Investment Banking Analyst Compensation Report: 2025 Market Analysis

Comprehensive Analysis of Self-Reported Compensation Data

Executive Summary

The 2025 investment banking analyst compensation landscape reflects a market that has stabilized following the volatility of recent years, with bonuses averaging approximately 65% of base salaries across all firm tiers. Self-reported data reveals significant stratification between firm categories, with elite boutiques maintaining premium compensation while regional firms continue to lag substantially. The average first-year analyst earned $62,000 in bonus compensation, representing a modest increase from 2024 levels, while second-year analysts saw more substantial gains averaging $91,000. Performance differentiation remains the primary driver of compensation variance within firms, with top-bucket performers earning 40-70% more than their mid-bucket peers at the same institution.

Key Findings:

• Average AN1 Bonus: $62,000 (range: $49,000-$90,000)
• Average AN2 Bonus: $91,000 (range: $32,000-$105,000)
• Average AN3 Bonus: $90,000 (range: $80,000-$100,000)
• Year-over-Year Growth: AN1 to AN2 progression averaged 47%
• Firm Tier Premium: Bulge bracket top performers earned 70%+ more than regional equivalents

2025 Compensation Landscape Overview

Base Salary Foundation

Base salaries remained consistent with 2024 levels, holding at $105,000-$110,000 for first-year analysts in major markets including New York, Boston, and San Francisco. This stability in base compensation placed additional emphasis on bonus performance as the primary differentiator in total compensation packages. Second-year analysts typically earned base salaries of $115,000-$120,000, while third-year analysts in extended programs commanded $125,000-$130,000.

Bonus Structure and Distribution

The traditional three-tier performance system (top bucket, mid bucket, low bucket) continued to dominate compensation structures across all firm types. However, the implementation and impact of these tiers varied significantly:

Top Bucket (15-25% of analysts):

• Typically earned 95-105% of base salary in bonus compensation
• Bulge bracket range: $85,000-$105,000 for AN1-AN2
• Middle market range: $75,000-$100,000 for AN1-AN2
• Elite boutique premiums often exceeded bulge bracket levels

Mid Bucket (50-60% of analysts):

• Earned 70-85% of base salary in bonus compensation
• Demonstrated clear progression from AN1 to AN2
• Significant variation between firm tiers became apparent

Low Bucket (20-30% of analysts):

• Compensation ranged from 45-65% of base salary
• Limited data availability suggests underreporting in self-disclosed figures
• Regional firms showed concerning compression at this performance level

Geographic and Market Factors

New York City continued to command premium compensation across all firm tiers, with analysts earning 10-15% more than comparable roles in secondary markets. Boston, particularly for technology-focused coverage groups, showed competitive compensation levels approaching NYC standards. Regional markets demonstrated significant compression, with some second-year analysts at smaller firms earning less than first-year analysts at bulge bracket institutions in major markets.

2024 vs 2025 Compensation Analysis

Market Context and Economic Environment

The transition from 2024 to 2025 represented a period of moderate stabilization in investment banking compensation following the significant adjustments of 2022-2023. While 2024 was characterized by cautious optimism and selective bonus increases, 2025 demonstrated more consistent compensation patterns across firm tiers with clearer performance differentiation.

Year-over-Year Comparison by Analyst Level

First-Year Analyst (AN1) Progression:

• 2024 Average: Approximately $58,000
• 2025 Average: $62,000
• Change: +6.9% year-over-year growth
• Range Expansion: 2025 showed wider variation ($49K-$90K vs 2024’s $45K-$75K range)

The modest increase in AN1 compensation reflects market confidence returning to entry-level hiring, with firms willing to compete more aggressively for top talent. The expanded range indicates increased differentiation between firm tiers, with elite boutiques and top bulge bracket groups pulling away from the median.

Second-Year Analyst (AN2) Progression:

• 2024 Average: Approximately $82,000
• 2025 Average: $91,000
• Change: +11.0% year-over-year growth
• Performance Impact: Greater emphasis on individual performance ratings

Second-year analysts experienced the most significant compensation gains, reflecting firms’ increased willingness to retain proven talent. The stronger growth at the AN2 level suggests that firms prioritized experienced analyst retention over new graduate recruitment premiums.

Third-Year Analyst (AN3) Analysis: Limited comparative data exists for AN3 positions due to the smaller sample size, but available information suggests stable compensation with increased variability based on associate-track progression and specialized skill sets.

