CAREERS IN FINANCE
CAREERS IN FINANCE
Your guide to finding a job in securities and banking
Each investment bank has its own personality. Some see themselves as cutting edge while others pride themselves on tradition. Some celebrate the art of the deal, while others laud diligence. Many have tens of thousands of employees in locations around the world, while others measure their staffs by the dozen and work out of a single office suite. Despite such differences, most share a common approach to their organization. So no matter where you work, you’ll probably encounter a similar retinue of job titles in similar spots on the organization chart.
In investment banking, the first rung on the ladder is the analyst. It’s in this position graduates invariably begin their careers. In the language of Wall Street, “analyst” is simply another way of saying “trainee.”
The work analysts do varies from division to division. In corporate finance, they’re the number-crunchers who study a firm’s financial reports and put together “pitch books” – the company and sector research that helps a bank win business. In sales, they hit the phones, calling (relatively unimportant) clients on various (non-crucial) matters.
Analysts assigned to the trading floor can’t trade until they’ve passed their regulatory exams. Even once they have, they’re heavily constrained until they prove they’re not going to press the wrong button and lose millions.
Most banks keep analysts in place for three years, then decide whether or not to renew their contracts. Of course at that point, analysts have the option of deciding whether they want to stay on or make their way in another firm. Analysts being considered for promotion must demonstrate an aptitude for leadership, the ability to present their point of view persuasively – even when it’s contrary to the views of others – and an understanding of the needs and motivations of both their firm and its clients.
“Associates” are either analysts who’ve made the grade or business school students who’ve joined the bank after earning their MBA. Typically, associates manage and allocate work to their own teams of analysts. Here again, they usually hold their position for three years.
Successful associates move into the role of vice president, and it’s at this level life starts to get exciting. While the title may sound daunting, don’t be deceived: Any large investment bank has scores of VPs in its ranks. In corporate finance, vice presidents manage the day-today affairs of associates and analysts, and usually have more frequent contact with clients.
Those working in sales, trading or research often have their own book of customers, more flexible risk parameters when trading, or their own list of companies to research. Because sales people and traders operate on their own, exceptionally talented trading-desk VPs can make more money than their firm’s managing directors. At this level, career transitions are more difficult. So, many VPs will stay in place for longer than the typical three years.
Those who don’t progress at one bank often jump to another, where they can join at the next rank: director or executive director.
For directors and executive directors – the titles are used interchangeably – the top rung of the ladder is within reach. These men and women are the right hands of investment baking are leaders, the managing directors. In corporate finance, executive directors help MDs handle relationships with client companies. In sales and trading, they call bigger and more important clients and place ever larger trades.
At the upper echelons of the investment banking hierarchy are the managing directors. These are the rainmakers who work directly with clients and bring in business.
As happens in any pyramid structure, few of those who started as analysts will make it to this level. One large bank promotes only 6 to 8 percent of its directors to managing director each year. At Goldman Sachs, the ratio of employees to managing director is roughly 16 to 1 (as of April 2009). At the end of the day, individual performance, revenue generation and client service are keys to moving up in the investment banking world. How long should it take? It’s not unreasonable for a hungry new analyst to become a managing director by his or her early thirties.