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Dinging the directors: Why you don't want to be an aspiring MD in investment banking now

The career ladder in banking is steeper

Now is not a good time to be a director or executive director at a large investment bank. Banks have already stripped out the ranks of underperforming MDs and now they’re turning their attention to the next level.

“Investment banks are firing a lot of directors and replacing them with less expensive VPs,” says Andrew Pringle, director, M&A, private equity and corporate finance at Circle Square Talent. “We’re seeing a lot of demand for VPs in M&A right now, and directors are making way.”

Director and executive director level is an increasingly frustrating position to be in. Not only are banks giving preferential treatment to juniors – Goldman Sachs, for example, says it has increased headcount by 11% over the last four years by shifting headcount towards a “greater percentage of junior employees” – but they’re also promoting fewer people to managing director.

“Directors are well-paid – and therefore expensive – but are not directly connected to revenue generation. It’s an awkward place to be,” says Logan Naidu, CEO of recruiters Dartmouth Partners. “Banks are working harder to retain their top managing directors and juniors are a priority, so directors or executive directors are the obvious targets.”

Depending on where in the world you work, compensation for directors in investment banking can come in at $243-539k, according to new figures from pay benchmarking site Emolument.

Barclays, Citi, Deutsche Bank, Goldman Sachs and J.P. Morgan are among the banks to lay off director or executive directors in the past few months, according to recruiters. More are expected to be targeted as banks roll out further redundancies in the coming weeks. This is happening globally – banks are targeting directors in Asia, for example.

“It’s a difficult rank to be in, and it’s among the worst time to be laid off because so few banks are hiring,” says Pringle.

But is the situation quite so dire? Naidu suggests that while large banks are not hiring at the director level, there are opportunities at boutiques, provided that you can prove your ability to generate revenue.

This is key to survival says May Busch, executive coach and the former COO for EMEA at Morgan Stanley.

“Prove that you are generating revenue for the firm, and if your role does not allow for this, show that you are imperative to the people who are ultimately making money for the bank,” she says.

As counter-intuitive as it sounds, when costs are being cut you should make yourself more – not less – visible to the powers that be, says Busch.

“Cultivate and emphasise your client relationships to show your value. Think about your personal brand – where your expertise lies, what relationships you have and how this matters to the bank,” she says. “I’d also recommend trying to figure out new ways to make money – whether that’s through cost-cutting or revenue generating. When times are tough it pays to be creative.”

Photo: Ingram Publishing/Thinkstock

AUTHORPaul Clarke

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