Although research analysts may be promoted to the associate level, many investment banks also recruit candidates directly out of the MBA programs at the top business schools. These professionals are often hired as associates.
First-year associates usually get paid a base salary range of $80,000-$90,000. The average bonus paid to associates with less than one year of experience is over $20,000. Associates with experience of between one and four years can receive bonuses of $40,000 or as high as six figures (taking their total compensation over $200,000).
Many associates work in the position for three to four years. Although some associates have analysts reporting to them, associates still have to do a fair amount of grunt work. The hours are long and your job is still to make your boss look good. However, if you can add value to transactions or pitches or help the firm improve things in other ways, you can be on your way to moving up the ladder to VP or director.
As an associate, you’ll need:
– The ability to do Discounted Cash Flow (DCF) valuations, pricing of deals, and due diligence
– A complete comfort level with Excel spreadsheets
– Great interpersonal and networking skills
– The ability to manage subordinates (analysts)
– Stamina, because you’ll still be working 12- to 18-hour days for weeks at a time
The demands of the job and the long hours do lead to a fairly high attrition rate among associates. Many associates report working 80-100 hours a week. It’s common for your co-workers to become your family. Many investment bankers spend nights in the office.
The training and the experience of working at such a high level of finance does provide lucrative opportunities for those who wish to pursue other careers. However, those who excel in this environment can make a great deal of money in a short period of time. You are often promoted based on performance. After four years as an associate, you can be promoted to Vice President. Stay another four years and you could move up to Senior VP or Managing Director.
Next time, we’ll look at some of the specific skills requested by employers who are looking to hire investment banking associates.