Hierarchies in Investment Banking: the good, the bad and the ugly

Although one might assume that the titles in banking would be more important than in other industries, exactly the opposite is true. Banking is surprisingly egalitarian – titles mean much less than one might think. Let dig into it: The Banking Hierarchy

Analyst. Most people that begin a career in investment banking will do so as an analyst. The word “analyst” simply means that a person is starting from the bottom of the barrel. An analyst is the person who actually crunches the numbers at a bank. They are experts in Excel and other spreadsheet programs, creating the models that are used to value to companies that have bank invests in. They then pass these models up the chain to be used.

Associate. After starting as an analyst, a person can move up the ladder and become an associate, except the bottom 5%, who usually get fired. An associate is basically a glorified analyst who oversees the models of many analysts. They may also give guidelines as to what kind of models the analysts should be making. However, Associates still do not have a great deal of interaction with clients – this is left up to directors, managing directors and vice presidents.

Vice-President. After the associate level comes the level of the vice president. This is when a banker will begin to have some interaction with clients and be responsible for bringing in business rather than crunching the numbers. Vice presidents will oversee teams of Associates. Some banks have an intermediate level of director before the level of managing director that everyone believes is the pinnacle of new blood in an investment banker.

Managing Director. In most cases, a person can be promoted to managing director after around 7 to 8 years of good work at a bank. However, the level of managing director is not as glamorous as one might think. Managing directors are responsible for bringing new business into the bank. They basically perform an entrepreneurial role while receiving less profit than a true entrepreneur. There’s a great deal of travel and salesmanship.

The one advantage is that banks are actually more egalitarian than other industries, limiting the amount of competition within a bank. This means that people are always working towards the same goal, creating a synergy that is definitely not available in many other competitive industries. The job titles do not necessarily mean a power differential. However, this also leads to a great deal of over work. As you notice, we are just talking about the work load, not the compensation, which is anything but egalitarian.

One response to “Hierarchies in Investment Banking: the good, the bad and the ugly

  1. Pingback: Ten Powerful Investment Banking Resume Tips You Can Use Today | Alpha Banker·

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