Imagine stepping into a fraternity house—a place of clear hierarchies, specific rituals, and the allure of both rewards and added responsibilities as you climb the ladder. This is a fitting analogy for the world of investment banking. But, much like the fraternity—or even the mafia—staying in the game too long might lead to unforeseen challenges.

In this article, we’ll explore the upsides and downsides of a career in investment banking, covering the work, hierarchy, promotions, lifestyle, hours, salaries, and exit opportunities at each level. But before diving into the nitty-gritty of this financial fraternity, let’s start with the basics.

What Do Investment Bankers Do?

Investment bankers play a pivotal role in advising companies on major corporate transactions, including mergers and acquisitions (M&A), as well as debt and equity issuances. When we say “advise companies,” we mean collaborating with management teams to market and sell companies, identify potential acquisition targets, and facilitate deals. Additionally, investment bankers recommend the best terms and timing for capital raises, subsequently marketing those debt or equity issuances to investors.

The role is a mix of advising, sales and marketing, and high-stakes negotiation—all on a grand scale. For more detailed insights, check out our articles on mergers and acquisitions, pitch books, and how Managing Directors win deals, along with our overview of the investment banking industry.

Why Pursue a Career in Investment Banking?

Many are drawn to the investment banking path for the lucrative compensation—by mid-levels, you could be among the top 1% of income earners in many regions. Others are attracted by the thrill of deal-making and negotiating with influential figures like CEOs and Board Chairs. Some are fascinated by the intricacies of deal mechanics, while others see investment banking as a stepping stone to coveted exit opportunities, especially for junior roles like Analysts and Associates.

Investment Banking Career Requirements

The investment banking career path tends to attract individuals who are:

• Highly competitive and willing to endure long, demanding hours.
• Extremely detail-oriented.
• Adept at reading, writing, and math, although exceptional skills in these areas aren’t always necessary since minimal “real math” is involved.
• Interested in deals rather than just following the markets or investing in public companies.
• Focused on specific exit opportunities that often require investment banking experience, such as private equity or corporate development.

Junior investment bankers are often recent graduates from prestigious universities, such as Ivy League schools in the U.S. or institutions like Cambridge and Oxford in the U.K. They typically complete finance-related internships during undergrad, intern at a major investment bank, and secure a full-time offer from that bank.

Alternatively, candidates can break into the field if they are working in a related area, such as valuation at a Big 4 firm or corporate banking, or at the MBA level if they attend a top business school and have the right experience.

Regardless of the entry point, the essentials to break into investment banking include:

• A relevant sequence of work and leadership experience for IB roles.
• Strong academic credentials (grades, test scores, and university reputation).
• Extensive networking and interview preparation.
• A unique trait or experience that showcases your personality beyond the technical skills.

For more, see our comprehensive guide on entering the investment banking industry and our articles on investment banking recruiting.

Or, dive into our IB Interview Guide for specific questions and technical preparation:

Course-1: IB Interview Guide – Secure investment banking offers with 578+ pages of detailed tutorials, templates, sample answers, quizzes, and 17 Excel-based case studies.

It’s nearly impossible to enter investment banking at the mid-levels, so you either start early—right out of undergrad, an MBA program, or as a recent graduate—or much later on if you’re already a senior executive in another industry.

The Investment Banking Career Path

The investment banking career path and corporate hierarchy are well-defined and have remained consistent over time:

• Intern or Summer Intern – Assistant to the Analysts
• Analyst – Entry-Level Professional
• Associate – Experienced Professional
• Vice President (VP) – Manager of Professionals
• Director or Senior VP (SVP) – Manager and Rainmaker-in-Training
• Managing Director (MD) – Rainmaker

While there are variations in titles, this structure forms the foundation of the investment banking career path.

Investment Banking Analyst Job Description

As an Analyst, you’ll handle most of the Excel and PowerPoint work, along with administrative tasks such as tracking buyers and sellers, managing the data room and deal documents, and responding to requests from clients and potential clients.

Analyst hours are long, typically 70-85 hours per week, though not all of that time will be spent working. You’ll face less intensive hours on weekends, and sometimes you’ll get a protected weekend off. Promotion to Associate usually occurs after 2-3 years, though many banks have shortened this timeframe to encourage long-term employment.

Exit opportunities are vast at this level, especially at large banks, with options including private equity, hedge funds, asset management, corporate finance, corporate development, venture capital, and more.

Investment Banking Associate Job Description

As an Associate, you’re a more seasoned version of the Analyst, with more life experience, higher earnings, and a slightly more interesting workload. You’ll oversee Analysts, check their work, and occasionally step in to handle more complex tasks. Associates also attend more meetings and interact with clients, although they rarely have speaking roles.

Promotion to Vice President generally takes 3-4 years, but it’s harder to achieve due to the competitive nature of the role. Exit opportunities are more limited for Associates, especially in private equity or hedge funds, requiring a proactive and targeted approach.

Investment Banking Vice President (VP) Job Description

Vice Presidents shift towards a “project management” role, working closely with Directors and Managing Directors to implement their requests and guide Analysts and Associates. VPs enjoy more client interaction and are often tasked with pitching deals. However, balancing deal execution with relationship-building can be challenging, making this one of the toughest roles in the industry.

Promotion to Director typically takes 3-4 years, but it’s easy to get stuck at this level if you don’t show potential to become a rainmaker. Exit opportunities are even more limited than for Associates, often leading to lateral moves within the industry.

Investment Banking Director Job Description

Directors, also known as Senior Vice Presidents (SVPs), bridge the gap between VPs and Managing Directors. Their role involves a mix of relationship development and deal execution, with a stronger focus on winning clients as they progress. The promotion to Managing Director generally occurs after 2-3 years, assuming strong performance.

Exit opportunities at this level are limited to lateral moves or industry changes, though some Directors may transition into private equity or buy-side roles if they’ve developed strong client relationships.

Investment Banking Managing Director (MD) Job Description

As a Managing Director, your primary goal is to generate business. MDs spend most of their time meeting companies, developing relationships, and winning clients. They may also be involved in critical deal negotiations. The hours are less intensive, but the job requires significant travel.

MDs who leave the industry often do so to pursue different interests, retire early, or focus on family. While some may transition to other high-level roles, many choose to step back from the demanding nature of the job.

Careers Beyond the MD Level: Group Head, COO, CEO, and More

Beyond the Managing Director level, there are roles such as Group Head, CEO, and COO. However, these positions are highly results-driven, with success depending on a proven track record of generating revenue or successful investments.

Investment Banking Career Pros

To summarize, here are the key advantages and disadvantages of a career in investment banking:

Benefits/Advantages:

• High salaries and bonuses at all levels.
• Potential for rapid advancement if you perform well.
• Access to top exit opportunities, particularly for Analysts.
• Industry stability, as relationship-based roles are less likely to be disrupted by technology.
• Exposure to a wide range of companies, industries, and management teams.
• Valuable skills that are broadly applicable to different industries and roles.
• Performance-driven advancement, especially at higher levels.