A lot of people compare an investment banking associate to an investment banking analyst. Some say they function in the same role, while others claim an associate is superior to an analyst.
So who is an investment banking associate?
In this article, we will be addressing this and many more. We will be looking at the job specifications, job requirements and the skills necessary to become an associate.
We will also be looking at the ways you can attain this position in the banking system, and how you can succeed in this job role.
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Who is an Investment Banking Associate?
An investment banking associate helps investment bankers and investment banks achieve their goals by interacting with clients and verifying the data processed by investment banking analysts.
Basically, they are in charge of overseeing analysts, performing support tasks for clients, and ensuring client satisfaction in investment banks.
An associate is one position above an analyst in an investment banking hierarchy. They work to ensure analysts are provided with the resources they need, and access to information they need to carry out their daily tasks.
They are in charge of checking and overseeing the work of an analyst before it goes up to any senior staff or client.
What do Investment Banking Associates do?
Investment banking associates have a wide range of responsibilities. Their job description is comparable to an executive chef in a restaurant.
They oversee the work done by analysts and make sure every task they carry out meets the company’s standards of quality. However, they also perform basic tasks like formatting presentation slides, arranging financial meetings and running financial analyses.
Investment banking associates act as project managers for their deal teams, allocating tasks and making sure deadlines are met.
Associates are responsible for the quality of output of presentations done by analysts, data and flow of key documents, and the execution of the whole process. They are involved with writing deal proposals and preparing deal pitches.
Other duties carried out by investment banking associates involve;
- Recruiting investment analysts.
- Networking and documentation of meeting agendas.
- Studying financial disclosures, research reports, and other materials to deduce potential investment risks and opportunities.
- Preparing complex financial models and reports to support investment decisions.
- Conducting research on companies and industries to spot investment opportunities.
- Staying up to date with new investment banking products and services by reading relevant professional journals and business publications.
- Drafting private and public marketing materials such as offering memorandum, confidential information memorandum, and S-1s
- Monitoring market developments and updating clients on new developments in their industry or sector, including changes in regulatory requirements.
- Evaluate clients’ financial statements and other company records to determine a client’s creditworthiness.
- Recommending investment strategies based on an analysis of a client’s financial situation and goals
- Taking part in client-engagement meetings
- Conducting initial client meetings to introduce clients to team members who will work with them throughout the investment process
- Explaining complicated financial topics to non-financial members of the company’s staff.
- Evaluating possible investments from an ethical standpoint to ensure that they comply with legal guidelines.
Investment Banking Associate Job Requirements
To be able to get a job as a banking associate, you need to have the following qualifications;
- A bachelor’s degree. This is the minimum qualification for an associate role. Some companies accept a bachelor’s degree in finance, economics and banking administration, while others accept a minimum of an MBA.
- A master’s degree in Business Administration (MBA). Aside from the fact that having an MBA will increase your professional value and earning potential, it is a primary requirement in most firms. Having an MBA also increases your chances of advancing in your career as an investment banking associate.
- Related certifications and licenses: This is not a primary requirement, but owning certificates and licenses can help you become the most competitive candidate when applying for a job.
- Necessary job experience and training: Entry-level investment banking associates generally receive some form of informal training from senior-level investment bankers and other associates. This helps them improve and master the necessary skills and knowledge needed to excel in this job role. All these experiences are valuable when applying for a job.
In addition, an investment banking associate will need to be licensed through the Financial Industry Regulatory Authority. The process involves taking several examinations and several tests.
Necessary Skills Required for this Job Role
To become a successful Investment Banking Associate, you should possess the following hard and soft skills:
- Strong technical skills
- Strong valuation skills and significant valuation experience
- Effective written and verbal communication skills
- Innovative and resourceful self-starter with a high level of motivation
- Excellent leadership skills
- Familiarity with investment banking transaction processes
- Ability to manage various projects simultaneously
- Ability to work autonomously and independently
- Ability to learn and adapt quickly
- Time management skills
- Great interpersonal skills with the ability to establish and maintain relationships at all organisational levels
- Ability to work and collaborate with others as part of a team
- Great organisational skills
- Strong analytical and problem-solving skills
- Financial Modeling.
