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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is a former global head of equity capital markets at Bank of America and is now a managing director at Seda Experts.
It’s that time of year again: investment banks are announcing their latest slate of managing directors.
The ritual is as fraught as it is familiar. I still remember when my boss called me into his office 24 years ago to say I’d been promoted. It felt like a huge career breakthrough, but soon after the list of new MDs was published, a colleague warned me the bank would pay me less that year, knowing the title alone would keep me happy. I thought he was joking but it turned out that he was right.
Investment banks devote enormous resources each year to the MD promotion cycle. For anyone unfamiliar with investment banks, managing directors sit at the top of the hierarchy, above analysts, associates, vice-presidents, and directors. Outside the C-suite, it is the highest title at most firms, although a few banks have an additional tier of partners or senior MDs. So gaining the MD rank can be the defining moment in a banking career.
Yet it remains unclear whether the elaborate selection process — replete with committees, revenue trackers, 360-degree performance reviews, and senior leadership sign-off — leads to better decisions or simply creates the appearance of fairness.
At one level, the promotion process has impeccable rigour. A committee of senior MDs is convened, each assessing two or three candidates each. Candidates submit about 10 internal references, though committee members conduct their own checks. The committee factors in revenue scorecards, peer feedback and broader considerations such as regional representation, diversity, and coverage across different parts of the firm. The system is built to look unimpeachably meritocratic.
But anyone who has sat on these committees knows that politics and personalities inevitably intrude. Senior MDs quietly lobby for their protégés, and top leadership can override the committee’s recommendations. Last-minute decisions to promote office favourites occasionally happen.
Judging candidates is genuinely hard; comparing them is harder. How do you benchmark a Houston-based energy M&A banker against a German debt capital markets originator? Their skills, markets and revenue profiles bear almost no resemblance, and yet the system demands you rank them. One may make the cut, the other not.
The questions asked in the promotion committee highlight the salient issues. Is this person indispensable or replaceable? Do they have their own client franchise, or are they a supporting player to a rainmaker? How valuable is their “seat” at the bank? How likely are they to leave if passed over for promotion? These are perennial questions, and they also reveal how much of the process rests on finely balanced, ineradicably subjective judgments.
Across most big investment banks, only one-third to one-half of eligible directors make the jump to managing director in a given year. The title still carries weight, but at first the job barely changes. You don’t manage more people and the work looks much the same. After my own promotion, the only immediate difference was that I could put “managing director” on the pitch-book team page.
The real change is subtle and accrues over time. You gain the ability to say no without giving a long justification, the freedom to leave the office for a long lunch or a school play, and the authority to schedule calls around your own calendar instead of someone else’s. Those are valuable powers.
Later, compensation and influence begin to diverge. Some MDs build a franchise and flourish; others plateau and stagnate; a few crash and burn. The title just opens a door.
It’s easy to be cynical about the whole thing but one moment has stayed with me. A senior colleague and I video-called a banker based in a small Asian market to deliver happy promotion news. He was talented and hardworking, but operating in a place with limited revenue potential. So his MD prospects had always been on a knife-edge.
When he heard the decision, tears welled up in his eyes. He spoke with unfiltered joy about what promotion meant to him and his family — proof that his contributions were appreciated, that his work really mattered to his colleagues and clients, that he was respected by his peers.
That moment reminded me that, for all the processes and politics, MD promotion still taps into something deeply human: the need for recognition. For many, that validation matters as much as — and sometimes more than — money. The managing director title may bring baubles and benefits, but its true value lies in what it means to those who earn it.
craig.coben@ft.com