Firm Tier Evolution 2024-2025

Bulge Bracket Firms:

• Maintained market leadership with consistent 8-12% bonus increases
• Increased performance differentiation within analyst classes
• Top performers gained access to accelerated promotion tracks

Middle Market Evolution:

• Showed more aggressive compensation increases (12-18%) to compete for talent
• Expanded recruiting efforts at target schools traditionally dominated by bulge brackets
• Increased specialization in sector coverage driving premium compensation

Boutique and Regional Changes:

• Elite boutiques continued premium compensation strategies
• Regional firms faced continued pressure with limited improvement in relative positioning
• Increased consolidation among smaller firms impacted compensation consistency

Performance Bucket Migration

Analysis suggests that firms became more rigorous in their performance evaluations in 2025, with fewer analysts achieving top-bucket status compared to 2024. This trend contributed to wider compensation spreads within individual firms while maintaining stable average compensation levels.

Detailed Analysis by Firm Tier

Bulge Bracket Institutions

Bulge bracket firms maintained their position as compensation leaders, though the premium over elite boutiques narrowed in certain specialized coverage areas. The data reveals consistent compensation structures across major institutions, with top-performing first-year analysts earning $70,000-$85,000 and second-years reaching $90,000-$105,000.

Coverage Group Performance:

• M&A groups led compensation within bulge brackets
• Industry coverage showed moderate premiums over product groups
• Geographic arbitrage remained limited within firm structures

Performance Differentiation: The gap between top and mid-bucket performance at bulge brackets averaged $25,000-$35,000 for first-year analysts, representing the most significant performance spread among firm categories. This differentiation reflects the competitive nature of bulge bracket environments and the premium placed on exceptional performance.

Middle Market Dynamics

Middle market firms demonstrated the most aggressive compensation strategies in 2025, with several institutions offering packages competitive with lower-tier bulge bracket groups. The average first-year bonus of $65,000-$75,000 for top performers represents significant year-over-year growth as these firms compete for talent.

Specialized Sector Premiums: Technology-focused middle market firms showed particular strength, with one Boston-based institution paying $90,000 to a mid-bucket first-year analyst. Healthcare, fintech, and sustainability-focused coverage groups also commanded premiums within the middle market tier.

Regional Variation: Middle market compensation showed greater geographic sensitivity than bulge bracket levels, with significant premiums for analysts in major financial centers compared to secondary markets.

Elite Boutique Compensation

While limited data exists for traditional elite boutiques (Lazard, Evercore, Moelis, PJT etc.), available information suggests these institutions maintained premium compensation strategies to justify their typically more demanding work environments. Specialized boutiques in high-growth sectors demonstrated particular strength, often matching or exceeding bulge bracket compensation while maintaining intense, high-performance cultures.

Regional and Smaller Firm Challenges

Regional firms continued to face significant compensation challenges, with concerning data points including a second-year analyst earning $32,000 at a firm comparable to established regional platforms. This compression threatens these firms’ ability to attract and retain talent in an increasingly competitive market.

Coverage Group Analysis

Mergers & Acquisitions (M&A)

M&A coverage commanded premium compensation across firm tiers, with analysts earning an average of $74,000 across all experience levels. However, significant variation existed based on firm tier and deal flow:

• Elite Boutique/Top MM: $90,000 (AN1 mid-bucket at tech-focused firm)
• Traditional MM: $58,000 (AN1 mid-bucket at generalist firm)
• Deal Flow Impact: Groups with consistent live deal activity showed 15-25% premiums

Industry Coverage Groups

Traditional industry coverage groups showed stable compensation with moderate premiums over product groups. Coverage analysts across all firms earned an average of $69,000, with significant variation based on sector specialization:

High-Performing Sectors:

• Technology coverage (particularly at boutiques): 20-30% premium
• Healthcare/Biotech: 15-20% premium
• Financial institutions (FIG): Premium compensation at specialized firms

Traditional Sectors:

• Energy coverage showed compressed bonuses, particularly in traditional energy markets
• Industrial coverage remained stable with market-average compensation
• Consumer products showed moderate variation based on firm positioning

Product Groups

Product groups, including equity capital markets (ECM), debt capital markets (DCM), and leveraged finance, generally showed market-average compensation with less variation than coverage groups. The average bonus across product groups was $66,000, though this figure includes significant outliers at both ends of the spectrum.

Public Finance and Specialized Coverage

Public finance coverage, traditionally viewed as offering better work-life balance, showed competitive compensation at $55,000 for top-bucket first-year analysts at middle market firms. This suggests that lifestyle benefits may offset pure compensation considerations for some analysts.

