From Analyst Monkey to King of the Jungle MD: The Investment Banking Hierarchy
“This is not a fraternity house,” my staffer explained as he hauled me into a small conference room.
“Some of the MDs have complained about how messy your desk is, so clean it up.”
Genuinely curious, I replied, “Were you referring to the empty Red Bull cans or to all the papers too?”
Not a good start to your 3rd week on the job.
I told this story to a few co-workers afterward and they all laughed and responded the same way:
“He’s lying, a bank is exactly like a frat house.”
They were right – just like a fraternity, there’s hazing, a hierarchy, and certain rituals you must go through to advance.
While this site has been analyst-focused in the past, today you’re going to learn all about this hierarchy, how much you get paid at each level, how the work differs, the average age range, and the possible exit opportunities.
And if you’re curious about hours please stop reading this site right now.
Footnotes & Starting Assumptions
As with the analysis of where your paycheck goes, here I’m starting with the assumption that you’re in a developed country in a major financial hub like New York, London, or Hong Kong.
At the end you’ll learn how this hierarchy might differ outside banking, outside those cities, and in other countries.
These pay figures are not exact – I used recent salary and bonus figures, data from the Careers-in-Finance compensation listings, and other sources like that to get numbers.
So yes, there are exceptions and sometimes you see more pay or less pay – these are rough averages.
Let’s dive right in and start with the bottom of the hierarchy: the analyst monkey.
Analyst
What You Do: You’re a monkey, and your chief responsibility is to collect bananas for the bigger monkeys higher up in the food chain.
You do most of the Excel and PowerPoint work, take notes, send emails and call people, and even take care of random tasks like fixing printers and picking up dry cleaning.
Most of this site has been focused on what analysts do, so see all the day in the life and week in the life posts for more.
How You Get In: You’re recruited from a top undergraduate or Master’s program, or you network like a ninja and get in from a lesser-known school. Once you go beyond a few years of full-time work experience, you won’t get in as an analyst because you’re overqualified.
Yes, some people pull this off anyway but it gets exponentially harder the longer you’ve been working.
Age Range: Most analysts are just out of school, so 22-27; in countries with military service or with 5-year undergraduate programs (Europe) the upper end of the range is more common.
Pay: This varies by region and the state of the economy, but most 1st year analysts make at least $100K USD all-in (base salary + bonus) and that may go up to $150K or more if we’re in a bubble.
In some countries (Australia) the base salary is higher and the bonus is lower, while in Europe and the US base salaries tend to be lower with significantly higher bonuses.
2nd and 3rd year analysts see increased pay, usually closer to $200K in a good year for a 3rd year analyst and maybe $150K or a bit less on the lower end in a bad year.
Time to Get Promoted: Usually it takes 3 years to become an associate.
Possible Exit Opps: See these articles on exit opportunities. Out of all the levels, analysts have the most exit opportunities because they’re young and haven’t had “too much” experience in a certain field yet.
Associate
What You Do: If the analyst is the monkey, you’re a bigger and better-groomed monkey who’s much smoother in social situations.
You may still do Excel work if the model is complex, but mostly you are checking the analyst’s work and making sure he doesn’t screw up. You spend most of your time managing the analysts and making sure the VP’s orders get executed.
Much of your time is spent talking to clients and seeing what they need when you’re working on deals; analysts are too busy cranking away to have much client interaction, at least at large banks.
You get to attend more meetings and pitches than the analyst, but you will always have a non-speaking role unless the MD needs a number from you.
How You Get In: You either work as an analyst for 3 years and get promoted, or you get recruited out of a top MBA program after working full-time for 3-5 years in another industry.
Theoretically you could get recruited for an associate position if you’ve already graduated from an MBA program and have been working in industry for a while, but this is rare – your chances are 100x better when you’re still in school.
Age Range: This one varies more than the analyst age range because associates come from more diverse backgrounds; 25-35 is the safest estimate because some associates are promoted directly from the analyst pool while others get recruited out of business school.
Getting in when you’re under 25 would be virtually impossible unless you graduated college early, and having 10+ years of experience pre-MBA makes you overqualified.
Pay: Again, there’s more variation here than with analyst pay because the bonus takes up the bulk of an associate’s compensation and that’s heavily dependent on the economy.
In a bad year, a 1st year associate might get between $150K and $200K USD all-in, while more senior associates (3rd and 4th years) might get closer to $400K or $500K all-in in a great year.
If your group is just OK and the economy is neither great nor terrible, your pay will be in the middle of that range.
Time to Get Promoted: Usually it takes 3-4 years to reach Vice President, and it’s harder to get that promotion than it is to go from analyst to associate – you need to show more leadership and client management skills.
Possible Exit Opps: It’s more limited at this level, and it’s quite difficult to move into something like private equity unless we’re in a bubble economy.
You either stay in banking or move to a normal company and do corporate development there – or get out of the rat race altogether and start an adventure travel company.
It’s possible to get into hedge funds, asset management, and so on but those are all less common at this level. The longer you stay in banking, the harder it is to break out of banking.
Vice President
What You Do: Moving up the pyramid once again, you are an even larger and more intimidating monkey, and you’ve got lots of barrels to throw down at the chimps below you climbing up the ladder.
You make sure that deals and pitch books get done – you interpret what the MDs and Directors want, and ensure that whatever pops out of your analyst’s cubicle resembles it.
