I'm a student at a Canadian University since a lot of Canadians choose to stay in IB
rather than move to PE or other exit opportunities, this is also the path I'm hoping to follow.
The path from Analyst-VP is relatively straightforward but after that, it gets a bit more complex so I had some questions.
1: Do VPs get fired if they stay in their position for a while? I hear a lot of talk of "up or out" but if a VP is working hard and properly bringing in clients
yet he's passed over for multiple promotions, will he inevitably be fired?
2: Where do fired VPs/MDs go? Since it's extremely difficult to get into buy-side roles at this point,
do they seek out VPs/MDs roles at other banks or just retire?
3: What happens after MD? Is there anywhere else to go after MD? If someone is an MD, could they become a partner of the bank?
4: How long do MDs last before being asked to leave their role? Could they just stay as an MD as long as they still doing their work?
5: If someone is promoted to VP, does the bank believe that you have potential to become an MD or
do is it just a promotion to get them out of the associate levels?
6: Why do so many people not make it to the MD level? Is it because of burn out or is it because they weren't being promoted and so they were laid off?
Thanks
I'm interested in these things because I want to know what it's like in the higher up levels of IB. I always hear about what it's like being an analyst, but not so much as the higher up levels.
As for the comment of me never making MD, you're probably right. A man can dream though.
Dude what is your problem. These are interesting questions that are worth asking.
From what I’ve seen in the U.S. as an analyst, the road to senior positions is more of a survival game. Attrition is pretty high on the associate level because a lot of post-MBAs don’t know what they’re getting into and can’t take the heat. I’ll try to address your questions one by one but if there are some more senior folks they would be better sources.
1) I haven’t seen any VPs get fired. I’d argue the Associate to VP promotion is more difficult than the VP to Director promotion. VPs don’t really bring in clients - they serve a weird intermediary role between Directors / MDs and clients. The idea is to start giving them a more “coverage” role so they can source deals in the future. Once you hit the Director level, however, you’re expected to bring in revenue. I’ve seen a lot of Directors sit at that level for a long time. The bank usually “tips off” a Director who’s about to get fired by giving them a bad bonus, at which point he or she starts looking for other opportunities.
2) The vast majority of senior bankers who leave either go to a corporate in their industry (think Corp dev / strategy / finance) or move to another bank. MDs who cover large accounts often get poached by banks or boutiques willing to pay them more.
3) Depending on the firm, there are always group head / partner / chairman type positions. Some also go into management roles at the bulge brackets.
4) Depends on the place. Goldman is known to kick out partners to keep promotions open to junior MDs and keep them around while other firms keep the rainmakers around. Not sure about duration.
5) Again, depends. The firm I’m at only promotes associates they think can become MDs to VP.
6) Attrition is a huge factor as I mentioned before. Especially at the Associate and VP level a lot of folks decide they can’t take it anymore. You’d be surprised at the number of incompetent post-MBAs some banks bring in.
Hope this was helpful.
Thanks for taking the time to reply to every question, it was very helpful
This very much mirrors my own experience. What flabbergasts me is while BB and EB banks make significant concerted efforts to recruit MBA's for associate roles, they do not heavily recruit lateral candidates for associate or senior analyst roles from less well known investment banks. These candidates 1) at least know what they are getting into having worked in banking and 2) don't have a brand name MBA on their resume and are thus less likely to have numerous other options/contacts. Yet, banks only recruit these candidates for positions on an ad-hoc basis as opposed to recruiting slews of MBA's, many of whom have had no prior banking experience.
My gut feeling as to why this is the case is that the bankers at the top making these recruitment decisions are MBA's as opposed to A2A promotes. This itself is a function of 1) attrition to the buyside/corporate/etc. and 2) volume favoring the former rather than the latter. As a result, MBA bankers favor the system that worked for them. However, this is just my theory and I would love for someone to elucidate this phenomenon for me.
If you get passed up for promotion, it's understood that the bank is effectively telling you that you should quit. Usually, however, it's not a surprise. Many people voluntarily quit as an associate to do something else, but I also know many people who have quit because they were given hints in their second or third year that they would have a hard time making it to VP.
VPs / MDs usually go to another bank or they go into a corporate role.
MDs can get promoted to the head of a vertical within a group, then the head of the entire group, then the global head of a group, then the head of a region, etc. There's always something to keep people moving up.
There's no standard answer. But MDs have revenue targets that they have to hit every year. I've heard that you are given more leash as a junior MD as you build your book of business, but after that point, you either produce or you are asked to leave.
Banks usually don't promote people to VP unless they think they have the potential to be an MD down the road. But it's obviously bank specific and highly dependent on the market environment at the time. If times are good, then the bar will be lower because the bank just needs people to execute all the deals that are going on.
It's a combination of all of those reasons. I would say that many of my associate classmates went into the job knowing that they would not be career bankers. Many saw it as an opportunity to spend a few years building a skill set that they can leverage for the rest of their careers. Others realize that the opportunity cost is just not worth it, especially as they get older, or that the job did not line up with expectations (nothing prepares you or the people close to you for being on call 24-7). And others don't make it because they were laid off when the economy soured, or did not get promoted because they did not perform up to expectations, or were simply fired.
Hope that is helpful.
Thanks for responding, your answer is very much appreciated!
Agree with lifestylemna and hominem. Would also add that Analyst to VP is not exactly that straight forward - A to A is, but Associate to VP and Director to MD are generally the hardest jumps in banking
I would argue that once you get to MD, it's one of the cushiest jobs in high finance. Obviously you have revenue targets that you have to hit, but at that stage you are basically just in a client relationship business. All of the deal execution is taken care of by those junior to you and you just have to be able to jump on calls and talk intelligently about the deal / company. Its just an absolutely brutal climb to get to that position and why most don't make it.
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