What do analysts, associates, VPs, and MDs actually do in investment banks?
What do investment banking job titles really signify? Do analysts really analyze? Are vice presidents (VPs) in charge of whole divisions? And do managing directors run the entire bank? No, no, and no again.
Banking job titles aren't what they seem. If you haven't come across them before you need to know that they often make people sound more grand than they actually are. If someone tells you they're a vice president in an investment bank, for example, you might think they're something very fancy. They're not: Goldman Sachs has over 10,000 vice presidents (VPs) and that Goldman VP you meet is just one of many. The same applies to managing directors (MDs): most banks have several thousand of them.
Why do banks give people such fancy job titles? Ex-Goldman banker turned academic Alexandra Michel suggests it's because banking careers were historically short. In the past, the average career in an investment banking division (IBD - including M&A and equity or debt capital markets) lasted less than a decade. Banks are trying to change this, but it's still the case that most of banks' junior hires leave voluntarily in the first three years after they've been hired. Banks use big job titles to persuade people to stick around.
What analysts really do in investment banks:
If you leave university after a first degree (or a Masters), you will enter an investment bank as an analyst. In an investment banking division, or in sales and trading, the analyst is simply the junior at the bottom of the banking hierarchy.
What do analysts do? If you work in an investment banking division (IBD), you usually will research companies that might be involved in a deal, you will build the financial models which value the companies you're looking at. And you will assemble your findings into a Powerpoint presentation.
"Junior bankers are experts on financial modeling," says Michel. They are also experts in Excel and VBA. And they are experts in building the PowerPoint presentations that banks use to communicate their ideas to clients. "The more junior you are in M&A, the more time you will spend working on Excel models and PowerPoint Presentations," another former Goldman analyst.
A current M&A analyst at a European bank says analysts usually do what they're told: "The analyst is the person who does all the administration work necessary in the deal process. As the most junior person, you might work on research, you might create the materials for the pitch-book which presents banks' ideas to clients, and you might work on the financial models - but what you do will be quite basic." Some analysts complain that their work is very boring and repetitive: “As an analyst, you spend 75% of your time on PowerPoint, making presentations,” says one. JPMorgan analyst Mani, says that in the course of one day he worked on "maybe 10 different Excel files and maybe four or five different presentations," for clients. Analysts are notorious for getting, "Please Fix," requests - after putting the presentations together, they'll often be asked to make correction by the bankers above them in the hierarchy. These requests can come through at all hours of the day or night.
How long will you be an analyst for?
Traditionally, people were analysts in investment banks for three years. However, this has changed. Analyst programs at most banks have been cut by six to 12 months and now last between 2.0 and 2.5 years.
How much are you paid as an analyst?
Despite being at the bottom of the pile, analysts in investment banks are paid pretty well. In your first year as an analyst in M&A in America you can now expect to earn a salary of $100k at most big banks. In London you can expect between £60k and £65k. Bonuses are paid on top, bringing "total compensation" for first year bankers to between £125k and £130k in London and around $180k in America.
How many hours do you work as analyst?
The downside to being an analyst in an investment banking division (IBD) has always been the working hours. These were thrown into sharp relief by the 'Goldman Sachs working conditions survey', which leaked out in early 2021 after 13 Goldman Sachs analysts complained of 120 hour weeks.
Most banks have got subsequently moved to try limiting working hours, at weekends, but 80 or 90 hour weeks are still common. Morgan Stanley analyst Florian Koelliker studied junior bankers for his 2021 dissertation. He found that both analysts and associates typically work between 80 and 90 hours a week. One analyst told Koelliker that leaving at 2am is "ok" and that leaving at 4am is "late."
Why do analysts work so hard? One reason is that they typically amend PowerPoint decks and Excel models at night when the senior bankers have stopped working. "In the day it's quite hard to sort of focus on one task at a time because you'll have all these inbounds of random requests and tasks so you never really get to focus on long project work," says Mani. "But in the evenings when most your clients and seniors are no longer at their desk it's kind of nice to be able to work on things at your own speed and own time."
Sometimes senior bankers are also accused of dumping work on juniors on Friday nights or in the evenings so that juniors have to work all weekends. Efforts are being made to stop this, but it can be unavoidable if clients want a quick turnaround.
What associates really do in investment banks:
Associates are one notch up from analysts. After you've done your two or two and a half years as an analyst, you should get promoted to an associate. However, you can also enter a bank as an associate after studying an MBA (although there are complaints that MBA associates tend ot be inept), particularly at first. Associates are like analysts, except more important. Associates' immediate purpose to manage the analysts below them and to communicate the wishes of the vice presidents (VPs) above them.
"As an associate you're still working on the PowerPoint slides, still managing the presentation," says the M&A analyst, "- But you also work more on the [financial] models."
The associate's role is partly to, "guide the analyst in preparing the presentation and doing the research," he says. The analyst does the work and the associate checks it. "The associate's still an important part of the process. If you have a 50 page presentation, the analyst will usually do 30-40 pages and the associate will check them and do the rest." Nowadays, these presentations are (theoretically) shorter as banks are trying to cut down on unnecessary work.
Associates are still expected to do analyst-type work, says one former associates, although she says that, "analysts are technically the "producers" of all the work and the associates are the "checkers" of it."
How long will you be an associate for?
If you last the course, you'll usually be an associate for around three years.
How much are you paid as an associate?
Banks have hiked salaries for both analysts and associates in 2021. On average, first year associates now earn salaries of $150k+ on Wall Street. JPMorgan associates are now paid $175k. This is just salary - you'll earn a bonus too. The highest paid associates are on total compensation of $400k, or more.
