The mistakes made by new associates in investment banks
Analysts in investment banks across the City and Wall Street are no longer bottom of the career ladder. Investment banks have just promoted their third-year analysts to associates - or even quicker in the case of banks with new accelerated training programmes - and for juniors who have been battling the demands of a 70+-hour working week, a whole new challenge awaits.
Before analysts become fully-fledged associates, they must spend a transitional period as 'associate 0'. If this seems like a gentle way of ingratiating yourself into the role, it's actually a test. "You're not automatically treated like an associate. At this point, you get a flavour of what's to come and must prove that you're capable of running things with little or no supervision," says Danyaal Shah, a VP working an at investment bank in Canary Wharf.
Now that analysts have moved up, more is expected of them. This is how to survive, according to investment bankers who have been through it.
1. New associates expect the change to be immediate
For the first time in three years, analysts are no longer bottom of the rigid investment bank hierarchy. The work required to get here is substantial and the learning curve is incredibly steep. To think that a new title suddenly means you drop all responsibility from your previous role is a misnomer, says Mark Franczyk, who worked in equity capital markets at J.P. Morgan for ten years before leaving to become a pastry chef and blogger.
"Don’t expect that everything will change overnight. It won’t. A new associate will still have to do a lot of 'analyst work', perhaps for many months. If you act as if such tasks are below you, you will fail. No matter what level you achieve, your primary role is always getting things done," he says.
2. New associates forget that the buck stops with them
Analysts are forgiven for mistakes, because associates are supposed to pick up on them before an MD ever gets to lay eyes on their work. Maybe an analyst who coasted through their training programme will have been shown the door anyway, but if you haven't learned the necessary lessons, becoming an associate is the time when you will be found out.
"The biggest change to adjust to is that you're suddenly very accountable," says Shah. "By the time you make associate you should be an expert in your particular business area or sector. No mistakes should pass through you. MDs will forgive analysts, but they're unlikely to forgive associates very easily."
"As an analyst, you are focused on analytics - the never ending churning of data. Often times you have no sense of where that analysis is going. Even when you want to, it can be hard to have a view of the bigger picture," adds Franczyk.
3. They spend too much time firefighting and not enough planning
As analyst you are given a steady stream of work by your associate that needs to be done in a timely and accurate manner. As an associate, not only must you understand what can and should be delegated, you must make time to plan for additional responsibilities. Suddenly, the number of meetings - both internal and external - you're expected to attend will increase.
"At first it can be overwhelming," says Shah. "If you're the sort of person who doesn't pay attention in meetings, or fails to follow up or understand the key action points, you'll struggle. What's more, when you're out with clients, you need to have answers for whatever might come up. The onus is unlikely to be entirely on you, but you represent an investment bank and clients expect anyone working on the project to be an expert on what they're trying to achieve."
The key, says Shah is being able to delegate enough work to be able to plan sufficiently.
4. They get lost in the moment and stop learning and understanding
Talk to any analyst for five minutes, and you'll inevitably hear the term 'steep learning curve'. The first three years on the job can be brutal, but you simply can't stop progressing once you hit associate, says Shah.
"The silver lining of being an associate, despite the increased responsibility, is that you'll be able to delegate some of the more medial or repetitive tasks," says Shah. "The key with moving to associate is being able to solve the problems on your own and really understanding them."
"You’re still years away from running the show, but your primary focus is no longer 'what are we doing?' but rather 'why are we doing it?," says Franczyk. "A good analyst can succeed by producing a perfectly functioning model. An associate needs to be able to understand, and have a view, on what the output shows."
5. They think like an associate, instead of a VP
By the time you're in your final year as an analyst, you "already be working at associate level," according to the head of HR at one US bulge bracket investment bank. When you make it to associate, your focus should be on what it takes to make to VP.
"The big deal about making associate is that you are now officially on the seniority escalator and need to start behaving as if you want to do the next level," says Kevin Rodgers, the former global head of FX at Deutsche Bank, who is now an author and market commentator.
"The biggest slip up is that employees kind of expect the promotion as a matter of course simply for having lived long enough. It doesn’t work like that," he says. "To be an associate means that you are aiming to be a VP and sort of acting that way. Similarly, a VP promotion means you a starting to act a bit like a director - and so on. So just sitting back and doing what you are told is the easiest way to be overlooked."
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