If you are an analyst or an associate in an investment bank, look up from your monitor for a moment, and glance over to the corner offices where your MDs sit. Ask yourself something: do they really deserve that basic salary of £350-500k ($535k to $765k)?
It can be a bit like looking into a primate cage at the zoo. One of them might be scratching his head, calculating the down-payment he’d need for his first yacht. Another might be making excuses to leave early for his house in the Cotswolds or the Hamptons. Maybe the offices are already empty - it's not unheard for people to go missing after client lunches.
When you're an analyst or associate, it's easy to reach the conclusion that you're working a lot harder than those at the top of the pile. So why on earth do they get paid so much? And why are there still so many of them?
Unfortunately, the people at the top of the layer cake always call the shots, and as the adage goes, turkeys don’t vote for Christmas. Rather than take a pay cut or a pink slip, bosses will always choose to squeeze the ones who work for them harder and harder.
Banking is a pyramid with the rainmakers at the top, but they couldn't do their own analysis and the reams of paperwork needed to close a large deal.
I’ve come across MDs who are allergic to Excel. I used to work for a certain senior banker who was regarded as a leader in his field of European consumer and retail companies. He understood the industry well, although maybe this was because he was the scion of one of the largest Continental luxury brands.
He was good-looking, polished, and, naturally, impeccably dressed. Clients loved him. It was a bit like having a meeting with a younger, suaver and more charismatic Mitt Romney.
Working with Frank was a nightmare. He would spend hours poring over pages of detailed analysis, running different scenarios, tweaking figures here and there, most of which would never make the final cut. This would have been fine if he did it on a computer screen like a normal human being, but instead he needed everything to be time-consumingly transferred from Excel spreadsheet into PowerPoint slide and printed out, at every single tiny turn.
After years in the industry, my take on MDs in banking is that there are two kinds – ones who create the illusion of activity (by running everywhere, speaking in rapid staccato and asking for everything to be done “yesterday”) and the ones who don’t, either because they can’t be bothered, or they don’t know how. The “busy” ones, tend to be better regarded, since they always appear to be juggling ten transactions, even if the reality is quite different.
Others with surprising longevity are really not that clever, but just hold important client relationships. They're expensive gatekeepers, who, sadly, are often key to closing deals.
There will always be a need for the so-called ”fillet steak” upper level of investment banks. And some MDs (a minority) do work extremely hard. I’m just not sure we need the rest of the chimps.
The author worked in investment banking for four years before escaping to the promised land of the buy side.