You get a lot more client interaction, and may call buyers and directly pitch a company that you’re selling.
And as you move up, you have to start shifting over to relationship development and winning clients – which is incredibly tough and one of the most difficult transitions to make.
How You Get In: You get promoted after working as an associate for 3-4 years.
It’s extremely rare to break in as a VP coming from outside banking, and I’ve never seen it happen. To have the skills required to run deals and win clients you need to have been in banking for a long time.
Age Range: Since you must have been an associate first, we could say the age range is 28-40, with the average somewhere in the middle.
Pay: There’s even more variability since the bonus takes up such a high percentage of your compensation; base salaries do not increase that much as you move up (even MDs might see only around $150K-$200K base).
Most VPs will earn between $300K and $1MM USD, with the upper-end of that range for more senior VPs in a good year and the lower end for more junior VPs in a bad year.
Time to Get Promoted: Probably another 3-4 years to reach Director / Principal / SVP, though it varies and you may do it more quickly depending on performance.
Possible Exit Opps: Even more limited than associates – either stay in banking or go to a normal company in corporate development.
Moving into PE from this level would be “challenging” to say the least, and even in other fields of finance you would have too much experience to have a good shot.
Director / Senior Vice President / Principal
What You Do: This one is a mix between what VPs and MDs do, and the role differs depending on the bank and group.
Sometimes you focus more on developing relationships and winning clients, and other times you do more execution work and project management like VPs.
But no matter what your role is, you will have to move closer to winning clients if you want to advance to the next level – Managing Director.
How You Get In: You’ve already been an associate and a VP, and you get promoted to this level after a few years of being a VP. I challenge you to find a single example of someone who was not already in investment banking and entered the industry at this level – it doesn’t happen.
Age Range: Sometimes you could get promoted more quickly (2 years rather than 3-4), so we’ll say 30-45. 45 is on the high end and you’d see that only if the person did something else for many years before getting into business school and then investment banking.
Pay: This one’s hard to pinpoint because it’s somewhere in between VP and MD in terms of pay; we’ll say $400K – $1.5MM USD to reflect that range.
As with the other pay numbers here, you should expect the lower end of the range in a bad economy if you haven’t performed well (your closed deal count is low or nonexistent) and the higher end of the range in a good year.
Time to Get Promoted: Similar to the others, a few years to go from here to the next level: Managing Director. We’ll say 2-3 years to get a specific number.
Possible Exit Opps: Imagine a blank screen with no visible life forms. Now imagine seeing this every day after you quit or get fired.
In all seriousness, you could always move over to the corporate side but it would be tough to move into other fields of finance from this position unless you happen to be a serious rainmaker and you have enough contacts to make yourself useful to a PE firm or other buy-side firm.
Managing Director
What You Do: You’re King of the Jungle. All the other chimps answer to you, and you move them around much like a chess grandmaster would move around pawns, bishops, and knights.
90% of your time as an MD is spent winning clients, meeting companies, and developing relationships – you fly around to conferences, meet with PE and VC firms, and position yourself to advise CEOs and win deals.
Occasionally if there’s a massive deal and it’s too big to fail, you get involved with the negotiations. Or if you have a special relationship with an investor or buyer, you may pitch a client to them.
But otherwise, you are sitting back and bringing in new business while everyone below you executes.
How You Get In: Most of the time, you’ve been a banker for life (or close to it) and you’ve worked at all levels in IB before – often across many different banks.
Sometimes you do see MDs who get into the industry from other fields (e.g. a Partner at a law firm that focuses on corporate and securities law, or a PE Partner who has lost his sanity and wants to move back to the sell-side).
But those scenarios are rare even at this level and you don’t see them much at large banks.
Age Range: This one is impossible to define precisely because some MDs really do stay in it for life, or at least until retirement age – for most bankers it is the highest they’ll ever go.
We’ll say early 30’s is the minimum age here, but on the upper end of the range there’s no limit – you rarely find MDs who are past their 50’s, though, so maybe that’s the limit.
By that time they are either burned out and retired on a beach somewhere in Thailand, or they’ve advanced further within the bank (see below).
Pay: This is where compensation has the highest “beta” (this is a finance site, so I am allowed to whip out finance jargon when convenient).
In a bad year with no closed deals, an MD might not make much more than his base salary – maybe the $200K – $300K USD range.
In a good year, they might make in the low millions USD ($1MM – $3MM) depending on how the group is set up, how many deals they’ve closed, and how well they’re playing the office politics game.
Time to Get Promoted: Yes, there are levels beyond MD at large banks (Group Head, C-level executives) but there’s no set path to reach them – you could get lucky and get there in a few years, or you might be there for a decade and never see the light at the end of the tunnel.
Unlike other levels of the banking hierarchy, it’s not “up or out” at the MD-level – it’s more like “make lots of money for us or out.”
So as long as you keep producing, your position will remain intact.
Possible Exit Opps: If you’ve been a lifelong banker, it will be very difficult to move into a completely different field – but you do sometimes see financiers at the top moving around to other high-level positions in the industry.
Some MDs may also just retire and do something completely different – business coaching, angel investing, writing, and so on – especially if they are worth tens of millions of dollars and don’t have a pressing need for cash.
Wait, What About Other Levels?
Note that in some regions and at some banks these levels have different names – VP might be labeled “Director” and SVP might be “Executive Director,” for example.
At firms with a partnership still in place (Goldman Sachs), there is also a difference between normal MDs and Partnership MDs – the Partnership ones make a lot more money.
