by Brian DeChesare Comments (5)

The Investment Banking Analyst: Faithful Financial Foot Soldier, or Peon Pining for Punishment?

Investment Banking Analyst
Ah, the investment banking analyst.

It was the subject of the first article I ever wrote for this site – an article that has continued to generate comments, threats, and snarky reactions ever since.

We’ve covered this topic across many scattered articles and interviews, so I wanted to consolidate all the coverage, update it, and lay out everything you need to know in one spot.

Here’s what investment banking analysts really do, the pros and cons of the job, what to expect in an average day, and how to break in:

What Do Investment Bankers Do?

Investment bankers advise companies on large, corporate-level transactions such as mergers and acquisitions and debt and equity issuances.

“Advise companies” means “Work with management teams to market and sell companies, find potential targets to acquire, and make deals go through; or recommend the best terms and timing for a capital raise and then market that debt or equity issuance to investors.”

The role is part advice, part sales and marketing, and part negotiation and deal-making – on a grand scale.

In the investment banking career path, the Analysts are the foot soldiers and workhorses.

They’re near the bottom of the hierarchy, above only Summer Interns.

The Investment Banking Analyst Job Description

Many articles about investment banking say that as an Analyst, you’ll be “in charge of Excel and PowerPoint deliverables, administrative tasks, and responding to requests from clients and potential clients.”

That is true, but it misses the point of the Analyst role.

As an Analyst, your job is to do whatever it takes to support senior bankers in winning and closing deals, even if that means doing ridiculous tasks that have nothing to do with accounting or finance.

Many students from top universities kill themselves earning high grades and winning multiple internships, all to land that elusive investment banking role…

…and then they start working and are disappointed to find that most of their time is spent revising presentations, tracking buyers and sellers, and doing mind-numbing market updates.

Even in highly technical groups, you’re unlikely to spend even 50% of your time on tasks such as financial modeling and valuation.

The “average case” for your time on the job might look like this:

  • PowerPoint for Pitch Books and Other Presentations: 50%
  • Random and Administrative Tasks: 30%
  • Excel-Based Financial Modeling and Valuation: 20%

In less technical groups, such as Equity Capital Markets, you’ll spend even less time in Excel, and in more technical groups, such as Restructuring, you might spend closer to 40-50% of your time on technical tasks.

Finally, note that even if you happen to spend more time on the “interesting work,” it’s still not all that interesting.

Unlike in buy-side roles, where you might use your own research and market/customer analysis to inform your models, many IB models are “paint by numbers” where the numbers are linked to the client’s demands – even if those demands are unrealistic.

You may occasionally get something more interesting, such as an on-site visit, meeting a company’s finance team, or brainstorming potential buyers or sellers, but don’t get your hopes up.

Investment Banking Analyst Hours

Yes, the hours are bad for the reasons described in our article on investment banking hours.

On average, you’ll be in the office 70-85 hours per week, though you won’t necessarily be “working” that entire time.

However, you will be on call 24/7, and you’ll have to respond to urgent requests and emails all the time, making it difficult to have a life or plan regular activities.

Banks have tried to improve the hours over time with “protected weekends” and other mandatory time off, but the results have been mixed.

It’s a bit better for Analysts now than it was in the late 1990s or mid-2000s, but it’s still a grueling job that requires incredible sacrifice.

Wait… Why Would Anyone Ever Want to Be an Analyst?!!

“Wait a minute,” you say, “this job sounds awful. Most of the work is boring, you work 80 hours per week, and you deal with crazy people all day. Why would anyone do it?!!”

Good question.

Most IB Analysts do the job because:

  1. It’s Not a Long-Term Position – You do it for 2-3 years, and then you move up into senior roles in investment banking, or you move into jobs such as private equity or hedge funds.
  2. You Earn A Lot – Investment banking offers higher compensation than any other job out of university, except for a few quant finance roles and programming jobs at big tech companies.
  3. You Gain Access to Great Exit Opportunities – And you can win more interesting roles in private equity, hedge funds, venture capital, corporate development, and other fields after working as an IB Analyst. For more, please see our article on exit opportunities.

The basic philosophy is “short-term pain, long-term gain.”

By killing yourself for a few years, you give yourself many future options in other, more-interesting, higher-paying jobs.

If you value your free time and don’t want to sacrifice your early 20s, this is not the right job for you.

Investment Banking Analyst Salary (and Bonus)

Base salaries at large banks in the U.S. are just under $100K USD.

Bonuses are often 0.5x to 1.0x your base salary, so average total compensation might be between $150K and $200K.

