The Don Draper Guide to Investment Banking
A few years ago some banker friends and I were thinking about creating a TV show.
Entourage meets The Office: all the glamor of movie stars and the celebrity lifestyle, but in cubicles rather than Hollywood.
But the outside world has never hated Wall Street more, and post-financial crisis there’s no way a drama like this could ever take off.
Plus, there’s another small problem: it would be impossible to make a show more awesome than Mad Men.
Don’t believe me?
Here are all the lessons you could learn from Don Draper himself:
1. Have a Great Name
You cannot underestimate the importance of having a name that rolls off the tongue: “Don Draper” is 100x better than “Dick Whitman,” so it’s no wonder that Don assumed someone else’s identity.
You’re judged on your name just like you’re judged on your appearance: so if your name sucks, change it or come up with a nickname or shortened version that’s easier to pronounce (just make sure it’s done officially so you can handle those pesky background checks).
Some people succeed without great names, but why take the chance?
2. Don’t Hook Up with Co-Workers
While Don has had dozens of affairs, up until season 4 he never crossed the hook-up-with-co-workers line.
And when he finally did cross the line, he hit rock-bottom and found himself more adrift than ever before.
You’re required to have affairs and random flings if you’re in finance – just make sure they’re not with co-workers or things will head south very quickly once it ends.
3. If You Do Hook Up With Co-Workers, Don’t Take the Marriage Seriously
So you just had a random fling with your secretary, suddenly decided that you’re in love, and proposed during a trip to California?
If Don can do it, you can too.
Remember that you cycle through wives or husbands approximately every 2 years in finance, so it’s perfectly fine.
With the amount of money you’ll make, alimony is almost an afterthought anyway.
4. Don’t Take Your Employment Contract Seriously, Either
Don didn’t even have a contract with Sterling Cooper until everyone realized he needed one, midway through season 3.
And even when he “signed” it, he didn’t use his real name and then broke the contract to leave and start his own firm anyway.
The role of contracts in investment banking is similar: they’re just a formality.
5. Take 4-Hour, 3-Martini Lunches
Has Don ever not gotten a hotel room with his mistress-of-the-moment after a 3-martini lunch?
You think you have to be available for clients and senior bankers 24/7, and that’s usually true…
…except for when you get that buy-side offer and are on your way out the door anyway.
Remember that no one cares about you at a bank: especially when you’re about to move on anyway, do the bare minimum to get paid and slack off as much as possible.
4 hours may seem like a long time for lunch, but if you’re leaving anyway and all the senior bankers are gone, who would notice?
6. If Conrad Hilton Calls You at 11 PM, Do Whatever He Says
And no, not just because his great-granddaughter is Paris Hilton.
If you have a high-maintenance client who’s worth millions of dollars and demands to speak to you 24/7, you better do whatever he says.
That includes getting his dry cleaning, dressing up as a clown at his kid’s birthday party, redecorating his house, and meeting him in the middle of the night just because he’s bored.
Remember, clients and work come before everything else – even if your wife is about to divorce you and your kids don’t remember who you are.
7. Exploit Loopholes for Personal Gain
So you just found out that your own firm is being acquired by a much larger company and you’d never want to work there.
Simple solution: just do what Don did and gather up everyone important and fire yourselves before the transaction goes through.
If your bank is actually getting acquired, the acquiring bank is smart enough to prevent that specific scenario with the reps and warranties in the definitive agreement…
…But there are always other loopholes you can exploit.
Send out emails late at night to feign busyness, work hard during your first and last month and slack off the rest of the time – do whatever it takes to get top-tier bonus.
8. Keep Stacks of Alcohol in Your Cubicle
Bankers may not drink alcohol out in the open anymore like advertising guys did in the 60s, but if you work 100 hours a week you’re going to need alcohol and drugs – ideally cocaine – at some point.
Rather than running out to buy overpriced bottles constantly, keep a stash hidden away in your cubicle.
Once the support staff and senior bankers are gone, you have free reign to do whatever you want.
So if it’s 3 AM and your balance sheet isn’t balancing, just pull out your Jack, take a swig, and hope for a moment of clarity.
9. Don’t Lie on Background Check Forms
Don gets away with assuming someone else’s identity for years, but it finally catches up with him in season 4 as North American Aviation, a new client, demands background checks on everyone so they can receive security clearances.
And if you’ve been lying about your identity for years, background checks are the last thing you want to think about – so Don forces his company to drop the client.
