How Investment Bankers can get Promoted Quicker
There is usually a pretty standard time frame in investment banking concerning how fast one can be promoted, but those with moxie and ambition may be able to move a little faster. The standard procedure is for a business school grad to start out as an analyst investment banker for either a small bank (sometimes referred to as boutique banks) or a large banking firm or bulge banks where there is more money being made. Boutique or Bulge, it makes no difference, a first year investment banker must perform well and admirably during the probationary first two years to acquire a third year offer to move on to associate.
Third year offers separate the men from the boys, so to speak metaphorically, and this includes women. After two years of hard work, many investment bankers leave the investment world for other areas in the financial arena. Staying in for a third term and working hard, showing leadership, making a profit for the bank and developing a network of senior bankers who will back you in transactions is the key to being promoted as quickly as possible.
What is the difference between an Investment Banker Analyst and Investment Banker Associate?
Investment Banker Analysts:
- Help companies, government agencies and individuals raise money by issuing and selling securities.
- Raise funds, provide advisory help.
- Prepare all documents and a private placement memorandum (PPM).
- Ensure all government regulations are followed.
- Differ from venture capitalists as they do not themselves have the funds, but work with a network of investors.
- Ask for up front retainers to begin due diligence work for entrepreneur's innovative concepts to verify if investment is sound. 2/3 of the retainer will be used to determine if the client should proceed; a stop here can avoid many problems for the client and loss of capital in the future.
- Provide basic plans with how, where and what form of funding will be provided.
Investment Banker Associates:
- Do all of the above PLUS more.
- Manage all the Investment Banker Analysts.
- Communicate with Senior bankers.
- Have more contact with clients.
- Go beyond just the basic steps of the analysts, by building good reputation.
- Take the brunt of blame for any misdealing, failures and unsuccessful ventures.
- Go above and beyond analysing and look for cost saving opportunities for clients.
- Are in line for promotion to Vice President positions.
Those third year analysts who are promoted to associates, are expected to stay in the banking business. They have dealt successfully with the gruelling hours, and become 100% committed to investment banking for a career. They will still be on-call 24 hours a day, 7 days a week, but pay improves along with reputation. Obtaining an MBA is not required, but may provide a broader perspective in doing investment banking work. But the most important element in any investment banker's career that will promote him the quickest is showing a profit. Once the investment banker shows a profit for his bank, he will be noticed and promoted because of:
- Good reviews from clients.
- High profile deals.
- Great relationships in the business.
- Well liked.
Only senior VPs and Managing Directors (MDs) earn millions of dollars in the investment banking field, and to be promoted to these positions takes years of hard work, and rightfully so. VPs have an exceptionally hard job in two conflicting areas: execution and client building. The MD just has the responsibility of acquiring new clients, but along with the huge responsibility of overseeing everyone in the organisation.
To be promoted as quickly as possibly and continue in the Investment Banking business, one has to put in a minimum of two years hard work as an analyst. The third year will determine advancement for those who show leadership by mentoring first and second year analysts, look for cost effective solutions for clients, have a history of successful transactions, have a great deal of likeability and perform excellently. The third year offer will open the career path to move on to VP which could be anywhere from four to ten more years.
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