- Relationship Management.
- Negotiation Skills.
- Pitchbook preparation and presentation skills.
- Business Valuation.
- Ability to comfortably interact with clients in a professional setting
- Strong intellectual curiosity
- Sales, Marketing and Business Development.
- Effective client management skills — manage, coordinate, strengthen and oversee the company’s interactions with its potential and existing clients.
How To Become an Investment Banking Associate
An associate’s career path is determined by the firm they work in. Some investment banks accept entry-level associates who have just completed their MBA degrees. While a few banks accept entry-level bachelor’s degree holders who are ready to learn and improve on the job.
However, some firms prefer the promotion of in-house staff to lateral hiring. In firms like this, associates attain their career heights after working in a lower-level position as an investment banking analyst for 2 – 3 years.
Suppose their performance over the years was satisfactory. In that case, they are either required to get an MBA to warrant a promotion or are promoted solely based on their experience/history with the firm, and their understanding of the company’s culture. This process is entirely based on the company’s policies.
Note that, to enter into investment banking from another industry, an MBA is a compulsory requirement.
How to succeed as an Investment Banking Associate
An average associate is expected to work 50 – 75 hours a week, depending on the workload of the firm. They work in a dynamic and stressful work environment, often as part of a team of other investment bankers.
To succeed in this role, one must be a fast thinker, able to make decisions on their foot.They must be able to perform well under pressure. Aside from hounding analysts to get their work done, they are held accountable by senior-level officials for anything that goes wrong.
Other ways to succeed in this role are to keep your skills relevant, increase your professional value and maintain a competitive advantage at work.
An associate typically works in this job role for 3 – 4 years before getting promoted to the position of Vice President.
Salary Range of an Investment Banking Associate
An investment banking associate’s salary range depends largely on many things. From their experience level, location, level of education, and the size and success of the firm they work in, all these factors determine how much an associate earns per year.
Their total salary is made up of their base salary, and other compensations and bonuses earned by the end of the working year. According to various websites, the average base salaries for investment banking associates as of July 2022 include;
|Banking Prep||$150,000 – $ 200, 00|
|Corporate Finance Institute||$100,000 – $120,000|
|Indeed||$109,087 – $138,254|
|Payscale||$53,000 – $127,000|
|Mergers and Acquisitions||$175,000 – $225,000|
As stated earlier, these figures can increase or decrease depending on the number of years an associate spends in a company, or their skill set and performance level.
Ways To Increase Your Salary Range as an Associate
- Get a good performance review: Aside from their base salary, associates are awarded compensations that make up a large part of their yearly bonuses. One way of enjoying this extra benefit is by making a good impression on both clients and superiors. Being energetic and driven about tasks, and taking up additional assignments show dedication towards your job as an associate, and will eventually increase your performance score.
- Improve your skill set: Strengthening and improving your required skills make you more competitive for promotions, and open you up to more opportunities for higher-paying positions. Some of these skills include;
- Financial analysis – performing analysis on a company’s financial statements and balance sheets to determine performance and value, and identify trends and risks.
- Pitch preparation – preparing presentations to pitch business opportunities and ideas to clients.
- Client management – coordinating the company’s interactions with its clients
- Financial and industry research – researching various investment opportunities in the industry.
- M & A analysis – analyze potential mergers and acquisitions to determine a company’s financial value
- Financial modelling – building financial models to assess the feasibility of investment opportunities, and forecast a business’s financial performance.
The daily activities of an investment banking associate are similar to that of an analyst. The main difference is the complexity, detail and professional expertise working as an associate requires. And just like every job role, hard work, and consistent personal and professional improvement will set you apart and make you excel in this position.