Buckets, politics, and why you’ll always feel underpaid
Let’s talk about money.
Everyone in banking thinks they’re underpaid. And they’re right.
Not because they’re actually underpaid — but because this whole system is designed to leave you just satisfied enough to stay and just hungry enough to keep grinding.
I’ve worked with a lot of bankers at every level — analysts, VPs, MDs — and the one thing nobody really understands is how comp actually works. How bonuses get set. Who decides them. What really moves the needle. And when it’s worth going all-in… or just doing enough to get paid and live another year.
Let’s break it down.
1. What Do Investment Bankers Actually Make?
Here’s your total comp cheat sheet:
- Analyst: $150–$200K
- Associate: $200–$400K
- VP: $400–$600K
- Director: $600–$800K
- MD: $800K+ (revenue-driven, wide range)
Those are street midpoints. In a good year, top payers will beat these numbers — but this is what you should expect. And fun fact: these ranges haven’t moved much in 20 years, even with the cost of living spiking. Not saying you should feel bad for bankers, but the purchasing power story is real.
Base vs. Bonus
People obsess over base. They shouldn’t.
Most bankers burn through their base just keeping up appearances. The real money is in your bonus, which often makes up 50%+ of your total comp — and that percentage goes up as you get more senior. A lot of senior bankers take out personal lines of credit just to float their lifestyle until bonus season hits.
2. Cash vs. Deferred Comp
When does deferred comp start?
Usually at VP, but some platforms start deferring at Associate level. Depends on the shop.
How much is deferred?
Typically 20%+ of your bonus is deferred — not your base. It’s usually paid in your bank’s stock (shadow shares). You typically get drip-fed the payout over a vesting schedule — something like 25% in Year 1, 25% in Year 2, and 50% in Year 3.
So yeah, golden handcuffs. The idea is:
- If the firm does well, your equity goes up and you’re happy
- If the firm tanks, your $100K in deferred might turn into $50K — tough break
Can you lose it?
If you get fired for performance, you usually keep it. If you get fired for cause — think “grabbed someone’s ass in the office” — you’re out of luck. If you leave for another bank, they’ll either buy you out or replace it with their own equity to make you whole.
3. What Actually Drives Your Bonus?
You’re evaluated across three things — only one of which you control:
1. Your Performance
If your work is weak, you’re not getting paid — full stop. But doing great work isn’t everything. This is Wall Street, not a school project. Politics matter too, making sure the most important people like you, i.e. the people with the most revenue attached to them, is also critical to “your performance”.
2. Your Group’s Performance
At junior levels, this doesn’t matter much — you’re mostly paid off a grid. But the more senior you get, the more this becomes a swing factor.
If your group prints fees, your group head can go to bat for more allocation from management. And when the bonus pool gets fatter, the senior people eat first though.
3. The Bank’s Performance
This one’s overlooked, but it’s a huge driver. If your bank is missing earnings and getting smoked in the market, then I have bad news for you, you’re not going to be happy with your bonus.
Juniors are more protected, but seniors can see 30–40% swings YoY. You’re never really safe — that’s just the game.
4. How Are You Evaluated (a.k.a. Bucketed)?
Everyone loves to talk about “buckets.” Here’s how it works:
- You get ranked into Top, Mid, or Bottom bucket
- That bucket determines your bonus range
- It’s applied by level — so there’s a “Top Bucket Associate 2” range, “Mid Bucket Analyst 1” range, etc.
The breakdown?
70% mid, 15% top, 15% bottom. And yes, those numbers are usually fixed.
Who decides this?
At the end of the year, there’s a roundtable.
All the seniors you’ve worked with sit around and talk about you — your deal contributions, your attitude, your work quality, whether they’d want to staff you again.
Your Group Head walks away with that feedback and makes the call.
What makes someone Top Bucket?
Top bucket people aren’t just smart — they’re grinders.
They get the best deals, which means they work longer hours, which ironically makes them even more top bucket… until they burn out. It’s a compounding loop. You don’t accidentally land in top bucket — it’s a lot of pain.
5. Who Actually Sets Your Bonus?
Let’s walk through the step by step:
- Senior management sets the total bonus pool for the investment bank (based on results)
- That pool gets split between Sales & Trading and IB
- Each group gets a piece — M&A, ECM, DCM, coverage groups, etc.
- Then buckets get priced: HR talks to other banks, sees what the street is paying, and sets the comp ranges by title and bucket
- Your group head slots you into a bucket
- Then comp gets assigned — with maybe 5–10% wiggle room for your Group Head to pay you more … or less. But if you get more, someone else is getting less. Fixed pool. Piggy bank logic
Your Group Head doesn’t have as much discretion as you think. If they want to pay you up, they have to take it from someone else. There’s no magic button.
6. Do Banks Coordinate on Comp?
Yes. Always.
They don’t sit in a room and agree on numbers, but everyone’s watching each other.
HR teams track what peers are doing and decide whether to position as a top, mid, or bottom payer.
That decision flows into retention strategy, recruiting, and “stay vs. go” risk.
7. Is Top Bucket Worth It?
Here’s the honest answer:
It’s only worth it if you know why you want it.
What’s the delta?
At junior levels, it might be <5% of your total comp.
At senior levels, it gets bigger. But the trade-off is real — top bucket means more hours, more pressure and often more burnout.
When should you go for it?
- If you’re in a promotion year
- If you’re staffed on a live deal that really matters
- If you want to build your reputation early
Otherwise? You might be better off aiming for upper mid-bucket, doing good work, and staying in the game longer.
Longevity beats flash. Top bucket burns people out.
The sweet spot is a 3.7 GPA, not a 4.0.
8. What Do People Get Wrong About Comp?
🔻 Mistake #1: Thinking Comp Is a Meritocracy
It’s not. It’s part merit, part politics, part perception, part bank performance. And you can’t control all of it. Focus on your work, your relationships, and being someone people want to go to bat for.
🔻 Mistake #2: Thinking Hours = Dollars
You don’t get paid for grinding. You get paid for owning things.
The more responsibility you take on, the more your comp moves. That’s it.
🔻 Mistake #3: Burning Out Too Early
It’s a long game. You don’t want to crush year one and quit in year three.
The person who plays it smart and sticks around wins — even if they never crack top bucket.
Final Word
You’re always going to feel underpaid — and you probably are.
Because at the end of the day, you work for someone else’s business. And that business is designed to pay you as little as they can while still keeping you in the seat.
Your job is to do great work, build trust with the right people, and take on more responsibility every year.
Do that — and everything else falls into place.