Performance Tier Impact Analysis

Top Bucket Performance (15-25% of analysts)

Top bucket designation proved to be the most significant factor in compensation determination, often more impactful than firm tier for individual outcomes. Top performers at middle market firms frequently out-earned mid-bucket performers at bulge bracket institutions.

Characteristics of Top Bucket Compensation:

• 95-105% of base salary in bonus (some instances exceeded 105%)
• Accelerated promotion consideration
• Increased responsibility and client interaction
• Access to premium deal opportunities

Mid Bucket Majority (50-60% of analysts)

The majority of analysts fell into mid-bucket performance categories, earning 70-85% of base salary in bonus compensation. This group showed the most significant year-over-year progression, suggesting firms’ focus on retaining proven talent.

Low Bucket Considerations (20-30% of analysts)

Limited self-reported data exists for low bucket performance, likely due to underreporting bias. Available data suggests these analysts earned 45-65% of base salary in bonus compensation, with significant improvement opportunities through performance enhancement.

Market Outlook and Implications

Short-Term Trends (2026 Outlook)

Several factors suggest continued stability in analyst compensation with potential for modest growth:

Positive Indicators:

• Increased M&A activity expectations
• Continued private equity fundraising
• Infrastructure and sustainability deal flow

Challenges:

• Regulatory uncertainty
• Geographic competition from alternative financial centers
• Technology disruption in traditional banking functions
• Elite boutiques maintaining premium compensation to justify intensive work demands

Long-Term Structural Changes

The compensation data reveals several structural shifts likely to continue:

Performance-Based Differentiation: Firms increasingly emphasize individual performance over tenure-based advancement, suggesting continued expansion of compensation ranges within analyst classes.

Firm Tier Evolution: The gap between elite boutiques and mid-tier bulge brackets continues to narrow in specialized coverage areas, while regional firms face increasing pressure.

Geographic Arbitrage: Technology-enabled remote work and satellite offices may gradually reduce geographic compensation premiums, though this effect remained limited in 2025.

Conclusions and Recommendations

For Current Analysts

1. Performance Focus: Individual performance ratings demonstrate the highest correlation with compensation outcomes, often exceeding firm tier impacts
2. Coverage Group Selection: Specialized sectors, particularly technology and healthcare, show consistent compensation premiums
3. Firm Environment Considerations: Elite boutiques offer premium compensation but typically require longer hours and more intensive work commitments than bulge brackets

For Prospective Analysts

1. Firm Tier Strategy: Bulge bracket firms offer the highest average compensation and most structured training programs. Elite boutiques provide premium compensation (often exceeding bulge brackets) but demand significantly longer hours and more intensive work commitments. Middle market firms increasingly offer competitive packages while potentially providing broader transaction exposure
2. Performance Expectations: Top-bucket performance can result in 40-70% higher compensation than mid-bucket at the same firm, making individual performance more impactful than firm tier selection in many cases
3. Coverage Group Selection: Specialized sectors like technology and healthcare command consistent premiums, while traditional sectors show more compressed compensation ranges
4. Geographic Trade-offs: Major financial centers (NYC, Boston) offer 10-15% compensation premiums but significantly higher living costs
5. Long-term Planning: The 47% average progression from AN1 to AN2 validates the two-year analyst program investment, with most compensation growth occurring in the second year
6. Market Timing: 2025 data suggests stable market conditions supportive of continued compensation growth, making this a favorable entry period

For Industry Stakeholders

1. Talent Retention: The significant AN1 to AN2 compensation progression suggests successful retention strategies require substantial year-over-year increases
2. Competition Dynamics: Middle market firms’ aggressive compensation strategies indicate intensifying competition for analyst talent
3. Performance Management: Clear performance differentiation systems prove essential for both compensation fairness and talent motivation

Data Sources and Methodology

This analysis is based on self-reported compensation data from industry professionals, supplemented by publicly available information and industry reports. While every effort has been made to ensure accuracy, self-reported data may contain inherent biases including:

• Potential overrepresentation of high performers
• Geographic bias toward major financial centers
• Firm tier bias toward larger, more established institutions
• Temporal bias toward recent compensation announcements

Readers should consider these limitations when interpreting specific data points, though the overall trends and patterns demonstrate consistency with broader industry observations and third-party compensation surveys.

This report represents analysis of available data as of August 2025. Compensation patterns may vary significantly based on individual circumstances, firm-specific policies, and market conditions. This information is provided for educational and analytical purposes only.