Evening all,
I've had a lot of interviews recently, and one question that I've faced in almost every investment banking interview so far has been "Why not consulting?". I feel like a lot of folks get tripped up by this question -- due in part to the fact that a lot of people probably ALSO applied for consulting positions, but that's beside the point.
As someone who strictly only look at investment banking, this question wasn't a huge issue for me (my situation has been unique), but friends have mentioned sweating bullets when interviewers really grill them on this particular topic.
So, logically, let's start at the second most important question you'll receive in your investment banking interviews: why do you want to pursue this line of work?
For a lot of people, the learning opportunity is the first thing that comes to mind. In fact, I would say that this is the most honest answer for most interviewees -- you do really get to learn a lot about many different things (professional and otherwise) during a two or three-year Analyst stint. This is something I've heard from Analysts in non-interview settings time and time again, and I doubt that there is another job that gives you the flexibility that IBD provides moving forward (again, mostly due to the fact that you will learn a ton).
But wait, you can also learn a ton in consulting, and you learn many similar skills and focus on similar things! Mind blown!
Interviewer: So I understand you want to learn about how businesses operate and also have a lot of responsibility delegated to you at the junior level...but you can also do that at MBB...
Hmmm, that's a good point, Interviewer.
You: "But, but, banking is more challenging."
Them: "In what ways? With travel, you're pulling 80-100 hours a week all things considered..."
You: "Well, for one, transactions have a greater ripple effect and therefore require more precision and expertise to execute. And you get to learn about how companies make decisions with respect to large strategic options instead of narrow production or cost-cutting measures.
Them: "I see, well, in many cases, consultants will advise that a company seek an acquisition/capital raise/divestiture/exit, so they work with transactions too. What is it about banking specifically that sets it apart to you?"
Geez, this guy is a real sweetheart, right?
Frequently interviewers try to drill down and really make sure that you at least seem like you're dedicated to banking 100%, consulting being an attractive option for a lot of young, well-educated folk. But the fact of the matter is that the two jobs, at the entry-level, seem very similar in terms of learning opportunities, nature of work, and exit opportunities. The freak of nature out there who has to decide between an offer at Morgan Stanley and Bain & Co. (if such a person exists, you are the pinnacle of prestige) will probably come out with a similar skill-set and pedigree after 2-3 years.
So, uh, yeah, what is it about IBD?
The way I have always approached this question is by talking about the fact that consulting is more narrowly-focused. Company A's widget productions have been decreasing vis-a-vis its competitors and it's not clear why -- figure it out, BCG. Investment bankers don't really care about that. Maybe the client's widget production has decreased, but let's figure out what about the client is strong relative to its competitors and market that -- at the end of the day, we want the client to have access to capital, and we need to facilitate a transaction of some sort. Banking is big picture, consulting is nitpicky.
I've always gotten good responses from using that approach to answer this question, mostly because I think it's true. I don't particularly care about widgets...I'm not interested in looking at deals and making bigger things happen. What approaches have you guys used to answer this tough interview question? Looking forward to reading your responses.
"I want to do banking because 1) I am passionate about working on/executing specific transactions, not making general strategic recommendations, and 2) instead of getting a broad but shallow education about how businesses work, I'm interested in learning in detail how businesses are structured financially."
Please don't use the word passionate when talking about thigns like valuing companies or executing transactions. That almost always comes off as 1) the person is trying too hard to impress and/or 2) This person must be pretty boring if that is their passion.
True, good point.
How about because you want to actually see a company DO what you helped it do, instead of telling them and having it go nowhere?
My consulting friends tell me it's like you are this really awesome and smart personal trainer, and a super rich person hires you to get them in shape. You tell the person exactly what they need to do and you give them absolutely everything they need to do it and succeed, but at the end of the day the guy is just lazy and fat and doesn't do shit about it. And you just spent 18 months in a stinky Akron hotel room traveling 4 days a week to a SINGLE CLIENT to do it. It's just depressing.
I think if you used that analogy and I was interviewing you for IBD I'd hire you on the spot...hilarious.
And, you feel advisors should be paid for success, not just throwing more bodies/hours at a 'study'.
