three times salary later. Lately, salaries have increasingly included an equity component which may not be liquid for up to three years, although as an analyst you would typically be sheltered from this. This is good for the banks because it makes it much harder for people to move around.

Some firms tend to pay less than others because they can get away with it. You might actually be better off taking less. Obviously don't give yourself away but at the entry level, the quality of experience you get and the strength of the people you will work with are far more important than how much you get paid. You are trying to maximize the present value of your future earnings and enjoyment. This may involve taking lower pay now. Or, if you're lucky, it might not.