And then beyond MD, there are Group Heads (e.g. Head of M&A Europe or Head of Capital Markets Asia) and the C-level executives at firms.
With those, the potential compensation is even more variable and could range into the tens of millions (or higher for C-level in a good year) – or the bank might slash its CEO’s pay to $0 in a symbolic gesture if they’ve had a bad year and caused economic Armageddon.
Differences at Boutiques?
Boutiques tend to have fewer levels than bulge bracket banks, so you might not see as many VPs and Directors/SVPs.
Advancement may be faster depending on the firm’s size, but pay will also be lower since the deal sizes are smaller – regional boutiques might pay 50% of the bonus that bulge brackets do (very rough estimate).
This does not apply to the “elite boutiques” (Evercore, Lazard, etc.) which pay more in-line with bulge brackets.
What About Trading?
On the trading side there is a flatter hierarchy and you may reach the MD level more quickly.
Pay is also extremely variable and the top traders might make tens of millions even if they never advance beyond the MD-level (ok, it’s questionable how true that will be post-crisis and financial regulation).
The Buy-Side: Private Equity and Hedge Funds
This one is impossible to cover fully here (maybe in a separate article if someone has good data), but let’s give it a shot:
The private equity side is similar to banking, but you will make more at each level; as a Partner in PE you could make significantly more than MDs in banking (hundreds of millions if you’re Henry Kravis), but at smaller firms you’ll see compensation closer to what banking MDs earn.
The main difference is that you get carry at the Partner-level as well, so that opens up the possibility of earning into the stratosphere if you’ve invested well over the years.
On the hedge fund side, there’s so little reliable information that it’s hard to say anything concrete.
You hear stories about people making hundreds of thousands or millions at young ages, but the average case is probably closer to the compensation levels above for banking.
And while hedge fund managers making billions of dollars a year get a lot of attention, that is far from the average case: the majority of funds out there are much smaller ($100M – $1B AUM) and it’s impossible to earn anywhere near that amount.
In short: hedge fund pay has the highest ceiling of anything here, but there is a massive difference between the founder or the portfolio manager and everyone else in the fund, and pay is almost 100% dependent on fund size and returns.
Other Countries
Developed countries (Western Europe, Hong Kong, Japan, Australia, etc.) see similar pay levels and have the same sort of promotion timelines.
In emerging markets, it’s more chaotic and you might advance far more quickly – but also make less in absolute dollars, even if you have your own palace and a harem or two.
The investment banking culture is not as well developed in the BRICS of the world, so you will see many deviations from the hierarchy above.
But in most of these places you have a 0.0% chance of breaking in as a foreigner with no connections: they are looking for locals who have studied or worked abroad and who are now returning to their home countries.
How Do You Move Up the Ladder?
Already answered – please refer to this article on investment banking promotion.
Key Takeaways
So, what does all of this mean?
Stop Assuming That Investment Banking / Finance in General are Guaranteed Paychecks
Especially as you move up, your pay is based almost entirely on your performance and the economy. A VP who has several closed deals may make more money than an MD who has nothing and gets a bonus of $0.
I’ve attempted to estimate pay ranges above, but to get there in the first place you’ll have to work 80-hour weeks for years and sacrifice your social life and maybe your first-born son or daughter.
Most MDs are Not Mega-Wealthy
Look at the Forbes list of richest people in the world, and you’ll see that there are very few (no?) banker-types on there, unless you count Warren Buffett as a banker (he’s not).
After you’ve taken into account taxes, recessions, the cost of living, and so on, a 10-15 year veteran MD might have $10 million or more saved up.
That is an enormous amount of money to most people, but you will not become a billionaire in finance unless you’re on the buy-side and you’re one of the best in the world like John Paulson.
Forget About Breaking Into Banking in the “Middle Years”
You either get in as an analyst or associate, and if not, you’ve missed your chance unless you have highly relevant experience, the market is frothy, and you trade down (i.e. go from a F500 to a boutique).
Even getting in at the top from other industries is uncommon – you see it more often in VC or PE where operational skill sets are valued.
If you’re in this position, you’re better off looking at other industries or starting your own business.
Expect Your Role to Change Gradually, Not Rapidly
Even though banking has a rigid hierarchy, what you do at each level is not as narrowly defined.
When you move from analyst to associate, you won’t instantly start dating super models or get your own reality TV show – sorry.
Your hours might improve slightly and you won’t have to do as much grunt work, but the pressure to perform will be greater than ever as well.
And…
Oh yes, and please reduce your expectations of $10 million and that beach in Thailand.
By the time you get there as a banker, you’ll be old and wrinkly and probably can’t stay out in the sun for very long anyway.
A frat house, on the other hand, might be well within your reach long before that.
Break Into Investment Banking
Free Access to Exclusive Content for Members Only!
Sign up for The Banker Blueprint today and enjoy:
- Free Report: 37-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews.
- Exclusive emailed bonus material.
- Free Banker Blueprint newsletter with more in-depth advice.
- Unlimited access to all articles, videos, and advice - and free updates whenever new content is added to the site.
“Imagine a blank screen with no visible life forms.”
Hahahahaha, simply great, as always. Brilliant. Thank you!
Thanks!
Thank you for snottet greatly insightful article! May i suggest you wrote one similair just with PE instead of IB :-)
*another
fk the iPad autocorrection
I’d like to – just need the data and more interviews / insight from people in the industry.
