How to make managing director in investment banking

Being promoted to managing director at an investment bank is no easy task. And it seemingly gets more difficult with each passing year as banks are becoming less top heavy while relying more on junior staff. The end result is a crowded line of vice presidents and executive directors all vying for a smaller number of seats. Morgan Stanley employs well over 50,000 people yet named just 145 managing directors in 2019. Meanwhile, Bank of America's latest MD class was only 139 deep. Goldman Sachs named just over 500 managing directors for 2018, but it changed from an annual to a biennial cycle a few years ago, further limited opportunities to join the bank’s second-highest rank.

The other issue is that firms have shortened the leash on MDs. Investment banks are no longer willing to wait around for several years to see if newly-appointed managing directors fit the bill. “Managing directors in investment banking last around 18 months,” Randall Dillard, the former head of investment banking at Nomura, told us previously. “Most people simply cannot handle the amounts of revenue they are expected to generate year after year.”

The closed-door selection process at most banks also remains a mystery. Nonetheless, based on conversations with bankers who have gone through the process, this is what it takes to be make it to MD and hold on to your seat.

You must start early and often

Typically, vice presidents are in a position to be nominated to become an MD after four or five years in their current role, though banks who are nervous of losing blue-chip talent – particularly in trading – will sometimes start the process after as little as two years. But this doesn’t mean you should wait to adopt the attributes of an MD until you’re near the front of the line.

“Managers have an elephant’s memory when it comes time to discuss potential MD promotions,” said one managing director at a tier-one bank in New York. “I’ve seen people bring up negative stories from years earlier that probably shouldn’t matter, but the vetting process runs that deep.” Moreover, those that try to impress down the home stretch of the year will stick out like a sore thumb, he said. This goes for performance metrics as well as behavior and personality. “People will make an assessment over whether you are ‘MD material’ way earlier than you might think.”

You need power-wielding supporters

In some ways, the messenger can be just as important as the message. Assuming you gain a nomination from the MD in charge of your team, your credentials will be debated before a group of current MDs, which then assembles a short-list of the most exceptional candidates.

At Goldman Sachs, there’s a process called ‘cross-ruffing,’ where the firm will canvass the opinions of managing directors and partners across the whole department. Having important allies outside of your team lead is therefore critical. Those who are quick to make MD have networked internally and made themselves a known quantity to people outside of their immediate bubble, according to the New York MD.

You already fit the profile

Banks rarely make MD promotions based on projections. Viable candidates will be “already performing at MD level,” says Ziad Awad, a former Goldman Sachs and Bank of America MD who now runs boutique bank Awad Capital. This means that your numbers will match top performing senior staff, but also that you’re able to show that you can lead a team. “Your leadership skills should be admired by both peers and juniors,” Awad said.

You must walk and talk the values of the company

Depending on your perspective, the notion of an individual investment bank's culture is either corporate guff or a mantra to live by. These days, if you want to make it to MD, you really need to toe the corporate line and embody the values of the company, says Awad. “You need to espouse the strategic vision of the senior management,” he said.

This can often be a moving target as new CEOs and other leaders come and go. Insiders say that Goldman Sachs accentuates the importance of different principles under new Chief Executive David Solomon than it did during the previous regime. At Bank of America, priorities within the U.S. investment bank have changed somewhat dramatically this year as CEO Brian Moynihan has been more hands-on with the M&A group. The best candidates for MD either fit the new vision or are clever enough to adapt as it’s being implemented.

“You never want to seem like you are one of the old guard,” said the New York MD.

You need to be a great salesperson

At the end of the day, most investment banks provide the same set of services. If you are in a revenue-generating role, you need to have the personality to match. Being a whiz at Excel will only take you so far. “It’s as much about selling yourself as it is selling the bank,” said one former Barclays MD. “Being likable is probably the most underrated part of the job.”  

You must get lucky

Like in most things in life, timing is critical. You can’t pick your boss, your numbers might falter for reasons outside of your control, and subjectivity lords over the entire process. A former managing director at Morgan Stanley who was promoted just two years after joining the bank acknowledged that he likely only made MD in short order because his boss quit to join a rival soon before the process began. “I worked my a** off, but I was also in the right place at the right time.”

Additional reporting by Paul Clarke