Whether you join a large investment bank or a small boutique, you'll encounter roughly the same retinue of job titles, in the same order of importance.
An analyst is the lowest position of all, and what graduates become when they join. In investment banking speak, analyst is simply another way of saying trainee.
What analysts do vary from division to division. In corporate finance, analysts are hardworking number-crunchers who put together pitchbooks (company and sector research that help banks win bids for business) and analyze a company's financials. In sales, analysts telephone relatively unimportant clients on non-crucial matters. On the trading floor, analysts can't trade until they've passed their regulatory exams, and even then are heavily constrained until they've proven they're not going to press the wrong button and lose millions.
At most banks you'll be an analyst for three years. The bank then decides whether or not to renew your contract, and you have the option of whether or not to stay on. So what does it take to move up to the next rung? An analyst being considered for promotion should demonstrate an aptitude for leadership, the ability to present his or her point of view persuasively, whether contrary or not, and an understanding of both clients' and the firm's needs and motivations.
The next rung on the ladder, associates are analysts who have made the grade, or business school students who joined after studying for a Masters in Business Administration (MBA). Associates typically manage and allocate work to their own team of analysts.
Expect to be an associate for another three years before moving up to the next rung-vice president.
At this level, life starts to become exciting. The title sounds daunting, but don't be deceived: Vice presidents (VPs) are plentiful at any large investment bank.
As a VP in corporate finance, you'll manage the day-to-day affairs of the associates and analysts under you and you're more likely to have frequent contact with clients. If you work in sales, trading or research, you will likely have your own book of customers, more flexible trading risk parameters, or your own list of companies to research. Because sales people and traders work on their own to make money, an exceptionally talented VP on a trading desk could potentially make more than a managing director.
You'll typically work as a VP for three years, but you could be one for much longer, as VP can be a more difficult career transition point. VPs who fail to progress at one bank tend to move to another one, where they can join at the next rank up: director or executive director.
Director or Executive Director
By this point, the top rungs of the ladder are within your grasp. Directors and executive directors (the titles are used interchangeably) are the right-hand men or women of the real big-wigs of the investment banking world, managing directors. In corporate finance, executive directors help managing directors handle relationships with client companies. In sales and trading, directors have bigger and more important clients to call and ever larger trades to place.
You've made it! Managing directors (MDs) sit at the upper echelons of the banking hierarchy. They typically make the most money, have the biggest offices and command the most respect. MDs are the rainmakers-they deal directly with clients and bring in business.
As with any pyramid structure, very few people who started out as analysts will make it this far. At one large U.S. bank, only 6%-8% of directors are promoted to managing director each year. Goldman Sachs, or example, has roughly 1,000 MDs for 20,000 employees.
At the end of the day, individual performance, revenue generation, and client service are paramount to moving up the investment banking ladder. If you progress smoothly, you can become an MD by the time you're in your early 30s.