You might think that’s bad – but if you lie on your own background check forms, something much worse will happen: you’ll get your offer rescinded and you might even have your career destroyed with the right chain reaction of forwarded emails.
10. Think on Your Feet
So the government has started telling everyone that cigarettes kill you – and your top client is Lucky Strike.
They put you on the spot in front of everyone else and ask you how to address these claims and market the product.
Simple solution: avoid the issue altogether. “It’s toasted.” – everyone else’s tobacco is poisonous, but yours is special.
Remember that investment banking is a sales job: it’s less about analysis and more about selling, relationships, and thinking quickly.
Even as an analyst, you’ll be put on the spot all the time when your MD or VP ask about your work or for specific numbers – so you better be prepared.
11. If You Get Arrested for Drunk Driving, Get Your Most Trusted Friend to Bail You Out
After indulging in alcohol yet again, Don finds himself in a wrecked car and in police custody along with his “female companion” of the moment.
So he does what any reasonable businessman would do: he calls Peggy, the one person he can trust to bail him out without telling anyone else at Sterling Cooper.
You should also have a “designated friend” to bail you out, because you’ll probably be arrested for drugs or alcohol at least a few times.
Just make sure it happens after you’ve already gone through background checks.
While you don’t want to follow everything Don does (e.g. sending a major announcement about your firm to the NY Times without consulting anyone else first), you can pick up a lot from him.
Advertising in the 1960s was just like finance in the 2000s: the most prestigious and highest-paying industry.
And if Don were in business today, he’d surely be a Partner at a bank or PE firm – so watch Mad Men and take notes the whole time.
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From Analyst to Associate and Beyond: How to Get Promoted In Investment Banking
So, what happens if you’ve lost your mind and suddenly don’t want to move into PE, go to a hedge fund, or become a venture capitalist?
You continue on in banking, and move from Analyst to Associate – and beyond.
If you’re in the US, you might be wondering why you’d ever want to do this – but in other parts of the world exit opportunities are less hyped and many bankers actually remain bankers.
Plus, if you don’t get any buy-side offers you’ll have to stick around in banking anyway – so here’s how to get promoted and how to avoid turning into Patrick Bateman in the process.
Why Would You Want to Get Promoted?
The usual arguments for moving to the buy-side are strong:
- Improved hours (maybe)
- (Potential for) Better pay
- More responsibilities
- More interesting work
If you’re a really social / “salesy” person who likes a fast-paced environment, staying in banking might be a better fit.
Plus, once you get to a certain level the “Show me the money!” arguments make less sense because any MD will make far more money than he has time to spend – even if he quits and moves to Buenos Aires.
How Common Is It?
The often-cited statistic is that 10% of investment banking analysts move on to become associates.
But that’s misleading because it doesn’t indicate a 10% “admission rate” – the majority of analysts don’t want to be promoted.
The top analysts usually leave for the top PE firms and hedge funds, and everyone else is too burned out after 2 years of investment banking hours to want to stay in banking.
But banks that desperately need to hire would much prefer a seasoned analyst to a freshly minted MBA – knowing how everything works saves months of time and piles of money.
So the option is there if you want it – but most analysts don’t, which is why you hear that it’s very difficult to advance.
What’s the Difference, Anyway?
The roles are not that much different since they’re both classified as junior bankers, but:
- Associates manage analysts and communicate directly more often with senior bankers.
- Associates get more client exposure and speak to management teams on more than just technical details of models, as analysts would.
- Banks assume that associates want to stay in banking for the long-term, whereas they know that many analysts will be gone after 2-3 years.
- When something goes wrong, the VP will blame the associate before the analyst since the associate was responsible for his work.
Hours may be slightly better for the associate, and base salaries and bonuses are both higher – good news if you have $150K or so of business school debt outstanding.
How Do You Do It?
First, you need to become a 3rd year analyst – that’s the standard in the US, UK, and pretty much all other countries.
The 3rd year offer comes via mutual consent – senior bankers approach you midway through your second year and sit down to discuss whether or not you want to stay on.
In 99% of cases they already know whether or not they want you to stay – that’s what happens when you spend 80-100 hours per week with the same group of people over 1-2 years.
So it’s more a question of what you want to do in relation to your performance.
In addition to all the usual qualities an analyst must have – attention to detail, not screwing up models, multi-tasking, and so on – you need a couple extra qualities to get a 3rd year offer:
- Leadership – Do you mentor 1st year analysts and summer interns? Can you manage those below you without causing an insurrection?
- Profit – Are you saving or earning more for the bank than you’re costing? Just like in PE, no one will keep you around if you have a negative ROI. This is finance, not non-profit land.