To paraphrase/quote somebody else (don't remember who): "IB is doing the same thing for lots of different clients, consulting is doing different things for the same clients"
If you are good at IB you will eventually become very good at understanding how to help companies access capital. If you are good at consulting, you will have become a jack of all trades, and, as I suspect after one frustrating year at MBB, master of none.
Also, the picking nits thing should not be underestimated. Imagine getting hung up on details like the exact categorization of lingerie and sleepwear at a retailler (and then pulling all-nighters preparing pretty slides to justify putting negligees in with pijamas instead of panties & bras). The most relevant work I did as a consultant was closely related to financial restructuring anyway. And even post MBA associates at MBB get hung-up on P&Ls & balance sheets, because they are constantly having to shift gears and learn new, irrelevant crud for a nit-picking engagement.
Plus, the money is inifinitely better in IB, and it's a lot less stressfull to be pulling 80-100 hrs and sleeping in my own bed every night. (disclaimer - I never travelled while at MBB, still hated it, and my experience at the boutique I'm at now has not involved a single week over 80 hrs.)
kinda shocked that ppl get this question/are struggling with it...
roles r completly different lol
Why not start at a Consulting firm? (Originally Posted: 12/12/2016)
Hello,
My question is if anyone could tell me what would be negative about starting an IBD career at a consulting firm. Suppose you want to get an MBA later on and get an offer from M/B/B in Germany and an analyst offer from a BB IBD after finishing undergrad. To me it looks a lot more appealing to do consulting for two years, then go to the US for a MBA and then try to land an offer as an associate in NY.
The negative aspects would be, that you would earn less during your first two years and you don't get the same exit opps an analyst at a BB might get, but in my opinion you develop a much broader skillset and have access to an amazing alumni network, which might create new exit opps later in your IB career.
Also you could argue a lot better on your application to business schools, why you want to get an MBA, since most Business Schools seem to like the career change arguments. To me the route M/B/B -> top MBA -> IBD associate seems like the best possible route, but I'm interested what you think
Thanks for your answers
If you are looking at a career in IB I would start early. Entering as an associate after 2 years as analyst would put you in a more favorable position (performance-wise) than coming out of consulting (even though consulting teaches you tons of valuable skills).
In my opinion it looks like you might have an advantage of you start as an Analyst in terms of technical Skills in the short term, but you're going to profit from the soft Skills you learn as Consultant once you reach a more senior Position in any Job.
Curious as well. I feel like IB analysts may learn less and not get as much of a diverse skill-set as consultants
Don't get your MBA and expect to break into IB with ease with 0 experience. Personally, not even going the MBA route.
If you want to do IB for life, why not start early? It doesn't really make sense to me that you do consulting at MBB hoping to get into an MBA program and then go into IB as an associate. Why ever take the longer route to get there? That said, MBB to IB is reasonable as I've seen many people make the move.
If you focus on exit opps from IB, the more senior you are, the harder to make the move as you're perceived as a career banker.
I was thinking that the Consulting experience may give you a quite well advantage in terms of experience with Client contact once you reach a more senior Position at the Bank. An IB associate who did the Analyst Route may have an advantage in terms of financial modeling but a former Consultant seems to have more experience on how to deal with Clients.
The best way to make a career into IB is to start into IB.
... and if you do not understand it, aim for a career in marketing instead
So what are your priorities - are you aiming for IB long term? What kind of exit opps are you interested in? Is top MBA the main focus and then you'll figure it out later?
I know and seen people do IB --> consulting and consulting --> IB (both usually after MBA, but if without then I've seen more of IB --> consulting). For people from IB moving on it's because life as an analyst can really suck and people burn out and/or want to do something bigger picture. And those switching from consulting may want something more deal/transaction oriented, finance heavy and (in some cases) less travel.
If you are very convinced IB is for you down the line, starting as an analyst at a BB will give you a better foundation. And you can also save time without doing an MBA, if that's something you care about. Becoming an associate after being a seasoned analyst also makes you better equipped to save yourself time from bullshit "make" work that some newbie associates have analysts do.
