Managing Director: your questions, answered

It depends on which kind you are. A banking or consulting MD spends most of the week with clients, pitching for mandates and running the relationship once a deal is live. The rest goes on keeping the team of directors, vice presidents and associates pointed at the work that pays. A company MD runs the business itself. You set the plan and the budget, chair the weekly leadership meeting, sign off on hiring and big spend, and explain the numbers to the board or head office every month. Both versions spend a surprising amount of time on people problems.

Sometimes. In the UK, Ireland, Australia and much of Europe, the MD of a company often does exactly what an American CEO does, and some firms use the titles interchangeably. In a large group, the MD usually runs one subsidiary or country and reports to a group CEO. In American finance and consulting, an MD is nowhere near the CEO seat. It's a senior rank held by a sizeable group of people, each running their own client patch.

Almost always by climbing the house ladder: analyst, associate, vice president, director, then MD. The promotion to MD is the hardest step because the test changes. Up to director, you're judged on execution: clean models, tight documents, deals that close. At MD, the question is whether clients hire the firm because of you. People who get the title usually have a sector they're known for, a group of clients who call them first, and a senior sponsor arguing their case at the promotion committee. Some join as an MD from a rival firm and bring their clients with them.

Yes, and most don't have one. Company MDs tend to come up through the part of the business that matters most to it: sales in a distributor, operations in a manufacturer, delivery in a services firm. The common thread is that they've already run a P&L, even a small one, such as a branch, a product line or a regional office. If you've only ever managed a function, get a role that makes you answerable for revenue and cost together. That's the gap interviewers probe hardest.

The pay figures on this page give you the range, but the structure matters as much as the base. A banking or private equity MD earns a large share of their money as a bonus tied to the fees they generated. Funds add carried interest on top, which pays out only when investments are sold at a profit. A company MD usually has a salary, an annual bonus against targets, and sometimes equity or a long-term incentive plan. Company size, sector and city move the number more than the title does.

In finance, it's that your pipeline never feels full. A quiet stretch without new mandates shows up in your bonus and in how the firm talks about you, whatever the market is doing. At a company, it's being the last stop. Layoffs, a key customer walking, a safety incident at a site: they all land on your desk, and there's nobody to escalate to except the board. Plenty of strong operators find they don't enjoy the loneliness of that seat.

In a partnership, such as many consulting, law and advisory firms, a partner owns a share of the firm and takes a cut of its profits. An MD at a firm that isn't a partnership has the seniority but is still an employee, paid salary and bonus. At some firms, MD is the step just before partner, and at others it's the top rank you can reach. Ask which it is before you accept, because it changes how much the title is worth over time.

You don't need an MBA, though you'll meet plenty of MDs in banking and consulting who have one, often from their associate years. Licensing matters in securities work. Bankers and brokers in the US usually hold FINRA registrations, and supervising MDs may need a principal registration on top. Which ones depend on your role and firm, and rules differ outside the US, so check with the firm's compliance team. Company MDs don't need a license for the title, though some sectors, such as healthcare or financial services, have their own fit-and-proper checks for senior managers.