How many hours do you work as an associate?
Associates usually - but not always - work a few hours less each week than analysts. "You'll often see the associates going home at 11pm instead of midnight," says one analyst. "But that kind of depends upon the person and how good the analyst is. If you're a lazy associate with a good analyst, you can leave early. If you're an ambitious associate with a bad analyst, you'll still be working at 2am."
What vice presidents (VPs) really do in investment banks
It's when you get to vice president (VP) level, that things start to get interesting. Suddenly, you're more outward facing - you actually get to talk to clients. However, you also have to manage the team and oversee the process of putting the client presentations together and this can be stressful. "Being a VP requires more “ownership” in the team and well-established client relationships," says one associate at an international bank.
Vice presidents help to manage clients on a daily basis, says Michel. They also manage the associates and (by default) the analysts and make sure the necessary financial models and Powerpoint presentations are being built. "VPs lead the layout of the presentations," says a Goldman banker. "They're responsible for making sure the pitch documents are put together and they will also have an active daily role in executing any deals that go ahead."
"The VPs guide the analysts and associates," says the analyst in M&A. "They're running the deal process on a daily basis. - They're the ones saying which materials need to be created. However, they're also the ones who speak on the calls to the clients. They help keep the clients up to date with how things are progressing."
How long will you be a VP for?
Once you get to VP-level, the process of rising up through the investment banking ranks suddenly becomes more erratic. In theory, you're supposed to be a VP for three years but sometimes people get stuck at vice president forever (and ever) - particularly in non-front office (ie. non-revenue earning) areas like technology. Most banks are trying to cut the number of expensive people they have at the top of their pyramids, and this is making it harder to get promoted. Goldman Sachs, for example, only promotes 500-650 people to MD every two years, but has around 12,000 vice presidents (it promotes around 1,500 people to VP a year). On the other hand, talented VPs are being more responsibility (for the same pay) under a process known as "juniorization."
How much will you be paid as a VP?
Because VPs can vary wildly in terms of experience, their pay often varies widely too. In London, Arkesden Partners says your VP years will be spent earning total compensation of between £249k and £342k ($455k).
How many hours do you work as a VP?
As a rule of thumb, you should work fewer hours as a VP than as an analyst or associate. "The associate is running the process for the VP, so the VP gets to leave earlier," says the analyst. This doesn't mean they leave early, however. "Our VP goes home around 10pm," he adds.
Koelliker found that VPs work between 60 and 80 hours each week.
What directors and managing directors really do in investment banks:
Some banks have an intermediate level of directors (Ds) between VPs and managing directors (MDs).
And what do Ds and MDs do exactly? Michel points out that their main responsibility is bringing in new business. There's a lot of travelling. It's not really as glamorous as people think. MDs also oversee everyone further down the hierarchy and make sure their treasured clients are happy.
"As a director, you'll speak a lot with the clients," says the analyst. "Your role is to act as the interface between the client and the rest of the team."
Managing directors are at the top of the investment banking pile. "They talk to the clients, meet the clients, bring in the revenues and build the business for the bank," says the analyst. "They're the connectors - the relationship builders - they're out there, finding out what's going on with their clients in their industry."
How long will you be a D or MD for?
Although some people are VPs forever, you're usually promoted to director after about three years in a VP position. Once you're a director, Michel says it should (ideally) take only another two years before you make managing director. This may be wishful thinking, however. - Research suggests most people only become MDs after 15 years in banking, and even then only 20% of those who are eligible for an MD promotion will make it. Some say that being a director is the most risky job in a bank – you’re expensive, but you don’t own the client relationships. Others say being a director is less risky than being an MD: directors are cheaper and can step-up to replace MDs when costs are being cut.
Once you make MD, the pressure will be on to bring in revenues. At UBS, managing directors were recently a target of 300 client meetings a year. If you don't deliver you'll be out. If you do deliver, you can expect to last a while. The average tenure of managing directors and partners at Goldman Sachs, for example, is thought to be around eight years.
How much are you paid as a D or MD?
Pay for directors and managing directors varies wildly from person to person. As an MD in IBD on Wall Street your salary alone will be between $400k and $500k and you will almost certainly earn in excess of $600k in total compensation when bonuses are added. In London, MD salaries are often over £500k.
How many hours will you work as a D or MD?
As a director, you'll typically work fewer hours than a VP. - You might go home at 8 or 9pm. Koelliker found that directors work between 45 and 70 hours a week and have much more control over their time.
However, as an MD, your hours will assume a life of their own. "Sometimes we don't see the MDs in the office much," says the analyst. "- Their jobs are a bit more freestyle and flexible. They might be out of the office for a week, meeting clients. They might have a lunch with a client, and then a coffee, and then a meal with another client. They might go and meet a COO who's also a personal friend." If you're an MD in investment banking, you want to work for a bank that's happy to let you build relationships, and which accepts that this can take time. At Goldman Sachs, for example, ex-COO Harvey Schwartz said it could take seven years for client relationships to generate fees. Even so, banks like to know what their MDs are up to while they're flying around schmoozing clients: HSBC introduced a system for tracking how its senior M&A bankers use their time and how many deals they bring in.
Although banks are hierarchical, Michel says they can also be fairly egalitarian. If you perform well, you can progress through the hierarchy (at least to VP level) fairly quickly. In IBD, she says most people actually do get promoted up to the next level. This makes banks less competitive places than people expect. Power differentials are minimized and everyone (according to Michel) works for common purpose. Unfortunately, she also concludes that this can lead to overwork and burnout.
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