At more senior levels, is trying to get poached by other banks a reasonable ‘strategy’ to try and earn a promotion? It seems to me that senior bankers seem to be handed better job titles/more responsibility when they move to a rival.
Or is it the other way around – bankers only get poached when they’re due for promotion?
Incidentally, I’ve long been following M&I but this is the first time I’m commenting on a post. This site is a real font of banking knowledge! Thanks as always and all the best!
I wouldn’t really call it a “strategy” but it can work. Bankers don’t necessarily get poached only when they’re due for promotion, but you do see that quite a lot as everyone keeps tabs on everyone else.
hey brian,
I was wondering, can you do more articles on equity research? thanks!
Yes equity research is on the list, but so far no willing volunteers – hope to add it soon though.
When are you doing the Municipal finance side?
I want to cover it soon but have been tied up lately trying to finish a new course, so very little time to write recently.
I remember you had volunteered to help out with the public finance interview – I should free up in a few weeks so I’ll shoot you an email then and we can set up a time to chat.
What’s the hierachy in Research? Doesnt “Analyst” come after Associate in Research?
http://www.mergersandinquisitions.com/equity-research-recruiting/
Hi,
I’ve a CV question on promotion frm analyst to assoc.
Do we have to put in the dates highlighting when we were analyst and then associate, or just state associate with the date since you joined the bank?
thks!
I would start the dates at at analyst and then maybe in the first bullet just list when you were promoted to associate
Can you please install a print button next to the articles so that it will be easier to print the articles in a “printer friendly” format??
Yes will look into that
Brian,
Is it generally true that people who work in advisory (Investment Banking) tend to be more unhappy than people who work in markets (sales/trading/research)? Based on the people I have networked with, this generally seems to hold true and hardly any of them want to stay in banking long term and are only there for PE/HE/Corp Dev exits.
Is this a function of the role itself or the hours involved?
Yes that is generally true. Even after leaving the industry I myself am generally more unhappy than people who used to be in markets-roles.
IB just attracts more OCD / perfectionist / workaholic types with few interests outside of work, so that is most of it.
Hi there,
I’ve really found all your articles helpful for learning about investment banking and recruiting – I also am amazed that you manage to find the time to reply to all these comments!
With that said, I have a quick question of my own:
I’ll be interning the summer at the Private Banking section of a BB in the UK, but I’ve recently started to think that I’d like to move into an institutional sales FT position (preferably in FI or commodities). I’ve noticed that people aren’t very fond of PWM/PB, but what are my chances, and would there be any particular desk that it would be best for me to aim for during my internship?
Thanks in advance!
Not sure about specific desks there but PWM –> sales is probably easier than PWM –> banking since there’s more overlap. I would just try to get something as client-facing as possible as that experience is important for sales roles
Brian,
Another great article. :D
Tell you what, I love the Inquisitor (this site and the Spanish one), don’t know if you ever hear of Glokta (The First Law triology) though. Yes, it’s fantasy character, but dont let that bore you.
“On the contrary, nothing could be more natural. In my experience, people do as they are done to. You were sold by your father and bought by your husband, and yet you choose to buy and sell.”
As I noticed that you also have very good taste too. Love Mad Men myself. Could you recommend me some good TV series and books (non-fiction is greatly appreciated and no need for finance related) please? :D
Wow finally a fun and interesting question… I actually hate finance books and think they’re really boring…
TV series: The Wire, Breaking Bad, Damages (1st/2nd seasons much better), Fringe (2nd half of 2nd/3rd seasons much better), Lost, then some newer ones on right now: The Killing (based on Danish series Forbrydelsen), Game of Thrones
Books really depend what you’re looking for, I don’t read much fiction but non-fiction business-related books: Tell to Win (Peter Guber), Pitch Anything (reviewed here a while back), The Thank You Economy are a few recent ones that come to mind
Hope you did have a nice weekend Brian and thanks for replying Brian.
Yeah, The Wire is absolutely awesome! As for “Glengarry Glen Ross” (in the Pitch Anything article), I think it shows you have to endure the heat to stay in any hot-like-hell kitchen. That, and the memorable quote from Don: “I’m living like there’s no tomorrow, because there isn’t one”. Well, that’s reality then, I guess. Will check out the books and other TV series. :)
Two recent books I’ve read are “The Extreme Searchers Internet Handbook” (Randolph Hock) and “Revolutionary Wealth” (Alvin Toffler). I am looking for useful marketing and start-up books though (or any books that you find interesting), thanks.
Also, You mentioned that you had to “started over” with 0 friends and 0 connections multiple times. Wow, that’s just incredible man. Somehow I think that no matter how good you are, you still have a good chance at getting rejected by certain people. Uhm… practice makes perfect then. :D
Again, your site is great. Very practical and helpful.
Thanks for the tips. I read a lot but a lot of my recent reads have been boring or not very insightful (everyone saying the same things etc.) and I generally think practice is the best way to learn business and marketing, I learned way more by creating this business and releasing products than I ever did by reading books.
Haha, even you confirm that books are no good when it comes to real business. Well, I think I will try to gain more experience instead of finding “bullet magic” books.
Do you think doing business is like getting in a marriage though? I mean I can learn many things about them but I can still be screwed…
Just start small with a low amount of capital… something Internet or mobile-based is ideal. You won’t get screwed unless you take a huge risk with massive amounts of capital.
