We have several posts speaking to how a new analyst should behave on the job – and this determines the quality of time someone will have at an investment bank.

It is not easy to get fired by an investment bank, but being pegged as a “bad analyst” generally means that the black sheep in the office will be ostracized by other members of the analyst and associate pit and be given bad work.

These are the main negative consequences:

Lower Bonus or Variable Compensation

Generally speaking, the band between the best analyst and worst acceptable analyst maxes out at $30,000. It is very hard to be the best analyst who gets an Outstanding/Exceptional/Transcendent rating (and is not necessarily worth your time, nor does it mean that you learn the most about corporate finance) and the gap that most people actually fall under is ~$20,000. So if the top bucket Analyst II gets $220,000 all in, a more middling performer may get $190,000. However, the incremental $20,000 you can get for not being bad at your job is always a plus, even if it is $10,000 after tax.

The problem is when they start handing out the “F*** You Bonus” which is around $30,000 and basically telling people to get a new job. There are obvious benefits to not being handed this bonus. You will probably not get a good referral to your next job.

No Promotion Letter to Investment Banking Associate

Obviously this does not apply for those who ended up in top-tier/megafund private equity firms right out of the gate (who are by nature generally good investment bankers as they are go-getters and autodidacts), but for the majority of mid-market and more comfortable private equity firms that exist, they will match title when hiring on an ex-investment banker.

So if Private Equity firm sees that an investment banker has been there for two years, they will generally wait until they are an associate or have it in writing that they are to be promoted. For firms that need to hire quickly, they may ask their friends in the bank about whether this analyst interviewing is viewed favorably by senior staff. If there is no confirmation, the analyst will be offered an analyst title – which means another promotion hurdle, more boring responsibilities and and increased workload.

Social Aspects of Investment Banking

Investment banking is all-in-all a terrible, soul destroying job and the one thing that makes it tolerable is the cameraderie in the analyst/associate pit. Analysts who just do not have the intellectual horsepower to do well at the job, but are the first one in and the last one out grinding and learning hard will usually have some sympathy lobbed at them and be included in events. People who refuse to pull their weight are generally slowly cut out of banter and discussions even if they are otherwise very entertaining people.

There are always exceptions, but this is the general rule. There are investment banking pits with just terrible cultures and there are pits where the useless analyst is found endearing and ends up getting a proper send-off once the senior bankers finally get fed up and tell them to leave.

Learning Corporate Finance

Although “I want to work as hard as I can and learn as much as I can” is not a suitable answer for why someone wants to do investment banking, part of the reason is to absorb a ton of information and have a skillset that is valuable to any S&P 500 corporate finance team and prove that the professionalism, work ethic and social grace are there (ignoring any rising up the bank rank or private equity dreams).

Getting Put on Live Mergers & Acquisitions Deals and the Best Files

An extension of getting the best learning experience from a finance perspective, analysts want to be on live deals that end up in the news. If Pepsi and Coke have a merger of equals for $400 billion dollars (for the less informed, this is never going to happen), the analysts who work on this are going to get a tombstone/deal toy, resume booster and girls will fawn over their LinkedIn profile.

The best senior professionals with the most deal experience/respect in the industry will be on calls here and the higher level thinking exposure is fantastic.

However, it takes time to build trust in an investment bank. Trust is difficult to create and easy to destroy. Analysts that consistently turn in work for rainmakers at the bank will be handed these responsibilities because the Managing Director specifically requests for them.

Files from Executive Directors who are making a final push for MD that will go nowhere except serve as a massive time sink until 3AM every night are assigned to bad analysts because the staffer generally knows what is going on.

Other Investment Banking Perquisites

Want to go to client meetings (with free food), buy side account meetings (with free food), closing dinners (with free food and ample alcohol), investor conferences, football and baseball games in the corporate box and fly business class to Latin America to conduct site visits (warning, this gets stale real quick – business travel is awful even with the JW Marriott stays and overpriced brunches)?

Good managing directors and executive directors do appreciate the junior analyst pool and will offer trinkets such as bottles of Cognac or allow them to use their account at private clubs or Michelin Star restaurants. They will also take them out for fancy lunches or pay for ski trips and other offsites.