What do analysts, associates, VPs, and MDs actually do in investment banks?
Let’s say you’re watching American Psycho to get into the mood of your future investment banking career (or because you’re a sigma male or whatever). The infamous Patrick Bateman business card scene comes on, and you pause it to read his card. He’s a “Vice President”.
Wow, you say. Must be a big shot.
Well, he’s not. Vice Presidents (VPs) are a dime a dozen at any decent size bank. Goldman Sachs has around 13,000 by our count (no, that isn’t a typo). It has around the same number of analysts and associates.
Why are there so many of these VPs? Well, a variety of factors, although no one knows for sure. It might be because careers in banking have always been quite short – meaning that banks had to tempt juniors with seniority to stay (or at least apparent seniority). It might be because VPs are the earliest stage at which bankers start meeting clients, who also feel the need to talk with someone senior.
So… What do they all do?
What’s an investment banking analyst?
If you’re a fresh-faced graduate, you’re joining an investment bank as an analyst. The title doesn’t mean you necessarily have any analysis to do – just that you’re at the bottom of the hierarchy.
What do they do? Well, in investment banking (M&A, DCM, and ECM), analysts research companies involved in a deal and build financial models to value them. They then assimilate their findings in a shiny PowerPoint presentation which the MDs (see below) present to clients. This is called a pitchbook.
"Junior bankers are experts on financial modelling," says ex-Goldman bankers turned academic Alexandra Michel. They are also experts in Excel, VBA, and in building the PowerPoint presentations that banks use to communicate their ideas to clients. "The more junior you are in M&A, the more time you will spend working on Excel models and PowerPoint Presentations," another former Goldman analyst says.
A current M&A analyst at a European bank says analysts usually do what they're told: "The analyst is the person who does all the administration work necessary in the deal process. As the most junior person, you might work on research, you might create the materials for the pitch-book which presents banks' ideas to clients, and you might work on the financial models - but what you do will be quite basic."
Some analysts complain that their work is very boring and repetitive. “As an analyst, you spend 75% of your time on PowerPoint, making presentations,” says one.
JPMorgan analyst Mani says that in the course of one day he worked on "maybe 10 different Excel files and maybe four or five different presentations" for clients. Analysts are notorious for getting "Please Fix" requests - after putting the presentations together, they'll often be asked to make corrections by the bankers above them in the hierarchy. These requests can come through at all hours of the day… Or night. During the current dearth of deals, analysts spend a lot of time on these 'pitches,' but not much actual time working on the process ('executing') the deals that result. Even in busy times, though, analysts are more focused on pitching than execution.
How long will I be an analyst for?
Historically, three years, but nowadays more around the two year mark.
How much money do analysts make?
A bunch. In London, you’ll make around £65-70k in salary in your first year, and bonuses are around another 50% on top of that, which brings your take home pay to £100k ($124k). In New York, you’ll make around $100k in salary, and another $60-80k or so in bonus.
How many hours a week do you work as an analyst?
A lot. Goldman Sachs had a scandalous presentation leak a few years back, written by juniors complaining about one-hundred-and-twenty-hour work weeks. Things aren’t so bad now – it’s closer to 80 or 90 than anything else – but that’s still a lot of time.
Morgan Stanley analyst Florian Koelliker studied junior bankers for his 2021 dissertation. He found that both analysts and associates typically work between 80 and 90 hours a week. One analyst told Koelliker that leaving at 2am is "ok" and that leaving at 4am is "late."
But… Why? Well, because an analyst’s job is to fix things. A presentation or model sent to a senior banker is expected to be fixed beginning immediately, no matter what the time of day is. That can mean in the morning at 9am, or in the morning at 3am.
"In the day it's quite hard to focus on one task at a time, because you'll have all these inbounds of random requests and tasks, so you never really get to focus on long project work," says Mani. "But in the evenings when most your clients and seniors are no longer at their desk it's kind of nice to be able to work on things at your own speed and own time."
What’s an investment banking associate?
A step up from an analyst. A title either promoted into or filled by a graduate from an MBA program (although MBA grads tend to have a bad reputation amongst their peers). Associates don’t do anything vastly more important than analysts, other than managing them. "As an associate, you're still working on the PowerPoint slides," says one M&A analyst, "but you also work more on the [financial] models."
An associate's role is partly to "guide the analyst in preparing the presentation and doing the research," the analyst says. The analyst does the work and the associate checks it. "The associate is still an important part of the process. If you have a 50-page presentation, the analyst will usually do 30-40 pages and the associate will check them and do the rest."
Associates are still expected to do analyst-type work, says one former associate, although she says that "analysts are technically the ‘producers’ of all the work and the associates are the ‘checkers’ of it."
How long will I be an associate for?
Around three years - if you last that long.
How much money do associates make?