- Senior Banker Fans – Will senior bankers in your group go to bat for you when it’s time to make a decision? If not, you need those types of relationships to get a 3rd year offer.
There’s no quick-fix solution to achieving any of this, so you need to be thinking about these points from day 1 and actively working on them as you move from your 1st year into your 2nd.
To be more specific, here are a few examples of behavior that won’t get you promoted and behavior that will get you promoted:
- Non-Promotion: You give a 1st year analyst a set of public comps to complete and check his numbers before giving it to the associate or VP.
- Promotion: You give the analyst a set of public comps, but in addition to checking his work you think of another company that would be good to include because it boosts the valuation significantly. You run the idea past the associate or VP and point out that it may help with winning the deal.
- Non-Promotion: You look through a 1st year analyst’s operating model for a client and find that all the numbers are correct before giving it to your associate.
- Promotion: You look at the analyst’s operating model and find cost-saving opportunities for the client, which you can pitch to PE firms as an easy to boost their returns if they acquire the company. You also teach the younger analyst how to create scenarios in his model to support this.
Neither of these examples is a big deal by itself – it’s more about going above and beyond what you’re asked to do consistently, over 1-2 years, than discovering the magic bullet promotion solution.
…And Then From There
Once you’ve become a 3rd year analyst, you then need to get an associate offer.
You need to demonstrate the same criteria as what’s listed above, only more of it – rather than just informally helping out new analysts, you need to give analysts instructions and see pitch books and models through to completion.
At this level, more senior buy-in is required – your group head needs to like you, and the senior bankers need to say, “We like this guy/girl, he/she has run a bunch of deals and acted like an associate for us, and is ready for the role.”
This is a lot of self-selection here – if you want to continue in banking, chances are you’ll step up and start contributing more.
And if you don’t, you’ll probably be going home early every day or waiting to bounce when your new job starts anyway.
Boutiques vs. Bulge Brackets
Some argue that it’s easier to get promoted at boutiques because they need the manpower and because there’s more competition at bulge brackets…
…which can be true, but it’s definitely not a rule.
The key difference between small and large banks holds true here as well: it’s more random at boutiques.
You might be at a boutique where the loss of 1 key associate means they need someone ASAP; or you might be at a bank where turnover is low and hardly anyone moves up.
At bulge brackets, by contrast, the process is more standardized and you’ll most likely catch neither a lucky break nor an unlucky break.
On the sales & trading side, there’s not quite as much confusion over analyst to associate promotions because that’s where most associates are coming from anyway – MBA hires with no S&T experience are rare.
Most traders move up the ranks because they’ve made a lot of money, not because they went to a top business school – so the profit part of the equation above is even more important if you want a promotion there.
Analysts and associates exist at other institutions like hedge funds, private equity firms, and so on, but sometimes there are limitations on how much you can advance.
For example, if you’re hired as a private equity analyst right out of undergraduate there might be no option to advance to the associate level – the firm might expect you to go to business school or move elsewhere after 2 years.
Is an MBA Required?
Nope, and the degree won’t necessarily help you.
Finance, unlike most other industries, is driven more by results than internal politics.
No one’s going to say, “This guy got an MBA from HBS – therefore he should be promoted to VP over this other guy who doesn’t have an MBA.”
Instead, they’ll say, “This guy has really good reviews and worked on a bunch of high-profile deals – clients love him, and he’s starting to develop relationships of his own. Let’s promote him.”
There is some merit to that argument, but most bankers who go back for the degree use it as a 2-year vacation.
You will learn a lot and meet a lot of people – and that may make you a better associate.
But it’s a stretch to say that an MBA is required to advance.
But Will They Pay For It?
When times are frothy some banks may cover the expense if you agree to return in 2 years, but that is rare.
There’s no actual difference in pay or responsibilities if you get an MBA vs. if you just advance naturally – there’s far more of a difference between the associates with no banking experience and former bankers.
In sales & trading, you may be at a disadvantage with an MBA – direct promotes are usually given a portion of the trading book, but you won’t have that if you’re graduating and moving to a new firm.
What About Exit Opportunities If You Make the Analyst to Associate Move?
Don’t hold your breath.
It’s easier if you’ve been an investment banking analyst, but there’s still a strong bias against hiring associates because they’re perceived as “career bankers.”
So don’t use an associate offer as your backup plan unless you’re 100% set on banking – otherwise you will be pigeonholed.
If you do realize you want to move to the buy-side, do it quickly – it’s much easier to move over as a newly promoted associate than as a 3-year veteran.