Pay is lower outside the U.S., even in other financial centers such as London, and pay also tends to be lower at boutique investment banks.

For more on this topic, please see our article on investment banker salaries.

What Does an Investment Banking Analyst Do?

Each day in your life as an Investment Banking Analyst is different, but an “average day” might look like this:

9 AM – 12 PM: Arrive at the office, update a status report on potential buyers in an M&A deal, send it out, and join an update call with the client’s management team.

The senior bankers do most of the talking, so you work on a pitch book for a different, potential deal in the background.

12 PM – 3 PM: You join a few “due diligence calls” for another deal, where the potential buyer asks customers of the seller questions about why they use its products and services.

You’re just there to monitor the calls and make sure the potential buyer doesn’t go too far with its questioning. After that, you run to Starbucks with a few Analysts for a quick break.

3 PM – 5 PM: There’s a huge incident as a traveling Managing Director requests briefing materials for an upcoming pitch ASAP, and you have to scramble around to find and send hundreds of pages of reading.

5 PM – 7 PM: Your Associate comes over to review the Confidential Information Memorandum (CIM) for the client from this morning, and you start making his changes to the financial summary and market sections.

There’s a bit of downtime after this, so you order food and then shop for furniture online.

7 PM – 10 PM: As one of the VPs is leaving the office, he decides that the team needs to re-do a pitch book for an upcoming initial public offering (IPO), and he wants to see the new draft by tomorrow morning.

You start coordinating with the Equity Capital Markets (ECM) team to get market updates and case studies.

10 PM – 1 AM: The Associate signs off on the new qualitative slides in this draft of the pitch book, and he leaves the office. You continue to tweak the valuation and Excel-based parts.

1 AM – 2 AM: Another Analyst at the office is having a major problem with a complicated Excel model not working, so you decide to stay another hour to help out, and then you go home.

This is a fairly busy day, but not an outrageously busy or terrible one.

Factors that create “bad days” include:

  • Multiple Live Deals: If you’re on 3-4 deals that are all active at the same time, the workload is unpredictable, and you could get streams of requests throughout the day.
  • Big Upcoming Pitches: Since pitches have hard deadlines and bankers like to do unnecessary work, you could easily end up staying late or even pulling an all-nighter to finish a long and detailed pitch book.
  • Last-Minute Emergencies: For example, if a traveling MD suddenly needs information for a meeting taking place in 1-2 hours, be prepared to scramble.

“Good days” or “slow days” tend to happen when you can focus on a specific deal or client instead of being pulled in 10-15 different directions.

Interacting with management teams is probably the best part of the Analyst job, so those discussions can also create good days.

A Week in the Life of an Investment Banker

In an average week, you will not have much free time on weekdays.

Many Analysts are in the office from 9 AM to 1 AM each day, and sometimes a bit less than that on Friday or other “slow days.”

You might get called in for a few hours on Saturday and Sunday, but you’re unlikely to be there all day unless you’re working on an important deal that’s close to the finish line and that requires your presence.

If you’re wondering about the gym, sports, or having a social life, you do all of that “when you can,” which often means late at night, on weekends, or not at all.

Investment Banking Recruiting: How to Break In

The bad news about IB is that it’s still a very competitive field to get into, and you don’t have a great shot unless you go to a top university, earn high grades, and complete multiple internships.

The good news is that there’s so much information about investment banking available today that if you really want to break in, and you put in the effort, you probably can.

You might have to compromise by working at a smaller bank or non-bank initially, or you might have to “pound the pavement” with aggressive cold calls and cold emails, but it’s still doable.

By contrast, if you were recruiting for this job several decades ago (e.g., the late 1990s), it would have been nearly impossible to get in as a non-traditional candidate because there was so little information about it.

We cover the details in our article on how to get into investment banking, but the two main paths into the industry as an Analyst are:

  1. As an Undergraduate – Complete multiple finance internships in your first and second years, earn high grades, network with alumni, win a summer IB internship at a large bank following your third year, and convert it into a full-time offer there.
  2. As a Recent Grad – Still complete internships during undergrad, but get started with IB a bit later, so work in a related-but-not-quite-banking role after graduation, such as at a Big 4 firm or valuation firm, and then network and win an offer as a lateral hire.

The IB Analyst Job: Right for You?

If you’re reading this site, you are probably a high-achieving, Type-A personality, so I’m not going to waste time discussing whether or not IB is right for you (for that one, see our coverage of the investment banking career path).

Instead, there are two specific questions you should ask yourself:

  1. Do you need to work as an IB Analyst first if your ultimate goal is something else in finance, such as hedge funds or private equity?
  2. What is the long-term outlook for this job? For example, if you’re in high school or your first year in university, will IB Analyst roles still be around in the future? Will they be automated or displaced?

