Business

It Takes Over 12 Years To Become An Investment Bank Managing Director

Top managing directors at London investment banks take home annual pay packages of over $1 million

Almost every young man or woman in business school dreams of becoming a managing director at an investment bank at some point, even if they eventually decide on another career path in the financial industry. Salary benchmarking firm Emolument published a report on what it takes and how long it takes to become a managing director at several major IBs earlier this week. The report offers eye-opening information both on the experience required to become a managing director and the more than comfortable pay scale of MDs at all of the major investment banks.

 

Investment Bank Managing Directors 1

At least 12 years experience required to become a managing director

Emolument’s seniority and salary survey included data from 3,375 employees working for top investment banks in London between 2013 and 2015.

Several trends were notable from the data. First, it takes a while longer to get to the top at European financial institutions such as Lloyds or Societe Generale where managing directors average 19 years of experience. MDs for Japanese financial institution Nomura also average 19 years of experience.

On the other hand, brash American firms such as Goldman Sachs or Morgan Stanley are willing to promote Managing Directors with less than 14 years of experience, with MDs averaging 13 years of experience between the two. Right now Goldman Sachs has by far the least experienced managing directors, with MDs just having an average of 12 years of experience.

Investment Bank Managing Directors 1

Investment bank managing directors enjoy generous compensation packages

Surprisingly, the Emolument.com report discovered that being a young MD does not necessarily mean you’ll be paid less. It turns out that IBs with the youngest Managing Directors also pay the most.

The other side of the coin is that patiently waiting for the big financial payoff as an MD is not always a good idea. While some IBs make up for a “slow career evolution” by paying higher market rates (Nomura, Barclays), other banks do not make up for a slow promotion rate (Societe Generale, Lloyds). JPMorgan Chase paid MDs the most at an annual average of £940,000, and Societe Generale paid MDs the least at an annual average of £354,000.

Note all compensation figures include salary plus bonus.