Hey Brian!
Tks for another great article!
Something I haven’t realized before, but got as an insight reading this one: while going up the ladder, one should consider the risk of being laid off at the VP/Director level and not being able to find another job then?
Cheers!
Yes that is a big risk, though hopefully you have a decent amount of money saved up by then (i.e. haven’t spend it all on 5 houses, drugs, and trophy wives)
“I challenge you to find a single example of someone who was not already in investment banking and entered the industry at this level – it doesn’t happen”
What about Rahm Emanuel? Although I think he came in as an MD at Wasserstein Perella. It seems like there is a small and certainly elite group of guys who flit between finance and government (Harold Ford Jr. comes to mind as a recent example)- I’m guessing that’s due to their ability to come in and make it rain with their massive Rolodexes?
That’s true but he was a “celebrity” and I think it was actually at the MD level as you said. My point here was that almost no one gets in as a VP or Director from out of nowhere – in the mid-levels they want seasoned bankers. At the top sometimes you see random famous people like Bono etc. just because firms think it’s cool to say someone famous works there.
Brian
You previously mentioned that you think most Investment Bankers secretly want to be entrepreneurs. Considering this article, have you ever seen senior people in IB take a sabbatical/leave for 6-12 months to try a start-up and when things don’t go well go back to IB with their tail between their legs? (I’ve heard people mention a return to IB as a ‘back-up option’ but I suspect it’s imaginary…)
Most of them just leave to start other banks or maybe to start their own PE firms or hedge funds. You generally don’t see them go off to do something unrelated but sometimes it happens, probably more common in the midst of the crisis in 2008-2009.
Hi All. I asked this on the “Breaking into IB as an Engineer” thread, but figured it applies to this discussion as well…
I’m due to do the Summer Internship in Technology for a major bulge bracket this summer.
Provided I perform well at the IB, I have two decisions:
1. To go to a FO position in a Tech/Business Consulting firm (Sales or Business Consulting).
2. Pursue the IB Graduate job and work up to Business Analyst (or sometihng non-programming).
Is the IB Grad worthwhile in the long run? Are MD-level technology positiions worth working towards given their salary / work environments? Cheers.
Answered on the other thread but in general MD-level tech positions aren’t worth it
Hi,
concerning the age ranges you have been writing about. Would you consider 26 to be (too) old to start in investment banking or sales and trading in the US and UK?
My profile would look like this then:
3 year BSc in econ
2 year MSc in econ or finance from a target uni
2 IB internships
And on a second note, what would you do if you faced the following situation:
You completed your BSc and have the choice to
a) start a Master’s degree directly at an average Uni
b) do a gap year with maybe 2 internships and a bit of traveling and do a Master’s at a good target Uni afterwards (you missed the deadlines a year earlier)
Thanks and best regards,
Michael
Yes that age is fine. On your second question it really depends on what university you did the BSc at – if it’s a top school with a lot of access to recruiters, don’t bother with the MSc and go for option B, otherwise if it wasn’t as well-known a school then do A.
I graduated last year with a business-related master’s degree from one of the top 2 universities in Europe, and have been working at a company doing M&A due diligence for the last few months. Do you think it is worthwhile applying to investment banks’ graduate schemes later this year even though I graduated last year? What do you think is the best way to get in?
Thanks.
Normally you can’t apply if you already graduated and have been working full-time, but it might be a bit different in Europe. I would apply but continue networking because that will probably be more helpful at this stage.
Thanks for your advice. I am now applying to boutiques. Hopefully I will get in.
By the way, what is your view on starting a career as an analyst at a fund of funds? Today I was talking to a ex-PE guy and he was saying that they have a great lifestyle, make lots of money, and get to travel round the world. What do you think of the job?
It is not that great, very limited options afterward. http://www.mergersandinquisitions.com/asset-management-germany-funds-of-funds/
How many of each position are there in a typical m&a group would you say?
Depends on the office location, size of the group, the bank, etc. There are the most analysts by far (maybe dozens in a financial center at a single bank’s M&A group), fewer associates (maybe 10 or less) and then around the same numbers of VPs / Directors, getting a bit smaller at each level, until you reach the MD level, where there might only be a few per office.
I’m reading this topic again, and a few things came to my mind…
First, do you think is it possible to move from Corportave Development at F500 into IB at later stages, due to the exposure and connections you’ve made?
I know you said you wouldn’t talk about hours here, but couldn’t help: any grasp on how hours are at more senior levels? Any chance of having a life? Just have no idea on that….
Tks!!!!
Possible, yes, but unlikely. Senior levels maybe 50-60 hours per week not counting travel, which can extend it by a lot.
Hi there, I am the first time on this site and I want to thank you for writing such interesting things about banking!
I have a question because of the time to get promoted.
I will make my bachelor with 24 in BE in a target university in germany. and I would like to start then in Deutsch Bank as an analyst. I´ve talked with some people and the personal manager (I´ve done an inership there in my first semester so I have some contacts) But I am not sure abour what to do because it will take about 10 year to become a vp. what about starting a family and children in this sector.
And getting the first child when I am 34 is a little bit late. Is it possible to return to work after two years or so and not start as an analyst again????
I have asked a woman when I had my internship but she told me she didn´t want to have childrin anyway so she did not really understand me…
If you care about family, you should not go into investment banking. Think about asset management or trading or something else where your hours are more regular. Very difficult to have any kind of family life as a banker.
