Typical Hierarchy of Investment Banks
For those of you who are willing to make a career in Investment Banking, It becomes important to be aware of the hierarchy of a typical Investment Banking firm. Usually, the hierarchy is common and similar through all Investment banks and even if it differs, the actual roles and responsibilities at each level remains the same. Salaries of Investment bankers can be as low as $70000 and can reach millions at higher levels.
If you want to know more about the skills required for Investment Banking, click here
Investment Banking Analyst
If you want to enter an Investment banking firm, fresh graduates from B schools at initial levels are referred to as Analyst. It takes usually two years for an analyst to be promoted to the position of an Associate. The roles and responsibilities for an analyst involves preparing research reports, financial models in excel and power point presentations for firm’s clients. You need to have a good academic score, outstanding credentials and eager attitude for being recruited by a famous Investment Banking firm and excelling further. An analyst earns between $100,000 and $150,000 annually.
Investment Banking Associate
After working as an Analyst for two to three years, you are promoted to Associate. You can also enter the rank directly, after graduating from a top B school. The work usually involves dealing and engaging with clients to solve their complex problems and they also work directly with analysts to prepare pitch decks and financial models. Analysts spend most of their time crumbling numbers. Analytical skills are required for their daily jobs to take place. They are even differentiated as a first year associate or a second year associate in some investment banking firms. The salary of an associate varies between $110,000 and $300,000.
Analysts and Associates spend most of their time in fundamentals of the job while VPs or higher positions focus on client management.
An associate after working for three to five years gets promoted to the position of Vice President. Analyst and Associates work under the supervision of Vice President and as a vice president, you are responsible to ensure that presentations and financial models are prepared in the right manner. Most of their responsibility lies in delegation, supervision and maintaining relationships with clients and higher level employees. Apart from this, VPs have an active role of dealing with the clients and therefore, the pay usually ranges between $150,000 and $450,000, being substantially higher than associates and analysts.
Director/ Senior Vice President
To become the Director or the principal, you need to work in the Investment Banking firm and rise up the hierarchy. It’s very rare to be directly appointed at this position directly from outside. The Director acts as a bridge between clients and the team at lower levels. They deal with a lot of clients throughout the day. Their responsibility is much different from a VP, analyst or an associate as the responsibility shifts towards prospecting for new businesses. Some Investment Bankers spend their entire work life as a director. Senior VP pay ranges between $250,000 and $1.5 million, inclusive of bonuses.
The highest hierarchy in the Investment Banking firm is usually the position of a managing director. To reach this position, you need considerable skills, a long period of time, leadership qualities and a good fortune. The major work revolves around the profitability of the bank. Most of the time is spent on soliciting new clients, meeting potential investors, and building relationships. They have to look at the political and economic factors that might affect the bank’s operations or clients and know how the deals are progressing. They make between $500,000 and $4 million – in a good year, their gross income may hit $10 million. If the bank is doing well, they take the credit in the form of higher compensation but also needs to take the blame when the bank doesn't do well.
All these positions and their respective roles and responsibilities are essential for the entire investment banking to perform well. We hope that you are aware more about your career path through Investment Banking.