Salaries in IB and PE Revealed

One of the key considerations of starting your career in the financial industry is likely to be the compensation paid for entry-level roles. As one of the most lucrative sectors in terms of pay, it is possible to make six figures in the first few years out of an undergraduate degree. To offer further insight, we have compiled estimates of average remuneration across various roles in investment banking and private equity in the UK.

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Investment Banking

As one of the most sought-after roles in finance, investment banking analysts require financial modelling and quantitative skills. Typical responsibilities include building financials models, creating marketing materials and compiling sector research. The job is often associated with long hours due to a demanding workload, with analysts working on average between 70-80 hours per week according to various sources. Working in investment banking can be an exciting long-term career path; it is predominantly deal-driven, with exposure to high-profile transactions and C-suite management. It also opens up various exit opportunities into areas such as venture capital, private equity and corporate finance.

Analysts tend to progress to associates after three years, taking on more responsibility in leading workstreams and client discussions while gradually building sector expertise. Some banks have recently accelerated their analyst-to-associate transition to a two-year programme. The progression to vice president (VP) tends to take three years, with VPs more focused on idea generation, winning deal mandates and managing junior staffing. The path to becoming a director should then take another three to four years. Directors are generally the first point of contact for clients, managing these relationships and scoping potential investment or financing opportunities.

Role	Average Base Salary	Bonus Range
Analyst	£70k	£30-70k
Associate	£120k	£50-120k
Vice President	£155k	£70-155k
Directors	£200k+	£100-200k+

The above breakdown is based on aggregate reported remuneration from bulge-bracket investment banks according to Arkesden Partners. Base salaries may vary from bank to bank, along with the division entailed (such as M&A, Leveraged Finance or Restructuring). Bonuses on the other hand are much more variable depending on individual and group performance, ranging from 40% to 100% of base salary. According to research by Dartmouth Partners, bonuses in investment banks are up 60-80% in 2021.

Private Equity

Associates within private equity conduct research, financial analysis, and due diligence on companies in assessing investment opportunities. This entails financial modelling, often managing an investment portfolio and raising money from private companies, banks, and high net worth individuals.

A common path to private equity is through investment banking, due to the natural overlap in skills and technical competencies in terms of financial modelling and valuation analysis. Private equity firms tend to recruit bankers with at least two to three years of experience, who are more seasoned in terms of deal exposure and technical competencies. A core differentiator of a private equity associate to an investment banking analyst is the autonomy and responsibility delegated in managing and coordinating deal processes, hence the importance of prior experience. Entry-level programmes do exist however, which now means it it possible to join a private equity in a graduate role. PE associates tend to work on average between 60-70 hours per week, according to various surveys and estimates.

Role	Average Salary	Average Bonus	Carried Interest
Associate	£100k	£36k	£300k
VP/Principal	£160k	£119k	£775k
Director	£188k	£123k	£1,100k
MD	£200k	£167k	£2,000k

The above breakdown is the average pay according to survey by Emolument, which includes private equity funds, direct lending funds, infrastructure funds, real estate funds and venture capital funds. Carried interest is the share of any profits that are realised from the fund. While pay is undeniably high across most roles at private equity firms, there are significant disparities from one company to another, mostly depending on investment strategies, returns and fund performance.

Positioning yourself for a role in Investment Banking or Private Equity

competition is fierce and roles are in high demand, the industry is currently booming. There has been a sharp rebound in business activity in 2021 and a record number of mergers and acquisitions. Ways to get ahead in the application process include keeping up to date with the latest market developments, staying on top of various application deadlines and practising the technical skills required for the roles. Below are some of the reasons to consider Financial Edge Training's leading The Private Equity Associate online course to kickstart your financial career. Use code FCLIMB25 for 25% off.