If you’re looking to get into Investment Banking I’m sure you’ve done an incredible amount of research about what your role will be like. But have you ever wondered what the rest of the investment banking food chain looks like? This post will hopefully shed some more light on the actual workings of the investment banking world
This post will cover the lives of the Directors…who are they, where do they come from, what do they do and what is their life like?
What are Investment Banking Directors?
Directors are called different things at different banks. At some banks they are called Executive Vice Presidents and at others they may be called Junior Managing Directors but the role is effectively the same. They are not actually a ‘Director’ in the traditional sense – that is they are not the Director on the board of a company – it is just a title which is conferred.
Investment Banking directors have 2 primary roles. They are expected to both generate fees for the bank and to execute deals which they have generated and which the Managing Directors above them have generated.
In this way they are in a kind of ‘transitionary role’ between The Vice President role which is all about execution and the Managing Director role which is all about client relationships and winning the deal.
What do Investment Banking Directors Do?
The amount of time that a Director spends winning deals vs executing deals is almost completely dependent on how long they have been a director and how many of their own clients that they have.
Junior directors that have just been promoted from Vice President typically do not have many clients of their own (if any) and are pitching their hearts out to potential clients. They are also responsible for executing deals that were brought in by their Managing Directors. This execution role is more about client interaction than it is about the nitty gritty that the Vice Presidents and below are involved in. They are responsible for keeping the client happy and for making sure that the clients wishes are carried out.
Directors that want to make MD however have to generate leads, deals and bring in clients of their own. It is a challenging task for a director to create a space for themselves without treading on the ‘patch’ of other senior bankers at the firm. In order to bring in clients and generate fees Directors spend a lot of their time pitching for work. They will pitch for anything and everything and I have never seen a deal too small or irrelevant for a new Director.
As Directors get more senior and build their client base they typically pitch less and have a base of clients which will hopefully start to generate fees for the bank. The aim for a Director is to have enough of a client base and to be generating enough fees on a consistent basis so that they are promoted to Managing Director.
What is the work life balance of a Directors like?
Directors are so close to the top of the Investment Banking hierarchy that they can see the light at the end of the tunnel. By the time a person is promoted to Director they effectively control their own working hours. They work as long or as little as they want to.
Most directors have families of their own and are willing and able to work from home so it is pretty common to see them leaving the office at 7pm. They are normally contactable by email or by phone if a junior banker wants to check something but effectively they have checked out and will look over the junior bankers’ work first thing in the morning.
Some directors do not choose to take this easy path though. They are looking to make a name for themselves and get promoted to Managing Director in an incredibly short period of time. These directors are a nightmare because they work the same hours as the junior bankers and generate more work than you can possibly imagine. Worse they don’t give the junior bankers the space they need in the evening that they need to complete the work.
Directors get paid an obscene amount however the absolute level depends on the fees that the Director has generated over the prior year. Job security at the Director level is almost non-existent – they have to generate fees or risk being fired which creates a type of stress that junior bankers do not have to deal with.
Where do Directors come from?
Directors come from one of two routes: they are either promoted from VP or they lateral in from another Investment Bank. I have never seen or heard of a person who became a Director of an Investment Bank in another way.
Unlike the junior roles at the Investment Bank there is often not a ‘right of promotion’ to Director from VP and banks will often keep people at the VP level for significantly longer periods of time until they are confident that they can do the role. It is for this reason that people with significant industry experience that enter Investment Banking later in their career typically start at the VP level (and not the Director level where you would typically expect).
Directors also often transfer between Investment Banks themselves. They do this to advance their career or because they have been fired or told that they will not be promoted at their old investment bank. I have included greater detail on this path below.
Exit Opportunities for Directors
Director is the first position in the Investment Bank which is not an ‘up or out’ position. That is – it is entirely possible to stay a Director for 10 years and never be fired or promoted to Managing Director. Not every director actually wants to be a Managing Director. Some actually prefer executing deals to schmoozing with clients and you see these people stay at the director level for a very long time.
Most Directors, however, are trying to get promoted to the final rung in the Investment Bank. In order to do so they typically have to generate a certain amount in fees per year consistently. If they are unable to do this they either stay at the same level or are fired. It is quite common to see Directors jumping Investment Banks in order to get a ‘fresh start’ or to find a bank where their sector is not as heavily covered so that they can create space for themselves.
It is reasonably uncommon to see a director leave investment banking and do something else entirely (although it does occasionally happen) as the number of places willing to pay a similar amount and confer a similar level of seniority are extremely limited.