The Investment Banking Associate: Senior Banker in Training, or Glorified Spell Checker?
If you’ve ever Googled a term like “investment banking associate”, hoping to discover what banking is like at different levels, you’ve probably come to a sobering conclusion:
The vast majority of “day in the life” stories are about Analysts.
There’s always been less information about Associates, VPs, Directors, and MDs, and that hasn’t changed much over time.
That’s partially because more senior bankers aim to stay in the field for the long term.
And if they do leave, they’re more likely to take a corporate finance job at a normal company or do something else “corporate,” where writing a tell-all account is not an option.
So, in light of this continued dearth of information, here’s our full run-down on investment banking associates, from the job description to exit opportunities:
The Investment Banking Associate Job Description
In the investment banking career path, Associates are one rung above Analysts in the hierarchy.
While Analysts are usually recruited from top undergraduate universities, Associates are promoted internally or recruited from top MBA programs.
Just like Analysts, Associates also spend time on:
- Excel-based financial models and valuations.
- PowerPoint-based pitch books and client presentations.
- Confidential Information Memoranda (CIMs) and other marketing documents for clients.
- Questions from clients and other team members.
- Office politics and surviving abusive/crazy senior bankers.
So, what’s the difference?
If you’re an Associate at a large bank, the main differences are:
- More “Checking” and Less “Doing” – You will spend more time checking Analysts’ work in Excel and PowerPoint, and less time doing it yourself.
- More Communication and Project Management – You will also process instructions from the VPs, Directors, and MDs, and relay them to the Analysts; on deals, you’ll have more responsibility for following up with different parties and making sure the documents are in order for each step of the process.
- More Client Interaction – You’re more likely to attend meetings with clients and potential clients (pitches), and when a client has questions about the details of a model or presentation, they’ll go to you.
- More PowerPoint and Less Excel – And when you do the work, you’ll be in PowerPoint more often, drafting and editing presentations. You may still do some Excel work, particularly for more complex models, but you’ll almost certainly spend more time in PowerPoint.
The Associate role also varies significantly based on bank size, group, and seniority.
For example, if you’re at a regional boutique bank where the deal team consists of you and a single MD, you will act more like an Analyst, and you’ll start and finish the models and presentations.
But if you’re a third-year Associate at a bulge bracket bank, and the deal team consists of you, an Analyst, a VP, and an MD, you’ll be more like a “project manager.”
The bank knows that you can do the work; now they’re assessing how well you can manage teams and work with clients before they promote you to the VP level.
Investment Banking Associate Hours
Associates have somewhat better lives than Analysts, but “somewhat better” means 65-80 hours per week rather than 70-80+ hours.
If you’re in a capital markets group, the hours might be reduced by 10-15%.
You will still be on call 24/7, and you’ll still have to respond to urgent requests, but you have it a bit better than Analysts because urgent requests usually go to them first.
Yes, banks now offer “protected weekends” and other lifestyle improvements, but it’s still a demanding job that will minimize your social life, hobbies, and activities for at least a few years.
Why Would You Want to Be an IB Associate?
Remember that ancient meme about “What People Think I Do / What I Really Do”?
The logic in that meme applies readily to IB Associate roles:
- Why Banks Want to Hire You as an Associate – They want you to be a long-term employee and move up the ladder within investment banking. In exchange for your long hours, they’ll pay you well, train you, and groom you for the senior levels.
- Why You Actually Want to Be an Associate – Many students and professionals who recruit for Associate roles do it for the exit opportunities in private equity and hedge funds – directly contradicting what banks want.
- Why You Should Want to Be an Associate – You should want to do it because 1) You want to stay in IB long term; or 2) Because you’re interested in another role that’s a more viable exit opportunity, such as corporate development at a normal company.
The usual “exit opportunity” logic is: “Well, I missed investment banking right out of undergrad, but I want to get into private equity… so I’ll just do investment banking post-MBA and then move into PE from there!”
But the results from this strategy are mixed, as you can see at this article on IB Associate Exit Opportunities, so don’t get your hopes up.
And yes, you get paid well as an Associate, but if that’s your main reason for pursuing the role, you need to re-think your life.
The cost of an MBA program, plus the opportunity cost of leaving your current job, plus the time and money required for networking and interview prep mean that it’s not worth it unless you plan to stay in finance for at least 5-10 years.
Investment Banking Associate Salary (and Bonus)
At large banks in the U.S., Associates tend to earn between $300K and $550K USD for total compensation, with base salaries progressing up from $175K to $225K (as of 2022).
Bonuses are significantly lower at smaller banks such as regional boutiques, so expect total compensation that’s 20-25% lower.
Pay is also lower outside the U.S., even in other financial centers such as London.
For more on this topic, please see our article on investment banker salaries.
