With the new year underway, major investment banks on Wall Street have announced their 2023 compensation figures. Judging from early numbers, first year analysts at top banks are seeing base salaries inch above $200,000, with total compensation reaching $300,000 or more. Banks like Goldman Sachs and Morgan Stanley lead the pack with generous bonuses, while boutique banks trail behind. However, even lower tier banks are joining the pay raise party. The salary bumps reflect intense competition for top talent amid a red-hot deal environment.
Bulge Bracket Banks Hike Junior Banker Pay
The largest investment banks on Wall Street, known as the Bulge Bracket, are doling out major salary increases to junior employees in 2023. Goldman Sachs boosted first year analyst base pay to $225,000, up from $175,000 last year. Total comp could exceed $300,000. Morgan Stanley wasn’t far behind, bumping analyst base pay to $200,000. JPMorgan, Citi, and Bank of America have also announced pay increases to the $200,000+ range for first year analysts straight out of college.
Boutiques Struggle To Keep Up on Compensation
While major banks are flush with deal fees and able to pay top dollar, smaller boutique investment banks are struggling to keep up. According to reports, Evercore will pay first year analysts around $185,000 in 2023. That’s better than 2022’s $175,000, but far below what the major banks are offering. Boutiques like PJT Partners, Houlihan Lokey, and Lazard matched last year’s comp figures without any increases. The widening gap in junior banker pay could accelerate talent departures from boutique banks.
Fierce Talent War Drives Compensation Levels
Investment banking compensation has been rising steadily since the pandemic began. Record M&A activity, IPOs, and deals have allowed banks to collect huge fees. To attract and retain the best talent, they are passing along some of this windfall to employees. Banks also hope higher pay will improve morale and retention amid complaints of 100-hour workweeks. However, with soaring corporate valuations in 2022, banks will be challenged to maintain this growth in 2023. If the market cools, don’t be surprised if bonuses shrink too.
In 2023, top investment banks led by Goldman Sachs and Morgan Stanley are hiking junior banker salaries above $200,000, with bonuses pushing total comp to $300,000 or more. However, smaller boutique banks are struggling to match the lucrative packages from bulge bracket players. Fierce competition for talent is fueling the pay raises, but a market downturn could dampen future increases.