Want to find out who Investment Bankers really are, where they come from and what they actually do at the various levels? Well that is what these series of posts is about. From the lowest analysts to the Managing Directors…I’ll cover it all. This post will cover the lives of the Associates…who are they, where do they come from, what do they do and what is their life like?
What are Investment Banking Associates?
The associates are on the second rung of the investment banking ladder and as such their lives are marginally better than The Analysts. If you think of the Analysts as the powerhouse of the investment bank…i.e. those that do most of the grunt work…then associates are the ones that feed this engine and keep them ticking over. The associate’s primary responsibility is to make sure that every piece of work and analysis is done perfectly and is exactly what the senior banker wants. As a result they are constantly checking and supervising and directing the analysts.
They are responsible for everything the analyst does and if anything goes wrong the blame normally rests with the associate, not the analyst. As a result, the best associates are all over the analyst’s job as well as their own but they are typically spread far too thinly to actually do any of the analysts’ work. The combination of expectations, tight deadlines and an overloaded life makes the associates the most stressed people in the Investment Bank
What do Investment Banking Associates Do?
The associate years are not as rigidly structured as the analyst program so I will not divide it up by years. Generally speaking the associate program lasts for 3 – 4 years depending on the investment bank. The lower level associates, especially those who have been promoted from the analyst program are in a weird transition phase. They are still treated
as an analyst by both the senior and junior bankers but are expected to take on more work and responsibility. They are expected to do the work of an analyst as well as lead analysts (who rarely trust them) on projects where there is one allocated to them
As the associates settle into their role and start to build some credibility with both the senior bankers and the analysts their role tends to become less technical and more supervisory. As they become more senior they stop working with first year analysts (whose work needs to be checked line by line) and more with second year analysts whose work is of a much higher standard but who tend to need to be ‘managed’ and motivated more.
They also start to develop client relationship skills. All the modelling related tasks, questions and discussions with clients generally go through the associate. They also start to sit in on more strategy calls with clients and are occasionally called on to offer their views on pieces of analysis.
What is the work life balance of an Associate like?
The work life balance of an associate is typically better than that of an analyst…but that isn’t saying much. They still work incredibly long hours (although it does tend to be less constant than analysts) but there is less of a requirement to do face time. Associates typically have the same problem as analysts when it comes to balancing work and their life and burn out and deciding to do something different is quite common among associates.
The quality of an associate’s life is directly correlated with how much their analysts like them. I can guarantee you that every analyst does work for an associate they like before the associate they don’t like (regardless of time pressures). This ‘likeability is directly related to how the associate treats the analyst and also, importantly, how much they teach and mentor the analyst.
For some reason associates also seem to get treated worse from the senior bankers. Perhaps it is because the turnover of analysts is so high that senior bankers are very aware of the fact that some of these analysts will become clients. Associates are typically seen as being ‘bankers for life’ and do not have this same protection from the wrath of the senior bankers.
The associates are always walking a rather stressful line of having the senior bankers demand work and trying to keep their analysts onside. The best associates are both technically excellent people managers…able to manage up and down.
Where do associates come from?
Associates come from one of three main sources:
Those promoted from the analyst ranks
- These are typically those analysts who have decided that they want to be a senior banker or those who haven’t decided what else they want to do
- These associates are typically prized at investment banks because they can do the job of an analyst and already know how the system works at the particular bank they are at…they don’t need to be trained up or broken in
- However they also tend to be the most bitter and hardest to manage and they work the analysts a lot harder
Other financial professionals who lateral into Investment Banking
- A great way to get into Investment Banking is to do some other finance career for a few years and then lateral into an associate position…you avoid the analyst years and get into a good career path to become a senior banker
- People typically come from accounting firms, boutique investment banks and sometimes lawyers with a lot of M&A experience
- They are generally technically weaker than the analysts so they face some serious pain getting up to speed. They also get much less analyst support during this time because no analyst wants to waste their time showing an associate what they are meant to be doing
- Conversely they tend to be much nicer and less bitter and last longer at the bank
People who have done an MBA after working in other professions
- All sorts of people enter investment banking after going back to school to do an MBA
- They are generally the least experienced of all the associates but for some reason think they know what they are doing. Analysts avoid them like the plague and their life sucks as they have to come to terms with the Investment Banking world with no junior support
Exit Opportunities for Associates
Exit opportunities for Investment Bankers start to narrow as they become more experienced in Investment Banking. It is easier for junior associates to exit than it is for senior associates. They often have fewer opportunities than analysts because some firms (especially those in Private Equity) are very focused on the experience that investment bankers have when they hire them.
The hardest thing that associates have to deal with mentally when leaving is the pay cut. An associate will almost always take quite a large pay cut when leaving banking as there are few firms that will pay associates a similar wage for the level of experience that they have.
Many that enter the associate program are not as focussed on exit opportunities as analysts are. They have typically thought it through a lot more and have decided that they want to be a senior banker and so the attrition rate for associates is a lot lower than it is for analysts.