It’s not so long ago that we were bemoaning the lot of the mid-ranking investment banker. How things have changed. At least for some.
One year on from our lament about career stasis for vice presidents (VPs) and directors in investment banks, recruiters say that junior VPs are some of the most desirable bankers around. But only if they’re VP 1s (first year VPs), or VP 2s. VP 3s and directors remain in career hinterland.
“An amalgam of things has created the shortage of junior VPs in investment banking,” says Gary Goldstein at Whitney Partners Executive Search in New York City. “Firstly, these are the people who would have started in 2007-2008, horrible years in which the Street did little recruiting for its analyst and associate programs. Secondly, private equity firms have been very aggressive in recruiting these juniors from investment banks. And thirdly, fewer business school graduates have gone into banking and stuck around.”
It’s not just Wall Street. London-based recruiters complain of a similar phenomenon. “Last year was all about analyst and associate recruitment. This year, we’re seeing much more demand for VP1s and 2s,” says Richard Hoar at recruitment firm Goodman Masson. “There’s very high demand for that talent pool and there aren’t many of them around because so few people were hired in 2008 and 2009.”
In London, a typical investment banking career involves three years as analyst and three to four years as an associate. First year VPs are therefore aged around 28 if they graduate from UK universities and aged around 30 if they graduate from Continental European Universities, where Masters Qualifications are more common. On Wall Street, first year VPs are also around 30 after taking two years out to do an MBA.
While 30 year-olds are highly employable, another City M&A headhunter, speaking on condition of anonymity, says investment bankers lose their appeal once they hit 33+. “No one wants to hire a VP3 who will expect to be promoted to director-level soon. And no one wants to hire a director who will add to the overweight senior ranks. – The strong preference is for very junior VPs who can execute deals.”
This means that mid-ranking bankers need to proactively manage their careers before it’s too late. “If you hit director-level and realize that there are no managing director slots for you to move into at your current employer, it will be very difficult to find a new job elsewhere,” says the headhunter. “You need to plan ahead and move while you can.”
High demand for vice presidents is reflected in their pay. In London, banks like Morgan Stanley are paying salaries of £170k. On Wall Street, Goldstein says junior VP salaries range from $250k to $450k. Bonuses are supplementary.