Hi Brian,
Several bulge brackets have Corporate Banking as well as Investment Banking. Would an Analyst position in Corporate Banking have the same PE exit strategy as IB? I was recruited by the Corporate Banking division of a BB and did my summer internship there, but I would eventually like to work for PE after 3 years of Analyst experience in banking. Would you say Corp. Banking is a good place for that? Thanks!
Corporate banking is a bit different from what I understand so I would say IB is much better if you want to do PE.
Hi Brian,
I discovered your site just yesterday. First of all, your site is super-duper fantastic and gives a realistic insider view to wannabes and newbies in I-Banking.
What is the average rate at which MDs get promoted to Group Heads and C-level executives? Or do they stay MDs till retirement? (Assuming they haven’t suffered burnouts, lay-offs or started their own businesses).
Also, considering the amount of networking and new business responsibilities at higher levels, would you say IB at senior levels is more marketing than finance?
Don’t know average rate. Yes IB at senior level is more marketing/client facing oriented.
On the buy-side, say a large private equity firm, how long does it take to move up the ladder? Thanks
Large PE firms are more structured. I can’t say “how long” because it depends on what positions you are “moving up” to. With the above being said, if you bring in $$ and are good at what you do, you might find yourself progressing the ladder way faster than others even if you are in a large PE house.
What age range do you mean by “Middle Ages”?
I’m 31 now and will get my MBA in 8 months. I’ve worked in the auto industry for 8 years, and I plan to start banking.
Would you consider I’ve missed my opportunity?
No I wouldn’t but as an interviewer, I wouldn’t know how to place you. I might try to slot you in as an Associate but you will still be a few years older than the “average” associate after you finish your MBA. I would then think, perhaps I should take in a younger associate so that it might be easier to “train” him/her and he/she can work longer hours w less family obligations (as you get older you tend to hv more obligations).. I can’t slot you in senior positions either unless you have client relationships in a particular sector and can bring in deals. I wouldn’t say you missed your opportunity but you’ll have to prove your value-add to bankers
In a bulge bracket; the following hierarchy and number of years you spend in each; depending upon whether you are; above average; average or below average performer:=
-analyst… 2-3 years
-associate…1.5-7 years
-senior associate… 2-6 years
-VP…4-6 years
-MD/SVP
-Group Heads.. all 55 and above…
M&I you are doing one hell of a job in keeping these kids well informed.. but then, the website is too biased towards best performers from top notch schools. I have seen lots of bankers (analysts) from BU, UC san diego (and other non A list schools) for that matter.
Thanks for the fantastic information here!!
I’m entering a top b-school and contemplating IB, consulting with the end goal of starting something on my own or PE. I have a background in operations/supply chain and hence entering an MBA program.
Could you tell me how difficult is the transition from IB and consulting(post MBA) to PE and entrepreneurship(after approx. 5 years). What in your opinion are the pros and cons. Am I better off starting something right away after b-school since the learning is far more this way?
Lotsa questions in here but your insights are much appreciated.
If you know how to pitch your story, getting into IB/consulting should be relatively straight forward if you are from a top b-school though competition might be a bit keener these days given current economic environment
If you want to get into IB/Consulting, do it right after bschool. You can also try to break into PE right after bschool though it may be tougher.
Entrepreneurship – you don’t need an MBA to do it. You may be able to develop the relevant network and build your credibility through bschool but not necessary
Hii M&I,
Great info here;
Can you tell me what is the role of a partner in an investment bank and how it differs from VP/Associate/operation heads/group heads etc.
Thanks
Pat
I believe a partner might be more hands off and will be managing the group head, who manages the VP, who manage the Associates
I believe he will usually be involved in “larger” deals and maintaining contacts with “bigger” clients and directing/building overall strategy/brand & business of the bank. Of course it depends on the partner & the culture of the bank.
In your opinion IB long term or PE and why? What type of person fit the two fields better?
It really depends on what sort of person you are and what environment you thrive best in.
IB is more “transaction” based and looks at deals at a shorter time horizon. PE guys look at deals at a longer time horizon and they are genuinely interested in good investments and companies which they can turn around.
Hi Nicole,
I have seen that you mention an MBA as a pre-requisite to be hired as an associate.
What about for example if a person has 3 + years of working experience as a trader, then he gets a Msc. in Economics from a target school.
Is it possible still to be hired as a 1st year associate given the graduate degree is not an MBA?
Thanks in advance!
No, MBA is not a prerequisite. If you progress from within the bank as an analyst or if you break in laterally from another bank, you def don’t need one. If you’re from another industry, you’ll increase your chances of breaking in by getting an MBA from a target/top tier university
Absolutely – http://www.mergersandinquisitions.com/investment-banking-masters-programs/
Thanks Nicole!!
What’s an Investment Banking Officer?
What level do they fall under?
What You Do:?
How You Get In:?
Age Range:?
Pay:?
Time to Get Promoted:?
Possible Exit Opps:?
http://www.mergersandinquisitions.com/investment-banking-groups-mergers-acquisitions/
What level will someone come after completing an Executive MBA?
This link does not explain what an Officer level is.
I’d suggest you to refer to sources online.
Hi,
I’ve been reading your site now for a couple of years and I have finally decided to try to break in to Investment Banking.
