Top 5: High Profile Roles On Wall Street And The Options They Give You

Investment Banking Analysts/Associates

Analysts should think of themselves as foot soldiers within an investment banking group. Your job is to roll up your sleeves and do the hard grunt work. Demonstrating that you are someone who can work long hours and take ownership for every piece of work that you produce is the key to winning during an analyst program.  The best way to set yourself apart as an analyst is to make the least errors possible on your work (i.e. produce “high quality” work). Analysts that can demonstrate good communication skills and ask thoughtful and insightful questions are also able to stand out. The analyst program is generally seen as two-years of “basic training” (with an option for a third year in some cases). Keeping a positive attitude about the work you are doing is also very important. After 2-3 years in an analyst program, it is very common for young professionals to be accepted into top business schools or get jobs in the corporate development or business development group at larger companies. Analysts can also be promoted directly to associates in rare cases. Overall, an analyst role prepares you for a multitude of other jobs because of the core skills gained.

Associates MBAs, law school grads, and others who have completed graduate degree programs begin their career in investment banking as associates. Unlike analysts, associates are generally placed in a specific industry group right away. However, working hard and staying late also serves associates well in their first year. Those who are able to mentor and help train analysts also stand out. Associates get more client facing time in the form of: due diligence meetings, drafting sessions and IPO roadshows. It is more important for an associate to have sharp communication skills and perform with confidence and poise in front of clients. Associates are promoted to VP after 3 years (sometimes up to 5 years).

Exit Opportunities for analysts and associates in investment banking are varied. Private equity, hedge funds, buy-side firms, corporate development at large companies, venture capital, or business/law school are the typical paths.

3 important things to note:

1. If you want to go into private equity (PE) then get into the M&A or Financial Sponsors group for a sure bet. You can get into PE from an industry group, but your choices will be limited to only PE firms in that industry. In general, M&A will leave the most doors open to you after 2 years.
2. If you want to get into venture capital (VC) then get into the technology group. However, only later stage VCs really care about investment banking experience (for example, the firms that invested in Facebook in 2009 — 5 years after it started!) If you are interested in VC because you want to find the next big thing then it’s probably best to go work for a startup as opposed to an investment bank. (For more info on the stages of VC click here).
3. When applying to b-school or law-school from investment banking, it is extremely important to make yourself stand out because you will have a lot of competition. These schools are constantly trying to diversify their student body and make sure they get people from all different backgrounds. You need to demonstrate an interest in doing something other than going back into banking/corp law to make more money.

Research Associates / Analysts

Research associates and other junior professionals (sometimes there are “assistant” roles) need to have good excel/financial modeling skills, but they also must be good writers. The research reports generated by analysts are usually handed down to an associate for editing or early drafting. Early on in their careers it is extremely important for research associates to build “quality” financial models with reasonable assumptions. In order to be promoted, a research associate must eventually become good at communicating with their clients (both investors from outside the firm and salespeople from inside the firm). They will have to field questions about what is going on with a particular company’s stock or bond. Additionally, they may have to assist in a due diligence mission to help with the next report, and they will have to ask pointed questions of company management.                         

Research analysts begin almost the same way associates do. They cover a variety of industries and perform a lot of writing and modeling to support the senior analyst. A more senior analyst is given a specific set of securities to cover and they essentially “own” those securities or that industry group (i.e. Restaurant analysts cover the stocks for McDonald’s, Wendy’s, Burger King, etc.). Their job is to create a series of reports that explain what is happening with a particular stock or industry. They also give recommendations about whether one should BUY, SELL, or HOLD a security.

To succeed as an analyst you must gain the respect of the investment bankers and sales/traders within your bank. If they do not trust your research and analysis, then your entire reason for existing is called into question. It is important to put out careful research and analysis because the other groups depend on this data to make recommendations to the firm’s clients (individual and institutional investors) and those clients are the ones who pay the firm. Which is how you get your salary!

It is also important to note that whenever a research analyst makes a call, somebody will be upset. For example, if you recommend against an IPO that you know will be bad – the investment banker will be unhappy because that is how his group makes money. However, the salesperson will be happy because that saves them from recommending a bad deal to a client. In another example, if you recommend that a company’s stock should be sold (sell rating) because you expect it won’t do well – then that company will be mad. If they used your firm for their their investment banking services, they may take their business elsewhere. In sum, good research analysts are like skilled politicians.

The most common exit strategy for research associates is to move to hedge funds, business school, the buy-side (mutual funds, pension funds, asset managers), or into institutional sales with an investment bank. Being promoted from associate to analyst is a waiting game. Analysts do not leave their post very often and there are not many of those jobs so you may have to wait until an analyst retires or moves on.  

Salespeople

Salespeople must have strong interpersonal and communication skills. Your job will be to entertain and make clients feel happy. To succeed in this role it is all about your personality and fitting into the group you work with. Depending on the firm, you will either be asked to “sink or swim” by being given new accounts to handle all on your own very quickly. However, larger firms give a formal training period (1-1.5 years) and handoff process to new sales assistants or associates.                                  

Success for salespeople means knowing how and when to contact their clients. The key here is to know each of your clients very well (what are their goals? what industries do they focus on? etc.) Also, note that your clients will be institutional investors while the private client group handles individual investors. Additionally, salespeople should always provide value to the client and not come off as though they are wasting their time. Providing timely, useful, and insightful information to the client is the ultimate goal. Sales people are promoted based on their own individual performance AND the performance of the group. If you are pre-MBA, it is harder to attain a management position in sales, but not impossible.

Traders

Traders’ formula for success is less concrete. To be the best at trading, it is important to have a good “market instinct”. This is the gut feeling you get about how the market will move. Of course, every risk that is taken within an investment bank has technical analysis and a lot of numbers to back it up. Therefore, being extremely comfortable with numbers is also a must. This role is not for those with a weak stomach because major decisions have to be made on the fly with limited information. Traders need to be well read and understand what drives the market and what external factors are affecting the market on a given day.

To be one of the best traders, an instinct about the market is key. Some traders look at technical indicators and numbers until they are blue in the face, but without a gut feel on how the market moves, they will never rank among the best. A trader must make rapid decisions at times with little information to go on, and so must be able to quickly assess investor sentiment, market dynamics and the ins and outs of the securities they are trading.

The Private Client Associate

The Private Client Associate must have a big picture understanding of all major aspects of the market and be able to communicate wide variety of investing strategies to clients. This person must know a lot about a lot – stocks, bonds, derivatives, etc. To succeed in this role it is essential that deep down you be a good salesperson, not necessarily a good data analyst. The end game for the private client group is to find and retain clients who have assets to manage. Much like salespeople on the trading desk, private client associates must understand their clients really well for this to go well. They must understand their goals and preferences so they can make the right recommendations.