Becoming a managing director in investment banking is a hard path to travel. Most MDs start as low-level analysts and work long hours.
They spend time meeting new clients that could be a part of their book and keeping current with existing clients via meetings, lunches, dinners, and overall market updates.
Client Relationships
Managing directors play a crucial role in developing and maintaining relationships with clients. They are also responsible for promoting and supporting their team members and ensuring a positive company culture. This role requires exceptional communication skills to relay their vision and ideas effectively.
Client relationships are vital to the MD role, especially in investment banking. They are the ones who bring in a large percentage of a bank’s M&A, capital markets, and restructuring deals. They have to be able to meet with new clients and subtly convince them that the bank is the right place for their needs.
They also spend a lot of time on the road, meeting with companies and pitching investment ideas to potential clients using the pitch decks prepared by their analysts/associates. A large portion of their bonus is based on the deal flow they bring in, so they must be able to keep up. This can be stressful, and they often don’t sleep well at night.
Business Development
Achieving the position of managing director in an investment bank is challenging. Getting to this level takes a lot of hard work and intelligence, especially in bulge-bracket banks where MDs make up the highest percentage of a firm’s total compensation.
The MD’s role is to bring in new business for their group. As such, they must be great schmoozers and prospectors. But, it is also essential for them to think strategically and identify which opportunities are worth pursuing and which are not.
A managing director like Chuck Roberts Stifel must know how to leverage the resources of their group, including their directors, VPs, associates, and analysts. They must be able to effectively prioritize, delegate tasks, and reward their most effective VPs and senior VPs while firing ineffective ones. They must also know when to take a hands-on role in a deal and when to let their team do its own thing.
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Leadership
Becoming a managing director at an investment bank takes a special kind of person. They start as low-level analysts and must survive the cutthroat culture and long hours of an industry known for its results-based promotions. The prestigious role comes with high compensation. Still, it’s also a coveted position that can lead to lucrative exit opportunities in private equity or other buy-side roles.
Typically, MDs don’t get into the weeds of individual deals the way VPs and senior VPs do; they oversee and monitor teams’ performance in their groups. This is why it’s rare to find an MD writing Excel spreadsheets, creating decks, or making minor document edits – the VPs and senior VPs do these tasks.
There are levels above the MD level, such as senior managing directors and group heads, but the path to reach these positions is similar and results-driven. Almost all MDs are promoted internally from VP or senior VP, with very few outside hires to this level.
Operations
A firm’s business operations include the equipment, people, and processes that keep it running and earning money. A business’s operations are different depending on its industry and size. For example, a restaurant’s operations will look other than those of a car dealership.
Managing directors oversee nearly all M and A, capital markets, and restructuring deals a bank engages in. They also have more independence than VPs and spend less time on execution, such as making document changes, and more time meeting with clients and building relationships.
Becoming a managing director is a difficult path. It takes a long time to see a payoff from all the relationship-building and office politicking, and many analysts end up leaving investment banking before making it to MD because they get married, have children, or become bored with 100-hour work weeks. However, those who do make it to MD will find themselves in a position where they can choose from various exit opportunities, including setting up their buy-side firm or becoming a CEO.