Three Things You Didn't Know About Becoming A Rock-Star Analyst
At the beginning of my analyst program i had a fixed-notion of what it takes to become one of the top-ranked analysts in my class, pocket top-bucket bonus and move on to a prosperous future in finance. I wasn't alone in believing that building up great modeling skills, understanding corporate finance and mastering the three financial statements would get me there. I still think that those skills will impress your deal teams and provide the basis for a career in finance, however they're not the only way to excel.
In fact, during my time in investment banking, I worked on a lot of deals with the same analyst who didn't master any of the three skills mentioned above, yet moved on to receive top-bucket at year-end. While financial analysis skills impress associates, the following three skills impress senior bankers. Since senior bankers rank higher in the banking hierarchy, the previous mentioned analyst became top-ranked despite below-average financial analysis skills.
Build Up Killer Organizational Skills
Investment banking consists of running many different processes. Vice presidents are valuable because they have run these processes over and over and master every single step. Banks have product-specific groups that can add even more value at the later stages of any given process.
While an analyst has not seen each process very often, they can still add value by keeping track of all the short-term deliverables that are required to eventually get to the finish line. Great analysts who master financial analysis often times overlook the importance of organizing and keeping track of all the internal deliverables and all client communication. However, an organized analyst will noticeably speed up the process and free up the associate's time. A vice president only looks good when a deal moves at a fast pace and thus he will quickly pick up that you are "driving the process".
It goes without saying that in the year-end review, due to hierarchy, the vice president will speak up ahead of the associate and the associate would not dare to contradict whatever the vice president says (unless you really did a terrible job). The vice president will not have a good sense for your financial analysis skills since all he cared about was the process. Organizational skills will also help you with my next point.
Build Relationships With Senior Bankers
The most important factor in your your year-end review is that a senior banker in your group supports you. The best way to build up this relationship is to make sure that every time you work with someone new you leave a favorite first impression. When I started as a banking analyst, I always had at least one 2nd year analyst who wasn't on my deal team look over my product before handing it to the associate. A 2nd year can quickly tell you some of the details that a particular associate looks for. This way you can quickly improve the first impression of your product.
When you do leave a favorite first impression, people will request to work with you again. Through this ongoing relationship, you will eventually be able to build up trust and gain more responsibilities. Once you take on more responsibilities, you will feel more ownership of your work and also start gain a better understanding of the bigger picture. This will quickly help in reducing the amount of mistakes you make in your everyday tasks. Eventually, more associate-level tasks will be delegated to you and you will get more staffings with someone who you already built a rapport with.
Come year-end this will pay huge dividends for you. In the analyst review process, there will be one meeting where the majority of the group gathers to discuss all the analysts. This review can be as simple as the group-head saying your name and starring in a blank space. When you have no major relationships, then the room will remain quiet for some time. Eventually someone will speak up and say that you did ok when you worked together.
If you were able to build up a relationship, the whole outcome will be much different. The moment your name drops, this person will speak up and say something simple to the point of: "we worked together on a bunch of deals and i think she/he did a great job." With the herd-like behavior in banking, unless someone had a terrible experience working with you, no one will dare to bring up something negative. Only those people who had a positive experience working with you will speak up. In most banking groups this quick review session will be the major determinant of your ranking.
Plan Enough Vacation Days and Find Time to Relax
A lot of analysts, especially when they first start, are incredibly eager to take on every single project that they can. Eagerness in itself is great because the whole office will quickly take a liking to your cheerful attitude (except for 2nd year analysts). The senior bankers will appreciate it. On the other hand, while everyone picks up quickly whether you're making mistakes or not, no one is tracking how many projects you do take on. At the end of the year, the one argument that carries very little weight in the ranking of an analyst is how many projects he took on. If you do take on too many projects, it's just a matter of time until your attitude starts fading. To senior bankers your attitude is more important than the number of projects you take on.
At year-end, when the group head calls your name, you don't want a managing director to start the discussion by saying he didn't like your attitude. No matter how much the associates in your group enjoyed working with you, they will probably not dare to speak up and say that the reason your attitude dropped was because you worked until 4am every single night.
Great post.
Great post.
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I thought the associates
I thought the associates determined analyst bonuses, not senior bankers. Wouldn't below-average financial analysis skills piss them off, or do the senior bankers trump them?
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
It works a little different
It works a little different in every group, but a lot of groups have one general meeting that associates, vps and mds attend. Most analysts are not able to build a relationship with mds so it ends up being the associate who talks about that particular analyst. if you build a relationship with an md he will certainly be the first one to speak up and also trump everybody else.
is this different from
is this different from internships?
Connor: I thought the
I thought the associates determined analyst bonuses, not senior bankers. Wouldn't below-average financial analysis skills piss them off, or do the senior bankers trump them?