In London, salaries are between £100k to £140k, depending on seniority. Bonuses are between £50k to £100k, meaning total earning potential is up to £240k ($300k). In New York, meanwhile, salaries are between $175k and $250k, with bonus bringing the earning potential to around $500k (excluding a few ultra-elite boutiques).
How many hours a week do you work as an associate?
Less than analysts, but not an awful lot less. "You'll often see the associates going home at 11pm instead of midnight," says one analyst. "But that kind of depends upon the person and how good the analyst is. If you're a lazy associate with a good analyst, you can leave early. If you're an ambitious associate with a bad analyst, you'll still be working at 2am."
What’s an investment banking Vice President (VP)?
The point at which an investment banking careers becomes much more interesting. You’ll get to meet clients at this rank – but you’ll also have more responsibility over the analysts and associates below you making all the relevant Microsoft Office derived products. "Being a VP requires more ‘ownership’ in the team - and well-established client relationships," says one associate at an international bank.
"VPs lead the layout of the presentations," says a Goldman banker. "They're responsible for making sure the pitch documents are put together and they will also have an active daily role in executing any deals that go ahead."
A VP’s domain is the day-to-day processes of a deal. "The VPs guide the analysts and associates," says the analyst in M&A. “They're the ones saying which materials need to be created. However, they're also the ones who speak on the calls to the clients. They help keep the clients up to date with how things are progressing."
How long will I be a VP for?
This is a bit harder to answer. Theoretically, three years. In practice, indefinitely. There are a lot of VPs in comparison to the population of the ranks above, and competition is tough. Some people reach VP and stay there indefinitely, never quite being as good as each incoming cohort of bankers who peg them to limited director and managing director roles.
How much money do VPs make?
Salaries in London start at around £150k, going up to £185k, whilst bonuses are anywhere between 50 to 100% of base. That can mean up to £340k ($424k) in the City. New York VPs, meanwhile, can expect between $470k to $570k.
How many hours a week do you work as VP?
"The associate is running the process for the VP, so the VP gets to leave earlier," says the analyst. This doesn't mean they leave early, however. "Our VP goes home around 10pm," he adds.
Koelliker found that VPs work between 60 and 80 hours each week.
Directors and Managing Directors (MDs)
What’s an investment banking director or MD?
Bring in and manage business, essentially. There’s a lot of travelling – but it’s not all that glamorous – and overseeing the various stages of the hierarchy below. "As a director, you'll speak a lot with the clients," says an analyst. "Your role is to act as the interface between the client and the rest of the team."
MDs are at the top of the investment banking totem pole. "They talk to the clients, meet the clients, bring in the revenues and build the business for the bank," says the analyst. "They're the connectors - the relationship builders - they're out there, finding out what's going on with their clients in their industry." Top MDs are often called “rainmakers” for an investment bank.
Worth noting also that not every bank has directors as a bridge between VPs and MDs.
How long will I be a director/MD for?
Assuming your bank has a director title, you’ll (theoretically) be a VP for three years and a director for two before becoming an MD. In reality, for the same reasons outline above, you might never make it to MD. Being a director is also the riskiest position to have in a bank, allegedly, as you cost a lot of money and haven’t got a client book to balance it out.
Assuming you’ve made it to MD (congratulations), the pressure is on to justify your pay package. At UBS, MDs had a 300-client-meetings-per-year target (although that was a few years ago). If you can’t deliver the goods, exit stage left. If you can, feel free to bask in the warm glow of huge sums of money.
How much money do directors and MDs make?
A lot. The numbers vary significantly from person to person, but $500k is a good benchmark for MDs. Just for salary, of course. An exact number for directors is a bit harder to pin down, but $300k or so is a good benchmark. Bonuses are highly variable for both.
How many hours a week do you work as a director or MD?
As a director, a bit less than a VP. Koelliker found that directors work between 45 and 70 hours a week and have much more control over their time. Finally, a glimpse of work-life balance, until you hit MD…
… When everything goes haywire. MDs are both constantly and never really working. "Sometimes we don't see the MDs in the office much," says an analyst. "Their jobs are a bit more freestyle and flexible. They might be out of the office for a week, meeting clients. They might have a lunch with a client, and then a coffee, and then a meal with another client. They might go and meet a COO who's also a personal friend." A bank is happy to let its MDs take time to build client relationships. Goldman Sachs estimates that it takes seven years for a client relationship to generate fees for the firm.
Although banks are hierarchical, Michel says they can also be fairly egalitarian. If you perform well, you can progress through the hierarchy (at least to VP level) fairly quickly. In IBD, she says, most people actually do get promoted up to the next level. This makes banks less competitive places than people expect. Power differentials are minimized, and everyone (according to Michel) works for a common purpose. Unfortunately, she also concludes that this can lead to overwork and burnout.
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