A Day in the Life: What Does an Investment Banking Associate Do?
To illustrate the differences between the Associate vs. Analyst roles, let’s walk through the same day detailed in the Investment Banking Analyst article, but from the perspective of an Associate:
8:30 AM – 10:30 AM: You arrive at the office, meet with a VP to discuss an upcoming M&A pitch, and answer some of his questions/concerns about a new Analyst in your group.
Then, you review an Analyst’s status report on potential buyers in an M&A deal, make a few changes, and ask the Analyst to update the document and send it out.
10:30 AM – 12:00 PM: You join a meeting with a Director and Managing Director, who are speaking with a private equity firm about a potential sale of one of their portfolio companies.
Your job is to look intelligent, take notes, and occasionally answer questions about the market research you completed on potential buyers.
12:00 PM – 12:30 PM: You eat at your desk as you join due diligence calls for another deal; the Analyst is monitoring the entire session, so you only stick around for one call in the beginning.
12:30 PM – 3:00 PM: You start drafting the M&A pitch book that you discussed with the VP this morning.
You outline the structure and write text on some of the slides, but you leave out the parts that will require Excel paste-ins – the new Analyst will handle those.
3:00 PM – 5:00 PM: A Managing Director is on the road and needs hundreds of pages of briefing materials ASAP. You read the email and forward it to the Analyst on the team. It’s someone else’s problem now!
Right after that, a client calls you, upset about the management presentation your team is drafting for them.
She feels it doesn’t emphasize the company’s growth opportunities well enough, and she spends 30 minutes walking through all the changes she wants to make. You start making the changes.
5:00 PM – 5:30 PM: You review a CIM with an Analyst and explain how you want to change around the financial summary and market sections, handing off your printed version.
5:30 PM – 7:00 PM: The office’s Head MD and staffer call you into a room for a meeting.
They want your impressions of the new classes of Analysts and Associates; you’ve been here for over two years, so they value your input.
You try to strike a balance between giving useful comments to the MD and not sabotaging anyone’s new job.
7:00 PM – 10:00 PM: It looks like you might get to leave “early” – but then one of the VPs decides to have your team re-do an entire IPO pitch book.
Most of the work goes to the Analyst, but you need to stay there answering questions and outlining parts of the new presentation.
10:00 PM – 11:00 PM: You review the new IPO pitch book, make a few small tweaks, approve the qualitative/market slides, and leave the office right after that.
This was a ~14-hour day, which is on the long side, but not unreasonable for something in the Monday – Thursday period.
The same factors that create “bad days” for Analysts also create them for Associates: multiple live deals, big pitches, and last-minute emergencies.
However, office politics often contribute to bad days at this level as well – especially when meetings pull you away from work, as they did to the Associate here.
How to Break into Investment Banking as an Associate
The two main entry points into Associate roles are:
- Out of Top MBA Programs – This path is more common in the U.S.; if you’re a career changer who wants to switch into IB, an MBA degree from a top program is, by far, your best chance of breaking in.
- Direct Promotions from Analyst Roles – If you perform well as an IB Analyst for 2-3 years, you could get a promotion. Outside the U.S., this is the path most Associates follow because MBA-level recruiting is less developed in other regions.
It is very rare to get hired as an Associate if you’re coming from a completely different industry and you also haven’t completed an MBA.
Yes, you can find exceptions and cases where it has happened, but those stories should be viewed as outliers at best.
If you use a top MBA program to get in, you need to start preparing long before you arrive on campus, with networking, interview prep, and perhaps a “steppingstone role” right before the program begins.
In some cases, it might make more sense to complete a part-time or executive MBA program so you don’t have to quit your current job and so you have more time to prepare.
It tends to be extremely difficult to win offers from a non-target MBA program, though it is possible. However, you’ll most likely have to focus on smaller banks to pull this off.
For more, see the “MBA Path” part of our article on how to get into investment banking.
Investment banking interview questions at the Associate level are not that different: you still need to know accounting, valuation, and financial modeling, you still need a solid “story,” supporting mini-stories for the fit questions, and answers to the key objections, as well as deals you can discuss.
The main difference in is that interviewers often test for slightly different qualities, such as:
- Ethics – You’ll be working with clients more directly, so “ethical dilemma” questions are common.
- Humility – Bankers do not like over-confident MBAs who think they’re rulers of the known universe. And over-confidence is quite common in MBA programs.
- Case Studies – Many interviews turn into “verbal case studies” where the interviewer describes a company or deal, and you have to walk through the analysis and answer questions about how you would advise the client.
- Your Family and “Extracurricular” Commitments – It’s illegal to ask about your family or age directly, but bankers can indirectly ask about these topics with questions like “How do you spend your time outside of work?” To stay safe, you should give relatively vague answers.
The IB Associate Job: Right for You?