I graduated 5 years ago from a school ranked in the top 50 with a 3.6 GPA in Humanities and have been working in commercial finance (not real estate) as a full commission sales rep for the past 4.5 years (6 month employment gap when the world almost ended in 2008). I’m a top producer and would get excellent letters of rec. I have my plan almost formulated now: take some quant/finance classes to develop an alternative transcript at UCLA or UCB, go to B-school, network like crazy, and break in as an associate.
However, I am having a problem deciding what school I should try to go to and if I should go full or part time–trying to weigh if it’s worth it to forgo income and opportunities to go to a a full time program at a 10 B-school (HBS, Stanford, Wharton, Booth, etc etc), or stay at my current company and go to a local OK ranked B-school (UCLA or USC). I made $120K so far this year, so I will probably end this year close to $140K, and next year I’m almost guaranteed to make $150-$200K based on a few changes we just made for next year. That’s the level of income I’d be forgoing IF I went to a full time MBA program. To most it seems pretty obvious that I should just go to a part-time program and stay at my company at least until I graduate. But there are those who say going to a top 10 program will give me a better chance to break in and with a higher salary than if I did the part time program and an OK school and tried to break in from there.
Also, my main motivation or wanting to break in is that where I am now is as good as it’s going to get for me in this industry. I was even offered a management position at my company due to my performance but the pay was going to be only $50K…this industry is just such that the reps make the most in the company. It doesn’t benefit us to get promoted pay-wise if you are a top producer. The only way for me to move up in the in terms of responsibility, deal size, deal complexity, influence, and pay, is to move up the chain from the industry–in simple terms, go work for the people we get our money from (our money comes from a combination of PE firms, I-banks, etc). Of course I have other lofty/idealistic goals to go with that too. Anyway, I know the top end pay in an IB career far exceeds the track I am now if I stayed where I am now, so it’s worth it to me to do EVERYTHING I can, even sacrifice income and opportunities to go to a top 10 B-school IF it will significantly increase my chances of breaking in as an associate out of B-school. According to the hierarchy above, if I break in as a associate I can expect to resume getting my current income level and possibly much higher in a good year–and that to me would be very worth it.
So, my question is, what do you think I should do (PT program at UCLA or USC, or FT program at top 10), and what do you think is actually in the realm of possibility for me? Do you think I actually CAN get an associate position with my experience and if if I go to a top 10 B-school, or is that unlikely (and is that going to be just a waste of time/forgone income/high opportunity cost)? Should I just go with a local PT program, continue to collect my pay checks, and then try to break in when I graduate because my chances that way will be just as good as the other option, but with the added benefit of not forgoing my income?
Sorry for such a long comment…obviously this has been taking up a lot of space in my mind and a source of great distraction for me that I really need some solid advice in!
Thanks!
J
Getting to a top b-school (target school) and building a network of contacts will help you
are you sure we’re talking post-financial-crisis salaries here? If the above is true, me and my team members will have to have a serious chat with HR. Working in London, our analysts get £50-60k and associates £80-90 p.a. fix. I am aware the above also includes bonuses, but in the current environment, they are a) not that significant and b) highly uncertain as one is not even sure if he still has his job the next month.
This article was written in 2011 and based on salaries post-crisis… please see all the Yearly Bonus Recaps under “On the Job” for a summary of 2008 – 2012 data as well (e.g. http://www.mergersandinquisitions.com/2012-investment-banking-bonuses/). 60K GBP = roughly $100K USD so it does not seem that far off to me.
Salaries will always be lower at smaller boutiques and there is now far more of a difference between top-ranked analysts and associates and everyone else.
Firstly, thank you for the very informative article.
I have a question regarding the starting age range for IBankers.
Im currently 27 anf for the past 5 years have been pursuing a degree in architecture yet due to the shitty economic development of late it seems as though my career choices havn’t been the best.
My question is, would it be possible for someone my age to commence studies and break into the IBanking world and is there any way of fast tracking a career in IBanking. Also would my previous studies be of any advantage when pursuing positions. Although not dirrectly related architecture degrees are largely based around management
I am really intrigued by IBanking not so much because of the money but more so the prestige and predatorial nature of the field
If you have a talent in trading/bringing in deals in this environment yes there’s a chance of fast tracking though it can still be challenging in this environment. However, stars survive in all sorts of environment
I’d suggest you to check out our other articles on IB to better understand the industry; this will help you in interviews/when you network
Firstly, thank you for the very informative article.
I have a question regarding the starting age range for IBankers.
Im currently 27 anf for the past 5 years have been pursuing a degree in architecture yet due to the shitty economic development of late it seems as though my career choices havn’t been the best.
My question is, would it be possible for someone my age to commence studies and break into the IBanking world and is there any way of fast tracking a career in IBanking. Also would my previous studies be of any advantage when pursuing positions. Although not dirrectly related architecture degrees are largely based around management
I am really intrigued by IBanking not so much because of the money but more so the prestige and predatorial nature of the field.
Firstly, thank you for the very informative article.
I have a question regarding the starting age range for IBankers.
Im currently 27 anf for the past 5 years have been pursuing a degree in architecture yet due to the average economic development of late it seems as though my career choices havn’t been the best.
My question is, would it be possible for someone my age to commence studies and break into the IBanking world and is there any way of fast tracking a career in IBanking. Also would my previous studies be of any advantage when pursuing positions. Although not dirrectly related architecture degrees are largely based around management
I am really intrigued by IBanking not so much because of the money but more so the prestige and predatorial nature of the field.
