Buy or Sell: VP is the most useless position in banking

Don't get me wrong, I totally get along with all of my VPs and hopefully will be one in short order. I just feel like that position is relatively useless (especially when you consider how much they cost). 

Analysts are initially a time drain mostly, but once they get some experience they're great for churning out menial yet time consuming tasks that frees up bandwidth for the rest of the team. 

A good Associate can more or less manage/run the heavy lifting & admin work that comes with running a deal process (CIM/Model/Deliverable production) and should be able to interface directly with clients. 

MDs bring in the deals and manage relationships. 

A good deal team with an MD, Associate and Analyst pretty much has no need for a VP imo. They're basically just more expensive Associates or MDs in training. Now I'm certainly GLAD that there are so many VP positions on wall street because it bodes well for job security, but unless someone shows potential to be groomed into an MD, I really don't get why there are so many of them. 

Comments (15)

May 12, 2022 - 11:22am
motley_accrual, what's your opinion? Comment below:

Deal teams flex up and down as needed. You're right that an experienced associate can run a process, but that takes time, and maybe it's harder for the associate if an analyst is still getting up to speed. Good VPs can step up and help the MD focus on other deals too.

Definitely agree though that there can be too many cooks in the kitchen, and probably the worst thing for a deal team is when the middle managers (VP and ASO) get insecure and start creating non sense.

May 12, 2022 - 11:32am
wanttobreakin111, what's your opinion? Comment below:

100%. VP is literally a useless level. I've never seen them add value, but certainly have seen them destroy value…

  • VP in IB - Gen
May 12, 2022 - 3:34pm

(sweating) no bias but I think VP is like even more important than MD.

that was a joke before all the analysts here come after me with pitchforks.  I think the VP position is composed of a bunch of write-offs in terms of future MDs but a smaller proportion will ostensibly keep progressing.  It's more of a 'prove your future worth or leave' kind of position.

  • Associate 1 in PE - LBOs
May 12, 2022 - 5:22pm

A lot of VPs are a definitely a drag on the process / time / effort but the good ones definitely stand out. The issue is good VPs get promoted quickly while the bad ones stay VPs way too long and just make junior people lives hell with useless comments and new creates that add no real value

  • Analyst 2 in IB-M&A
May 14, 2022 - 2:01pm

Definitely agree. Our best VP got moved up to Director after 1 year, which left a weird gap in our deal teams in our group. In all honesty, our best deal teams are now an Analyst, Associate, that Director, and MD. However, we often run overly large teams to get experience for everyone from top-to-bottom, which accentuates deal challenges that have been already discussed between ASO and VP.

May 12, 2022 - 6:38pm
reformed, what's your opinion? Comment below:

During an M&A process, our VPs will: Yes, associates will fill in here for most of these when VPs have conflicts, but frankly the VPs are better at these and just have more experience steering things back on track if things start to go sideways, so preference is to have the more senior do it. 

  • Handle the initial business overview of business/why this business is great calls for potential buyers who want to learn more before signing an NDA
  • Provide valuation guidance to potential buyers
  • Provide high level (email bullet points) guidance for things to highlight in positioning section of CIM. Review final product before it goes to client, etc.,
  • Lead internal meetings that need to go well (e.g., fairness committee, vetting calls with analysts, etc.,)

For pitches:

  • Decide what content goes in the book and review materials the team put together
  • Coordinate with other teams if working across industries/products
  • In the actual meeting, MD will usually kick things off and chat with client for the first 10 minutes, then pass it over to the VP who will go through the content of the book

Personally, as the associate, when drafting an S1 or management presentation, I've had projects where no one reviews turns of the deck before it goes back to the client between drafting sessions and ran the drafting sessions solo (this is the case 95% of the time when there's no VP staffed on it) and others where a VP reviews before it goes to the client. As much as I like to think I can design my own pages and check my work, we usually end up with a better product when a VP reviews it. 

Array
  • 4
  • VP in IB - Gen
May 13, 2022 - 4:09am

Non-performing MDs first, then Directors if they're not bringing in deals (most aren't yet).

  • Consultant in Consulting
May 13, 2022 - 6:41am

I've seen a similar thing in consulting where firms often have Analyst, Associate, Consultant, Manager, Principal and Partner. People can see the Manager role as a bit useless, but the truth is that as you learn to run projects as an Associate or Consultant, you do not have time to start developing business development skills like Managers. VPs are in the same spot. You're being groomed to be a Director one day and need to start thinking about bringing in business. Trying to make the jump in expectation and responsibility from Associate to Director would be insanity. No one would make the cut well or they'd need to spend 5 years as an Associate. It might not be the most useful position from a clear-cut responsibility standpoint, but it is a necessary transition role to ensure you can perform well as an Associate and later as a Director or MD.

