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How to Get a Decent Bonus and a Full-Time Return Offer in Investment Banking

Help I'm thinking about my career

Every year, a good number of investment banking analysts (who want to get promoted) are given a mediocre bonus and told that their analyst program will not be extended past the second year. This is usually a sign to start looking elsewhere for employment.

Generally speaking, the promotion from analyst to associate is not a transition into a revenue generating role (no revenue assignments until the middle of the Vice President level), just a signal that the quality of work is adequate, attitude is good and maturity has been demonstrated where a banker can be trusted with delegating work (and ensuring quality control), mentoring junior staff and more prominent client interaction.

As such, for analysts, this means keeping your head down and putting out reliable work. What this means is that analysts need to keep mistakes limited and own up to and rectify mistakes as soon as they are discovered.

For all intents and purposes, banks find it ideal for analysts to get promoted as they are more qualified than freshly minted MBAs (and cheaper as new hires must be trained and put through the orientation program) due to the advantage of three years of corporate finance work experience and a demonstrated capacity for the rigour for investment banking. So analysts should aspire for a promotion letter after the completion of the second year even if they do not want to continue as investment bankers, as private equity and pension funds will treat the promotion in-kind with positions at their firm.

Investment Banking Analyst Mistakes

There are acceptable analyst mistakes and unacceptable analyst mistakes – however, if an acceptable analyst mistake is repeated, it becomes an unacceptable analyst mistake.

Should mistakes be discovered by the analyst, they need to be brought to the attention of senior staff at once, provided that they have been disseminated broadly either internally or to clients. Owning up to mistakes and making amends is key to being a team player and demonstrates a sense of urgency required to excel on the job. Should a mistake be sufficiently large, not identified and subsequently a mark on the firm’s integrity of workmanship, this could be grounds for termination.

At the junior level, there is a learning curve and the learning curve is exceptionally steep, especially when compared to other entry-level careers. To receive a top-bucket bonus, analysts must be meticulous and offer precocious insight.

There is ample functionality in Word and Excel that analysts would not have been exposed to during undergraduate business school, and many junior professionals are not familiar with terms such as blackline/redline and features such as “track changes”. On the trading floor, junior professionals need to be able to pick up on how to operate a phone turret quickly.

An acceptable mistake is when the analyst does as instructed but the managing director deems that a number does not look right and that the analyst’s thought process in getting to the number was wrong. The analyst will figure out the appropriate multiple and emulate the process going forward.

Unacceptable mistakes relate to attention to detail. These include:

  • Not incorporating all changes when “turning” comments (the changes that a senior member of the team gives you on a marked-up printout of your PowerPoint/Excel)
  • Forgetting to update FactSet/Bloomberg pulls by refreshing (right click and refresh often – or use Alt + C + R + C)
  • Not translating Excel changes to your pitch book
  • Not changing the company name when you copy source files for a new client

These mistakes are a great way to get a bottom-bucket bonus or the lack of a return offer (for summers) or an extension to associate.

Investment banking is a relationship business that entails a lot of team work (hence the preference for undergraduate business programs with a participation and team case study focus, namely Ivey). Analysts who do not pretend to like the work and smile often will not be favored. This is not an endorsement of being insincere, it is an endorsement for being considerate – you are not the only person having a rough day and negativity is contagious.

There is no such thing as a stupid question is not applicable to this profession. If the answer can be found on Google, an acerbic response can be expected from higher ups. Time is money and compensation is a consideration for most employees. There is room and appreciation for good questions, and senior staff appreciate intellectual curiosity (when the answer is not easily found on a search engine).

Complaining and Pushing Back to your Associate

There is a difference between complaining and pushing back when workload is heavy or just to manage political situations appropriately.

Complaining is generally a no (see above pertaining to negativity), whereas pushing back in a diplomatic way is necessary in not being a yes man and accordingly taken advantage of.

Reasons to push back on work include:

  • The work being stupid and aimless, effectively not adding reasonable value to the client or internal parties (fine line here, which requires judgement that will not be found on this website)
  • A lack of bandwidth as the analyst is already heavily staffed
  • The work being owned by someone else that is trying to be passed off

Depending on the level of authority where the work stems from, sometimes continued pressure means that the work will have to be done no matter how stupid it is.

The ability to push back also comes with experience and general respect. A brand new analyst pushing back will definitely be stomped on – anyone who has not been through the process is not allowed to unilaterally make decisions. A high quality analyst who has over half a year of experience may start to have more leverage, and a rockstar analyst with external options and surefire promotion prospects will have much more autonomy. A second year analyst who continues to make mistakes will likely not have much backing if he pushes back.

Face Time and Vacations in Investment Banking

During every recruiting session, Managing Directors will give a little speech about how “there is absolutely no face time on my team; I’m not here to babysit you, I just want work to be done well and done fast. How you choose to manage your time is on you.”

Face time is often associated with corporate finance jobs, and the reality of the situation is that any variant of the above speech is a blatant falsehood. Even if the MD does not care about face time, any analyst who kites earlier than 8 Monday to Thursday will whether warranted or not have the rest of the pit whining about their absence unless they were expressly dismissed by a senior staff member as they have been working extremely hard on a deal.

This is not a bad thing – corporate finance is not a profession taken up for people who assign great value for work-life balance – corporate finance is about learning as much as you can in a pressure cooker environment and being compensated materially higher than other entry-level roles. There is always something to do or help out on, whether models for one’s own edification (practising LBOs) or reading equity research.

Vacations are fairly misunderstood in Investment Banking. Here are some general rules:

  • Vacation time is not guaranteed until take off (and sometimes after take off), so buy flight insurance
  • Two week vacations are generally unacceptable outside of slow periods (Summer, December/January)
  • No vacations in your first three months on the job (this looks really bad) and we would argue six
  • Vacations cannot exceed two weeks

Anyway, hope that helps. If this is too much, it is possible investment banking is not a career of choice and you can consider doing something easier, like starting a website.

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Matt
ex investment banking associate
https://www.linkedin.com/in/matt-walker-ssh/

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