Yes, you can, but if you’ve been working for 5 years already you may need a Master’s or MBA. http://www.mergersandinquisitions.com/age-investment-banking/
Hey absolutely loved this article helped a ton, I was just wondering if you could do a sudo one to this just in the form of the PE hierarchy, like how long it takes to move up each position its salary and what it consists of. Thanks again love all the articles I’m trying decide what I want to do for college and I think you have pushed me in the IB direction for better or worse.
Thanks Galileo. We will take your input into consideration
I am a senior at Andover and have recently been accepted into Dartmouth.
1. “Sometimes you do see MDs who get into the industry from other fields (e.g. a Partner at a law firm that focuses on corporate and securities law, or a PE Partner who has lost his sanity and wants to move back to the sell-side).
But those scenarios are rare even at this level and you don’t see them much at large banks.”
Could you explain the steps that are involved when this happens; in other words, how would a lawyer become an MD?
2. If an MD were to become a C-level exec, how long would it usually take? How long would it usually take if he were particularly talented or hardworking?
1. By being able to add value and generate revenue. Steps – depends on the individual and luck
2. Unfortunately/Fortunately there’s no set path. I can’t tell you the time it will take
Hey,
Thanks for this very informative article. Could you spread some light on how IB in BRIC countries (particularly India) is different from that in US/UK in terms of growth opportunities and salaries?
Also, how easy/difficult is it to move to the headquarters of a BB on the wallstreet from their BRIC locations ?
There are a few articles on IB in BRIC countries (all but Brazil) if you do a search on the site. It’s relatively easy to move from NY / London to another place, but harder to move back.
“We’ll say early 30’s is the minimum age here, but on the upper end of the range there’s no limit – you rarely find MDs who are past their 50’s, though, so maybe that’s the limit.”
What do they get promoted to around their ’50s?
Group head, C-level executive, or simply get sick of all this nonsense and retire and leave the industry.
1. What is a group head? What is their pay?
2. Is it more common for an MD to become a group head or C-level exec?
3. Is it common for a group head to become a C-level exec?
1. The head of… a group. Like the head of M&A or Head of Capital Markets. Pay could be anywhere from low millions to $10+ million.
2. Group head.
3. No, it takes a lot of politicking and playing the game to get ahead and move up at that level.
“After you’ve taken into account taxes, recessions, the cost of living, and so on, a 10-15 year veteran MD might have $10 million or more saved up.”
What is he works in Manhattan but lives in a Conn. suburb?
Hard to say. There are too many factors. It depends on how the MD manages his money – does he invest? Does he know how to invest? What are his spending habits? Does he have an expensive wife? Does his wife also contribute to the household? Has he been through a divorce? How many kids does he have? etc etc
The promotion seems to be somewhat fast; only taking three years to get promoted to the next. Is this true for large banks-i.e. Goldman Sachs, Deutsche, etc.
It really depends on your performance and the overall economy. Associate to VP is usually the longest promotion and can take longer. But if you’re making a ton of money for them, you will move up relatively quickly.
How much do portfolio managers at large Hedge/PE firms typically make?
http://www.mergersandinquisitions.com/hedge-funds-institutional-asset-management/
Average for PMs might be somewhere in the $500K – $1MM range depending on fund size… some more, some less.
Do most people there make it to Portfolio Manager?
This depends on your performance in the firm – do people trust you enough to make good investment calls/do you have a solid reputation, and better yet track record?
The pay figures I assume also include bonus.
1. Do MDs receive any other money besides salary + bonus? If so, what would their total compensation including this?
2. 1. Do PE partners receive any other money besides salary + bonus? If so, what would their total compensation including this?
1. Yes housing allowances (in some cases) and other perks (varies according to the firm and performance of the individual so I can’t say)
2. PE partners usually receive a base salary and carried interest – http://www.investopedia.com/terms/c/carriedinterest.asp#axzz2LPtqLGtV
I don’t have the numbers of PE partners’ total compensation because it varies according to individual & firm performance
Do most associates make it to MD, or at least SVP?
I’d say around half though I may be wrong. It depends on your firm, your performance and the market
In PE, how many make it to partner in a large firm, such as Bain or Blackstone?
Very, very few. Actually, many associates and mid-level people at those places end up going “down market” and move to smaller funds in an attempt to move up. It is insanely difficult because no Partner ever wants to willingly give up his position. It is arguably easier to move up in IB because the burn out rate is higher.
“It is arguably easier to move up in IB because the burn out rate is higher.”
At large Investment Banks, do most associates make it to MD?
Do most people in large PE make it to SVP? How much do they make all-in after taxes?
It is hard to say because it depends on the individual!
wow this is a great website. The advice I find here is very helpful. I do have a question though….
at the moment i’m studying economics. What are my chances of getting into private equity, even though i’m not majoring in finance?
also, you should definitely talk about Private Equity… I really want to know!
Having IB/deal experience will increase your chances of breaking into private equity quite significantly. We have quite a few articles on the topic. You may find the below useful:
http://www.mergersandinquisitions.com/private-equity-recruiting/
http://www.mergersandinquisitions.com/private-equity-recruiting-in-2550-words/
MBA, marketing with over 14 years experience in banking sector across different geographies and business lines. I am expert in investment banking, private banking, privilege banking, product portfolio, alliance, cross selling and competitive analysis, new channel development, new business start up and growth, relationship management and business development and handled large sales force upt0 500 sales executives.