OK, But Do You At Least Get Some Nice Perks?
Usually you’ll get a signing bonus comparable to what new associates would get – around $40K – plus a few weeks to a month off and the option to attend “training.”
If you’ve been an analyst for 3 years, “training” has no value for you so it’s really just a long vacation.
Those are the main perks – plus, of course, you won’t be treated like a newbie who knows nothing about banking.
So, Should You Do It?
Choosing to become an associate is more of a career choice than moving to the buy-side or going to corporate development at a Fortune 500 company – in those roles you have more mobility and you can hop around to different positions.
But at the associate level, you’re expected to stay in banking for the long-haul – so if you’re not 100% committed, do not use it as a backup plan.
Staying in investment banking for the long-term can be a good career, but you will be more limited if you make the leap.
And After You Get Promoted…
You’ll get more responsibility, you’ll have to formally manage analysts, and you’ll need to start thinking more like a VP.
You won’t be expected to pull in clients yet, but you do need to start building relationships and making yourself known as more than just another nameless analyst.
The hours may be a little better, but you won’t see a big improvement until you’re more senior – and even at the MD level, ruined weekends and being on-call 24/7 are still expected.
And yes, pay improves as well, but you still won’t be making $1 million+ until you’re a more senior VP or MD – which is not easy to do.
If you do well and prove that you can execute deals with little supervision, you might just get promoted to VP.
The VP’s Dilemma
But lots of promising bankers stall out at the VP level because you have to balance 2 huge, often conflicting tasks:
- Executing deals and making sure all the presentations, books, and meetings go as planned.
- Bringing in clients and developing relationships.
If you devote too much time to #1, #2 suffers – and vice versa.
Because of this dual responsibility, your hours may not even improve much – you’re busy with potential clients during the day and you’re occupied with deals at night.
And while MDs are also under a lot of pressure to bring in clients, that’s all they do: they don’t need to juggle sourcing with execution.
The VP to MD transition is the toughest one in banking, and that applies on the buy-side as well – going from due diligence, model-crunching mode to sourcing investments is a delicate balancing act.
If you’re a star, you might move from VP to MD or Senior VP in only 2-3 years; more often it’s around 4-5, and if it takes longer than that you’ll probably be making a trip to the conference room in the near future.
Is It Really This Hard?
Did you really expect to make millions of dollars per year without putting in a lot of effort?
Of course it’s tough – if you’re looking for something easier, though, I hear Best Buy is hiring.
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How to Quit Your Investment Banking Job Without Getting Executed
Midway through every year, a whisper starts growing at investment banks everywhere.
“This sucks. I’m gonna quit.”
Sometimes it’s so bad that you just want out immediately.
Other times, you plan to wait and stealthily make an exit as soon as your bonus hits your bank account.
So here’s how you can break out of investment banking – without dying in the process.
It’s not as simple as announcing that you’re leaving and storming out of the building.
Yes, you could do that… but it will create some problems for you in the future.
To make your quitting successful, you need to:
- Make sure no one else knows anything about it beforehand / prevent rumors from circulating.
- Avoid burning bridges (if you can) because you might need recommendations in the future.
- Line up another offer first or have a plan for what you’ll do after you quit and spend a week on a tropical island.
You probably understand the importance of point #3, but I’ve seen many quitting bankers forget #1 and #2.
How to Escape the Executioner
Here’s what you need to do once you’ve made the decision to jump ship:
Get Over Yourself
Repeat after me: no one cares about you… at all. You are a very small cog in a very large wheel.
In “normal” industries if you tell your boss you’re leaving, he might say, “We really need you right now! Can you stay for a few more weeks?”
Or who knows, maybe he’ll even offer up a promotion or try to bribe you into staying longer.
You don’t have to worry about any of that in finance: as soon as you say you’re quitting, they’ll say, “Good, here’s the door. Please leave now.”
A lot of junior bankers overestimate their own importance – “Trophy Kid” syndrome.
But most people won’t even remember you the next day.
Prepare for an Immediate Exit
Next, understand that once you announce your plan to quit your exit will be immediate.
You don’t get a “going away party” or presents or any of that nonsense – you get escorted to the building exit.
There’s a practical reason for this: you have access to a lot of confidential information about public companies.
If you continued to have access to that information, you could spread it around to other people, competitors, or make a quick million or so with insider trading.
It’s almost as fast as getting fired, but sometimes – depending on the bank and group – they will let you stick around for a few days to a week to hand off your tasks to other analysts.