Associates don't decide shit
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futuramo: is this different
is this different from internships?
Internships are a little different because interns (summer analysts and associates) mostly interact with analysts and associates and generally don't have much interaction with more senior people.
rufiolove: Connor: I
I thought the associates determined analyst bonuses, not senior bankers. Wouldn't below-average financial analysis skills piss them off, or do the senior bankers trump them?
Associates don't decide shit
Thanks for clarifying.
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
This is a good post overall
This is a good post overall but I can say that so much of this is group dependent. For example, one major thing to note is that the disparity between top bucket and bottom bucket is jokingly small, especially on an after-tax basis in the current economy. You're better off working your ass off trying to get an offer, the bonus doesn't really matter all that much you have an offer.
You may also be surprised to know how little is said about you by people that you think have your back and that you did great work for.
One thing I absolutely advocate is building a solid relationship with an Associate (ideally one who is vocal) so that they can stand up for you in the roundtable. It is completely true that most Associates won't majorly contradict senior guys, but if they are the most valuable and highly regarded Associate in the group, a lot of times their opinion matters more than a VP's (this is especially true in small groups and if you have VPs who are known to travel a lot and have a reputation for grinding analysts). Make sure that you can get them to give you a fly-on-the-wall recap of what went down in the roundtable.
The whole process is by its very nature cowardly and bullshit, so it's best to know exactly what is said about you because that can play a big factor in how hard you are willing to work your second year. You may have a VP who completely trashes you even though he was the biggest clown ever and constantly blew your shit up. If he does say that you "lack motivation" or don't produce good work, when it clearly isn't the case as evidenced by Associates and other officers you have worked with, you definitely want to file that away and the next time you get a staffing from them you can handle accordingly.
The biggest thing analysts forget is that they have pushback power (within reason) at a certain point you have to draw a line and acknowledge the type of person you are. I personally am not a little bitch and refuse to let spineless people control my experience. Make sure that you are able to know who actually spoke up for you and who threw you under the bus. It's very tough to fire analysts unless you are absolutely unreasonable or incapable, but they use bonuses as a means to try and manipulate you. Once you have an offer locked down, it is a very simple economic argument to look at your situation and determine how much shit you are willing to put up with for an incremental bonus bump. Knowing where the bonus situation is likely going to shake out, I can tell you that a ton of people who kill themselves are unhappy even when they get top bucket because the value proposition isn't what it used to be.
With all that being said, make sure that you do good work for the guys you like and try your best not to piss people off because you will need them for references when you go through recruiting... but don't be a sheep. Know enough to know when people are throwing you under the bus and adjust your effort accordingly.
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"Licensed to Ill It"
We all know Bro J did it...
Connor: rufiolove: Connor
I thought the associates determined analyst bonuses, not senior bankers. Wouldn't below-average financial analysis skills piss them off, or do the senior bankers trump them?
Associates don't decide shit
Thanks for clarifying.
Yeah - ultimately they can definitely speak about you and sometimes that can go a long way, especially if they are a respected associate, but if a senior guy likes you and speaks well of you, they aren't going to overturn their ranking because an associate hates you. Similarly, if for whatever reason a senior guy decides he wants to flame you, an associate will likely be too risk averse to challenge them, but even if they do it likely won't improve your situation very much. It's very unfortunate because the whole process is largely bullshit. Case in point, some of the guys you work with the most might be traveling to meetings and won't call in. They could be the guys that you worked with on the 2 biggest deals you did, and they aren't there to go into detail. Some other people might say "oh so and so was on x deal" but they won't be able to really sell you. Also, the process, even though it decides your entire comp for a year and sums up a year's worth of performance is largely an after thought, and even though most people won't believe it, it often isn't taken as seriously as it should be. They typically only devote an hour or so to the discussion and it is very arbitrary. You might have a guy who holds one bad night against you because you were sleep deprived as the OP mentioned and you fire off a snippy email or forget to respond to something you think is trivial or whatever the case is. Same holds true for positive things. You might have a guy who loves you because you made the clients die laughing on a roadshow and they thought you were funny as shit at the strip club. The point is that these deliberations are largely bullshit. I know people who probably worked way harder than me and others who didn't get comped as well, and I also know people I didn't think were nearly as good as me get comped the same / better.
At the end of the day it's important to remember that it is just an elaborate way to control analysts. They could easily afford to pay way more than they do... (cutting an entire analyst class's bonuses by 10k isn't going to save them anymore money than cutting one MD's bonus by 150k, and yet the percentage impact to both is probably about the same and might even be more detrimental to the analyst). Don't get caught in the bonus trap.
I know a lot of kids out there are all type A and think "I'm gonna be top bucket and you don't know what you're talking about... plus the top bucket analysts get all the offers" but I can tell you that I know a lot of people that weren't top bucket that received offers that would make some top bucket kids' panties wet.