Also, doing IB early may give you a good idea whether this is something you really want to pursue vs. Joining at the associate level and having to pivot out if you hate it. Also, if you have any of interest in say private equity opportunities, banking generally sets you up for it more than consulting (hough it's not uncommon for MBB's to do pre-mba PE either).
If you want a broader skill set earlier on and you want ton have more optionality, mbb would likely be a better bet. Also if you're unsure of what you may want to do down the lin, consulting can potentially provide for a wider lens on that (depending on what you see via your projects).
I wouldn't concern myself too much with money and the difference between the two, and rather, think about what you want out of the roles and where they can take you. Also consider the culture of the people you'll be working with (fit is very important given you'll be working a lot with these people).
Both can open up for top MBAs and both are well regarded. Just know that you'll be in great shape either way.
Thanks for your detailed answer! What do you think about the networking opportunities, doesn't doing consulting first open up a whole lot more of networking opportunities, if you just think for example of the McK alumni association. Wouldn't you have access to two alumni associations if you would do consulting before IB instead of just one, if you enter IB directly? Really curious about this, thanks for your answers!
Well, some banks have alumni groups for professionals leaving the firm. But I mean I wouldn't go out of my way to do consulting and banking for the network access to both. People won't necessarily answer your emails or whatever just because you guys happened to work at the same firm... I don't think this is enough of a bullet in support of doing two separate things.
Personally, if I were to do both banking and consulting, it would probably be for a similar reason to the ones I listed above, the notion of "grass is greener on the other side" and the curiosity of doing something new. Because as much as you feel or know you'll like something, it doesn't compare to actually experiencing it yourself, warts and all. And also benefit of bschool (one being network - which you do seem to highly valued) is also the exposure to different people and their perspectives. You for example may really think you want to do banking, but you'll come across peers that have done it from various levels, and will tell you the good and bad.
If you think you're really keen on banking, I think going in as an analyst is good because you get to experience it sooner in your life to see if it's something you really want to do. I think the volatility of one's like and dislike and experiences for banking is higher than for consulting (as in the bad can be quite terrible vs. Consulting where the culture and experiences could be better on average so you won't likely come to hate it). Knowing the highest highs and lowest lows in banking sooner (analyst) vs later (associate) will help you determine if it's something you want to do. Also, and I say this generally, it's not uncommon to see post-mba consultants move on to top f100-500 type firms after a few years. But it's less common (but not rare) for post-mba associates in IB to do the same.
It seems to me like you're leaning towards trying consulting first. I would take "It will help me with banking down the road" out of consideration. And instead focus on "what kind of experiences and opportunities will consulting provide me vs. Banking at the entry level, and what would I like to experience". And if you are really really interested in banking and think you want to do it, I would suggest doing it now to see if it's something you like. And if it's not, there's always bschool, or moving to consulting laterally (rarer without MBA), private equity, or something like Corp strat and Corp dev
If you want to be an IBD associate and have a BB IBD offer, why wouldn't you just try to get a direct to associate promote from the analyst level instead of spending 150K on an MBA to arrive at the same end goal?
I don't see the point in getting an MBA if you want a career in IB. You will lose 2 years for something you wouldn't need if you started as an analyst in IB.
It's really more for a combination of other things: the network and branding, the optionality to branch out of banking if need be (by getting back into the recruiting cycle or later in life), the 1-2 year break away from working to reflect and think about what you want to do, wanting to get away, make new friends and travel, learn something new, etc.
If you are absolutely sure you want to stay in IB and move on up, then no the MBA is not necessary. But if you're not 100% sure and want a combination of some of the reasons I listed above (mainly getting back into the recruiting cycle to get exposure to other opps you otherwise wouldn't have, and long term network), then it could make sense.
This is idiotic. If the end goal is to be an associate and beyond in IB... then START in IB. You get paid more from the beginning, and you'll be exposed to the learning curve sooner. You will also likely get the direct promote and bypass bschool, saving hundreds of thousands of dollars.
Don't be fooled into thinking that an entry position at MBB gets you significantly more exposure to high-level execs compared to banking. At the end of the day, you're still a glorified powerpoint monkey.
It sort of hurts how right you are.
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