Investment banking career progression should be straightforward, but the reality is far more complex, especially at the associate level. If you’ve ever wondered why some banks have “Associate 0” while others start at “Associate 1,” or why your colleague with the same experience has a different title, you’re not alone.
The Confusing World of Associate Titles
The associate level in investment banking is notoriously confusing due to inconsistent naming conventions across firms. Some banks employ a structure with Associate 0 (also called “stub associate”) through Associate 3, while others use Associate 1 through Associate 4.
Despite these differences, it’s important to understand that the overall timeline to Vice President remains consistent across most banks: approximately 3.5 years regardless of title structure.
Understanding the “Stub” Period
A “stub associate” typically refers to a new associate who joins in July or August after completing an MBA program or receiving an Analyst-to-Associate (A2A) promotion. These associates receive a “stub bonus” for their first few months to align their bonus cycle with the calendar year.
The term “stub” comes from the partial year these associates work before the normal bonus cycle. This period creates confusion because:
- Some banks promote to Associate 2 immediately after the stub period
- Others pay a stub bonus but only promote to Associate 2 after a full 14-16 month cycle
Title Structures Across Banks
Four-Level Structure (Associate 1-4)
- Associate 1 & 2: Base salary of approximately $175,000
- Associate 3: Base salary of approximately $200,000
- Associate 4: Base salary of approximately $225,000
Three-Level Structure (Associate 1-3)
- Associate 1: Base salary of approximately $175,000
- Associate 2: Base salary of approximately $200,000
- Associate 3: Base salary of approximately $225,000
Implications When Changing Banks
This inconsistent title structure becomes particularly problematic when moving between banks. If you’re an Associate 2 at a bank with a four-level structure and interview at a bank with a three-level structure, you might be offered an Associate 1 position—seeming like a step backward despite representing the same career progression.
The key is to focus on years of experience and compensation rather than the title itself. Always clarify what the title means in terms of career trajectory when interviewing at a new bank.
Final Thoughts
The investment banking associate ladder may remain confusing, but understanding these structural differences can help you navigate your career more effectively. Remember that regardless of whether your bank uses a three or four-level associate structure, the journey to VP remains consistent at about 3.5 years.
When evaluating opportunities, look beyond the title to understand the true progression path and compensation structure. This will help ensure you’re making accurate comparisons when considering a move between banks with different associate level structures.
