Are you considering whether a career in banking is right for you? As you explore the paths for finance professionals, one step is to examine the projections for commercial banking versus investment banking salaries.
The key differences between these two sectors can seem worlds apart. Read on to find out a few factors that differentiate these careers, from salaries to the types of employers and work duties you can expect in these careers.
Investment banking salaries
For some professionals, compensation is the primary driver behind their career planning. For the most part, professionals in financial services organizations negotiate a higher salary than those in commercial banking.
Research from the 2019 Robert Half Salary Guide for Accounting and Finance Professionals now shows a managing director or partner in banking and financial markets can expect a midpoint salary of $194,000, not including bonuses, this year.
At the level of vice president, compensation varies widely, but the midpoint starting salary projection is $152,500, according to the Salary Guide. Associates can expect $107,000 at the midpoint, with $71,250 for analysts in 2019. At the midpoint, candidates have average experience with the necessary skills to meet the job requirements.
The salaries listed in the Salary Guide are based on actual placements throughout the United States, as well as an analysis of the demand for the role, the supply of talent and other market conditions.
Commercial banking salaries
For commercial banking, there's a rebound, too. From small community institutions to national firms, banks are adding staff to handle relationship management, business development, credit analysis, and operations and compliance positions in the mortgage sector.
Salaries vary greatly depending on the experience and position, many of which are accompanied by annual bonuses. Research from the Salary Guide shows a commercial lender with one to three years of experience can expect a starting salary of $58,500 at the midpoint.
For a commercial lender with five or more years of experience, the midpoint salary is $107,250, according to Robert Half financial services executives. A private banker with five or more years of experience can expect a starting salary of $96,500.
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Two different banking career paths
If you choose an accounting career in commercial banking, you’ll likely work for a bank branch or a bank’s corporate headquarters. Commercial banks offer customers an array of financial services, including checking and savings accounts, mortgage loans, auto loans, credit cards and IRAs. And for commercial businesses, banks will offer commercial loans, equipment financing, cash management, real estate financing and more.
At the branch level, financial professionals can choose from a variety of career options ranging from bank teller and retail loan officer to sales professional, operations specialist, trust officer, branch manager, commercial credit analyst and commercial banker. The most skilled financial professionals often land positions at the bank’s corporate headquarters, where they can expand into more complex areas, such as international trade finance, risk management, credit administration and investment management.
In comparison, investment banks act as intermediaries between corporations and investors. Because these companies often include a number of different divisions with varying responsibilities, there is a wide variety of career options within the investment banking sector.
Investment bankers facilitate the issuance of securities and make these securities available for investors to purchase. These professionals also offer investment advice to corporations and individual investors, handle mergers and acquisitions, and trade stocks, bonds and other securities. In-demand specialties include private equity accounting, hedge fund accounting, fund administration, trade clearance and settlement operations, asset management, and collateral and derivatives expertise.
It’s important to weigh all of these factors, from the commercial and investment banker salaries to the very different duties of the two roles, as you consider your future career. As you choose your path in banking, think about which of these sectors — commercial or investment banking — most closely aligns with your long-term interests and goals.