The short answer to the first question is, “No, you don’t necessarily need to start as an IB Analyst anymore if you can win a good offer at an established buy-side firm right out of undergrad.”

However, if you’re not sure what you want to do in the long term, then you can’t go wrong with an IB Analyst role because of the options it gives you.

For more on this one, see the investment banking vs private equity article.

On the second question: unless something very fundamental in the economy and financial markets changes, Analyst roles are unlikely to go away or even change significantly.

Many people also “predicted” that Analysts would go extinct after Excel was developed and adopted by everyone, and that didn’t exactly happen.

I could see programming skills becoming more important, as they have in sales & trading, but I doubt that most IB work will shift away from Word/Excel/PowerPoint in the near future.

So, once you put in the time and effort required to get into the industry, you start working, and then you start complaining about your job, you can look back fondly on this article:

“Wow, it’s just like he described. And… not that much has changed. Except for my compensation – bonuses are up this year! (phew)”

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Comments

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  1. Hey Brian, great article.

    You state that in even the most technical groups, you only spend 50% of your time in excel/modeling, while in most groups the number is closer to 20%. This definitely comes as a shock to most aspiring/incoming bankers, who believe that it is the majority of the job.

    My question for you is – does this matter? Will developing the best modeling/excel/valuation skills really set one apart in a long-term career in finance? Does it make sense to gun for the most technical groups, or do these skills not matter very much in the long term? I don’t know any MDs or even Partners at PE firms that know how to model, but they are extremely successful.

    I know modeling matters for PE, but even once you make VP there, you don’t model (correct?)

    Anyway, how should we all view the skill-set of modeling? Is it a make-or break, or just a skill needed to move up the ladder? And if our group doesn’t model as much, will we be at a disadvantage in a long term finance career? (Besides maybe being at a disadvantage for PE recruiting if headhunters know this fact, but you could still learn modeling on your own (through your courses) to land those jobs.

    Thanks for your input! It just seems everyone focuses on modeling, but maybe we should be focusing on other areas of deal making for long term career success.

    1. Yes, people overestimate the importance of technical skills (not just in finance – this happens in tech and other fields as well). You need to be competent in Excel/modeling/PowerPoint, but that only takes you so far – you’re not going to be promoted to VP because of your Excel skills, for example.

      There are some buy-side professionals who still do technical work, even at the highest levels, but you’re right that most of them do not do any modeling. At that level, it doesn’t matter next to the relationships and sales/negotiation work.

      I would view financial modeling as a “check the checkbox” type of item, similar to grades or standardized test scores – yes, learn it, and become reasonably proficient, but don’t kill yourself learning advanced VBA features or obscure rules for very complicated transactions. You need to show evidence of these skills to recruit for most PE/HF roles, so they are important in that sense.

      But once you reach the mid-level of the ladder (Associate/VP or Senior Associate/VP in PE), other skills become more important.

  2. Hey Brian,
    Thanks for the article. Interesting how even when reading things presented in such an honest way, the allure of “sth better” (the exit ops, maybe rightfully so) that supposedly comes after IB makes ppl take Analyst roles.

    On that point:
    I’m a mid 20’s non-target grad in London with 2 years of non-ft exp across finance and M&A. Now I have the opportunity to choose between:
    – Lev Fin Analyst role at a top 5 European bank (fixed 1 year contract with limited possibility to stay in the same team thereafter, no bonus and basic salary). Good dealflow I assume.
    – Corp Dev team at a solid brand crossing industrials and consumer, maybe tech even (also 1 yr fixed but higher chance of indefinite ft thereafter). They seem to be active executing inhouse more than 4-5 deals yearly.

    What would you go with? I was okay with my life as an offcycle intern (same bank) and am tempted to go with LevFin as exit ops could still be the same or better 1 year later, while going from CD to banking or PE is harder.

    Does the risk-reward equation of 1 year in Lev Fin beat the exp in CD? I’m afraid I may be drinking the kool-aid but still..

    1. I would probably go with LevFin unless your long-term goal is corporate development. Otherwise, LevFin will give you more options. It’s fairly easy to go from IB to CD, but much harder to do the reverse, or to move from CD to PE. So to maximize your options, LevFin is probably the best bet.

      1. Yeah most opinions I’ve gathered converge to LevFin. The CD job is great, but as I am not sure about the industry yet or about my LT plans, LevFin helps maximize future options, despite the short term risk.

        Good to have your view. Thanks! Hope it helps sb else reading this down the road

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