Just keep perspective... work hard but don't be a slave to some number. The incremental effort at the analyst level is hardly worth it.
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Speaking of analyst
Speaking of analyst bonuses....how bad is it looking for 1st yrs this year?
Surefire: Speaking of analyst
Speaking of analyst bonuses....how bad is it looking for 1st yrs this year?
Pretty bleak...
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"Licensed to Ill It"
We all know Bro J did it...
@rufiolove: i agree with most
@rufiolove: i agree with most of your points and of course there are exceptions, but for the most part the best analysts do get top-bucket. I also agree that the difference in bonus is not that great, but over the long-run it will pay off to be top-bucket because you build up better relationships and get to work on more interesting and challenging projects which ultimately will make it easier to learn.
It does pay off significantly
It does pay off significantly to be a top-bucket analyst. By the time analysts enter their second (and perhaps third) years, a top bucket analyst will earn $30,000 - 50,000 more in bonus than a bottom-bucket analyst. Also, being a top-bucket analyst is crucial for buyside recruiting. One of the first questions most head hunters will ask during the intial exploratory interviews (before they refer you to PE shops and hedge funds) is whether or not you are a top-bucket analyst. If you are not an A tier kind of guy/gal, kiss the A tier firms such as BX / KKR goodbye... Lastly, references matter a lot during buyside recruiting. A PE shop will call up some random VP or MD in some group and inquire about a specific analyst - if you are a top-bucket analyst and the senior banker can corroborate the your A tier status, it will help a lot.
Along the lines of wallstreetasks mentioned, the most important things to impress senior bankers (is ironically not the modelling skills) but rather to:
1.) Smile constantly
2.) Dress well
3.) Communicate effectively
exactly. Part of the reason I
exactly. Part of the reason I made this point is for people to understand that being a banking analyst is not 100% modeling all the time. Modeling is important, but in the end there's other ways to win the race.
Vancouver Canucks 2011: It
It does pay off significantly to be a top-bucket analyst. By the time analysts enter their second (and perhaps third) years, a top bucket analyst will earn $30,000 - 50,000 more in bonus than a bottom-bucket analyst. Also, being a top-bucket analyst is crucial for buyside recruiting. One of the first questions most head hunters will ask during the intial exploratory interviews (before they refer you to PE shops and hedge funds) is whether or not you are a top-bucket analyst. If you are not an A tier kind of guy/gal, kiss the A tier firms such as BX / KKR goodbye... Lastly, references matter a lot during buyside recruiting. A PE shop will call up some random VP or MD in some group and inquire about a specific analyst - if you are a top-bucket analyst and the senior banker can corroborate the your A tier status, it will help a lot.
Along the lines of wallstreetasks mentioned, the most important things to impress senior bankers (is ironically not the modelling skills) but rather to:
1.) Smile constantly
2.) Dress well
3.) Communicate effectively
I really don't think that's true certainly not in the current comp environment except for extreme cases. Analyst comp now is likely going to be down substantially from last year. You aren't going to see a 50k divergence. Additionally, I wasn't talking about merely about bottom bucket analyst difference although that's the example everyone always likes to use. I can tell you with striking certainty that the difference between top bucket and middle bucket is miniscule. In most cases you're talking around $2500 after tax. This is exactly what I'm talking about with people being caught up in the number. The difference is not worth the incremental bullshit you put up with but they know that most analysts think it's a life or death thing that you get top bucket. I'm simply here to tell you that regardless of my comp situation it had no impact on my buyside recruiting and if you really need $2500 over a full year to keep you happy at night knowing that you're marginally more liked or skilled than someone else then that's fine, but that's how banks squeeze every last bit of work out of you. Most groups can only have 1 top analyst so mathematically it's not likely that very many people are top bucket. If you look at the comp distribution it is bell shaped. It is very hard to get bottom bucket (you basically have to have a shitty attitude and be worthless). Similarly, it is very difficult to get top bucket because there are tons of factors out of your control. I can say that barring some absurd comp structure that I am not aware of, you certainly aren't going to see an additional 50k over 2 years as a top bucket analyst. The bands are extremely tight from top to bottom. You are either misinformed or you are referring to someone who is likely paid top of their entire analyst class.
It's also important to note that there are sub bands within buckets so the absolute top top is what is reported to the street because they want to attract talent. But a very small percentage of analysts are paid that number.
1/2 of the WSO Bash Brothers
"Licensed to Ill It"
We all know Bro J did it...
Of course it goes without
1/2 of the WSO Bash Brothers
"Licensed to Ill It"
We all know Bro J did it...
swagon has been trying way
haha yeah. coming up with
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Awesome post guys. Soft
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Fantastic thread thank you!
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We all know Bro J did it...
really nice
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