Most Helpful
May 14, 2022 - 11:49am
Quaneaser, what's your opinion? Comment below:

Deals can definitely get done well with a good analyst+associate combo who knows what they are doing/have experience. In those instances it can definitely feel like there is an extra layer clogging things up and taking credit for the work (I felt the same way as an associate and feel the same way now about certain directors).

That said, as someone mentioned above, deal teams are dynamic. If I'm on ~5-6 projects there are maybe 1 or 2 of those with high functioning junior team that can operate relatively independently, another 1 or 2 that needs a fair amount of guidance, and 1-2 that are a complete trainwreck. If you're looking at it from the perspective of the high functioning team then yes VP seems more useless. If you're on the team getting a ton of hand holding or literally being saved then maybe not so much (unless you completely lack self awareness)

It's impossible to be full hands on for 6 projects at a time so you have to pick your battles as a VP and have good working knowledge of the capabilities of your team. I always thought associate was the hardest job, but the good thing (at my firm at least) is that there'd be a limit on number of deals you'd take on at that level. So while you'd be jamming hard on 3 live deals, you'd at least know that was your workload and could defend yourself vs. your staffer. It's much harder to turn down projects when MD's start roping you into things directly at the VP+ level so time management becomes significantly harder.

  • Associate 1 in IB - Gen
May 14, 2022 - 2:03pm

I'm an experienced associate and run my own processes at this point so VPs are more hands off with my deals (insecure VPs see this as threatening but honestly it makes their life easier). As other people noted above, however, some analysts require more attention and it forces me to "play down" i.e., I become the analyst on certain deals because the analyst lacks competence. The issue is that I am staffed on a lot of deals and the sheer quantity of work I output is absurd. I've had cases where I am responsible for taking a deliverable from "cradle to grave" and there is no oversight or anyone to check my work prior to sending to clients... and in such cases, I wish I had a VP (or even another associate) to provide another pair of eyes. FWIW, VPs generally posses a little more tact from having lived through more deals, relative to the experienced associate. So the answer to your question is that is depends on the strength of junior members on each respective deal and workload required.

May 14, 2022 - 6:04pm
Kevin25, what's your opinion? Comment below:

to be honest, I notice that in every industry and in every company there are way too many managers. it's the same in consulting: partner sells the work, senior associates do the work, and managers and senior managers just tell senior associates to do the work - so you could easily cut them and if anything the work would be quicker and more efficient cause you wouldn't need to waste time on reporting and presenting to managers. same in the industry: I notice that a lot of managers in the industry spend all their time spewing rhetoric that just raises questions that nobody can possibly answer, talk about nothing and contribute no value to the company. at the end they'll just hire consultants that will tell them what to do, and then they'll just tell people down the chain to do that. if something turns out wrong, they'll just blame consultants and hire other consultants later. same in medicine, academics, tech - a lot of managers that are just there to tell people down the chain to work and spend all their time on calls and meetings talking about nothing and raising rhetorical questions.

having said all that, I aspire to become one of these managers soon and spend the next ~10 years telling other people to work and making ~$300k.

May 15, 2022 - 10:10am
CompBanker, what's your opinion? Comment below:

So while I don't necessarily disagree that the VP layer is probably one of the least valuable on any given deal, I don't know if there is really a better alternative. Look at corporate law for example. Instead of a VP, they just have associates who stay associates for nearly a decade. 7th year associate is actually a thing... Imagine if banking tried to replicate that? Instead of becoming a VP and managing a team of associates and analysts, you just stay as an associate until you're ready to be a director / MD. My guess is that a lot of people wouldn't stick around...

The VP role has challenges for sure, but it is also one of the biggest transitions in banking. Instead of being responsible for producing work, you're responsible for ensuring that other people produce work. Meanwhile, you need to start forming your own relationships and demonstrating a (future) ability to bring in business. This is not easy and certainly not something that you can do if you're constantly checking models or even producing work product yourself.

So yes, the VP may not appear to be adding much value to any single deal team, but it is a position that is necessary for the bank in order to train / test its future leaders. These are almost always people who have earned their stripes having served as associates for many years and are now being given a shot to make D/MD.

Note: Obviously there is a lot more to it than the above and many VPs do add a lot of value, particularly when working with new associates, but I do think the position is justified. 

Professional Career Guidance and Mentorship: www.RossettiAdvisors.com

  • 6
May 15, 2022 - 4:37pm
TimesNewMoney, what's your opinion? Comment below:

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