As with the Investment Banking Analyst role, the real question here is not, “Is the Associate job right for you?”
The real questions are:
- If you’re currently an Analyst and you’ve performed well, should you stick around for a direct promotion? Or should you leave for a different industry?
- If you’re a career changer, should you pay for a top MBA program so you can get this job?
For the first question, you should look at our coverage of exit opportunities to decide.
In short: if you truly want to be an investor or do something else that’s more creative/intellectual, or you hate banking and don’t care about the money anymore, then you should leave.
If not, or you’re on the fence about IB, but you have no better ideas and don’t mind the hours/lifestyle, you might as well stay and see where it goes.
As for the second question: if you have the right profile and you can put in the time and effort required and you understand that you don’t have a great shot of winning private equity or hedge fund roles, sure, go for it.
Going back to that “What People Think I Do / What I Really Do” meme , many MBA students recruit for IB jobs, believing that they can easily win buy-side roles from them.
While that does happen sometimes, it’s far easier to win these roles as an Analyst.
At the Associate level, more likely exit opportunities are corporate finance, corporate development, corporate strategy, and maybe less-competitive buy-side roles such as venture capital.
If you want to make the transition, you need to move quickly and tactfully and recruit in a good hiring market (see: IB associate exits).
That doesn’t make the Investment Banking Associate role a bad one.
But it does mean that you need to read the fine print carefully before jumping in – or you might end up the subject of the next great meme.
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Are seniors (IB, HF, PE) better modelers than associates and how much?
My first guess would be not by much as they spend a lot of time with clients and the emphasis is on other skills.
No. They’re worse because they barely even use Excel anymore and instead focus on deals/clients.
I really enjoy this article, which is really useful for me. However, I have confusion in deciding the post-MBA decision between London and NYC. Specifically, I have 3 years experience in London Big 4 Audit + 2 years in Big 4 TS, and I got permanent residence in UK meanwhile MBA (STEM) in US also provides 3 year opt.
When making decision between LBS MBA and Cornell MBA, though both of them are target school, I am worried that many Bulge Brackets IB provide less placements in LONDON (i.e. JPM, UBS, DB, Barclays barely offer MBA associate roles) , while NYC provides greater exposure to some extent.
Personally, I could embrace the cultures of both cities. From your perspective, which is the better choice in ensuring breaking into BB IBD ?
The U.S. is definitely the best place for post-MBA Associate roles because that hiring channel is far less developed in Europe.
First of all I didn’t thought that the article going to be that good… I really appreciate how you simplfy everything.. Kudos to your effort
Enjoyed reading this article. Good for someone who wants to be a career banker. Any chance you would be able to make an article about regional/start-up boutiques and how to make the best of them? Are they a underrated ticket to the major players? Thanks so much!
Thanks. We’ve covered some elements of regional boutiques here:
In short, regional boutiques give you some advantages, but it’s not necessarily “easy” to move from them to larger banks, especially at the Associate level. They’re fine if you’re at a non-target MBA program or have other issues that prevent you from being competitive at larger firms, but otherwise middle market/elite boutique/bulge bracket firms are a better bet (or even well-known industry-specific boutiques like Leerink).
Thank you so much! I will be sure to check these out.
Great article! Would love to read the same about a day in the life of a VP.
Thanks. The VP and MD versions are coming soon!
Thanks so much for writing this article – really useful as I’ve always debated whether an MBA for Associate was worth it.
I got a question on the Associate’s compensation. You mentioned Associates make $250-400K, with base of $140-180K.
When I read employment reports from Stanford MBA, it shows that Investment Banking base median is only $125K. (https://www.gsb.stanford.edu/sites/gsb/files/report-2018-mba-employment-report.pdf)
And when I found the report that had the expected performance bonus as well (Stanford MBA 2014-15: https://www.gsb.stanford.edu/sites/gsb/files/cmc-employment-report-2014-15.pdf), the bonus is only 80K for investment banking. In this report, even the high ends of the base and bonus together would only be $225, lower than the $250K you’re citing.
Do you have an idea why? I can’t imagine all of the Stanford MBAs are going to lower tier, lower pay banks, and I know some of them do go to BBs.
Is it that the industry is in decline?
I think the simplest explanation for the compensation differences is that compensation changes over time and some banks have increased Associate base salaries, while others have not. This is why the 2018 report shows a range for the base salaries, while the older report shows the same $125K everywhere. An $80K bonus is also low – numbers have definitely increased since 2014.
Our figures might be a little high overall because we focus on the biggest banks in NY (anything else is usually a discount to those). But $200K total compensation for an Associate would still be considered low – it should be closer to $250K for a Year 1 Associate at the large banks.
As for whether the industry is in decline, I would say it’s neither declining nor growing much. Something very fundamental would have to change for companies to stop needing the services of banks.