Save anything important – both physical possessions and computer files – in advance of quitting, because you won’t have time later.
Make Sure Your Exit Strategy Is Lined Up
No matter how bad you have it, it’s a really, really, really bad idea to quit if you don’t already have another offer lined up or at least some idea of what you want to do next.
So if you’re quitting to start your own fashion company, obviously you won’t have an “offer” but you should have some idea of how much money you’ll need, what you’re going to do, and an understanding your market.
And if you are continuing on within finance, you should have an offer somewhere else.
In “normal” industries it’s much tougher to get hired when you’re unemployed, and it’s exponentially harder in finance.
So you should not go and “announce” anything to anyone until you have a signed, accepted offer with another bank, hedge fund or PE firm, or a concrete plan of what you’re going to do if you’re leaving finance.
Make a Clean Break
Once you’ve prepared yourself, you need to avoid screwing up the final step of quitting – actually telling people that you’re quitting.
Here’s what NOT to do:
- Announce it to everyone in a long and possibly angry email message and then just leave.
- Start telling other people and allow rumors to circulate before you leave.
- Tell someone other than your Managing Director first.
- Announce your plans before you’re 100% certain and have a signed, accepted offer in hand or you know exactly what you’re going to next, if it’s not another job.
So once you’re set, go directly to your MD, in-person, and explain the situation:
“I’ve enjoyed my time here, but I’ve just received an offer for [Name of New Job], and they want me to start immediately – so I’ll be leaving.”
At this point your MD will probably jump in and act professionally about it – or he’ll complain about how much work you’re leaving behind, especially if it’s at a smaller bank.
Do not get emotional or give into any demands or last-minute requests.
You’re quitting. If you say “no” to these demands, what will they do? Fire you?
Saying “yes” won’t put you on better terms, either – if they make last-minute demands of you, they wouldn’t write a good recommendation in the first place.
Once you’ve told your MD, go around and say the same thing to your other team members, keeping it brief and unemotional.
Then, depending on whether you have to leave immediately or you have a few days to a week, go and craft a brief farewell email with your new contact information.
Don’t send this out to the entire investment banking department or the entire bank – you’re not that important.
Just send it to your own group, or to anyone you’ve worked with in the past.
A Tale of 2 Analysts
Similar to a tale of 2 summer interns, a quick tale of 2 quitting analysts will illustrate just how important the above points are.
Bitter Quitter was at a bulge bracket investment bank and received a hedge fund offer just before bonuses were announced – right around the 1-year mark.
He hated his life and desperately wanted to get out, but he made the mistake of telling all the other analysts in his office before anything was official.
“I’m really close to getting this hedge fund offer… then I’ll be out of here!”
Rule #1 of quitting your job: don’t tell anyone you’re quitting.
Assume that anything you tell a single person at your bank will instantly spread to everyone else – office gossip happens 24/7.
Bitter Quitter eventually won the offer, but he made the critical mistake of not telling anyone higher-up directly – they found out through the grapevine instead.
So he didn’t even get to “quit” – instead, the staffer approached him and said, “We know what you’re doing. Please get out right now.”
Result: He never got to tell his MD himself, so he left on poor terms and would have trouble getting a good recommendation for business school or anything else in the future.
Clean Breaker was working at a middle-market investment bank, and received an offer to move to the corporate finance department of a Fortune 500 company, a few months after bonuses had been awarded.
He also hated his life (notice a common theme here?), mostly because one VP he worked for could best be described as “evil incarnate.” He was incredibly out-of-shape, had no life outside work, no friends, and spent all day making his analysts and associates miserable.
Even though Clean Breaker was miserable, he wasn’t foolish – so he didn’t tell a single soul that he was even interviewing until he had the signed offer in hand.
“Trips to the dentist” and “personal days” are plausible if you don’t use them every single week.
When the time came, he went directly to his MD first and told him the news, then informed Evil VP and the rest of his team.
Evil VP got visibly angry and spent 30 minutes trying to convince Clean Breaker to stay (this only happens at smaller banks), but Clean Breaker held firm and said, “Thanks, but I’m out.”
Result: Clean Breaker probably can’t get a recommendation from his VP, but there’s nothing he could have done to prevent that. But since he handled it professionally, he could easily go back to his MD and ask for help in the future.
How to Quit
Quitting your job is like removing a band-aid: make it quick and clean, and accept that it’s going to be painful in the short-term.
That’s way better than spending an eternity peeling it off and enduring the pain over weeks or month.
So make it quick, professional, and confidential and you might just escape with your head intact.