IB Career: 30's, 40's, and Beyond
What are the long-term prospects for people pursuing careers in finance and what is the culture of the industry? I feel that students entering into the financial services industry don't have much of a plan (perhaps you don't really need one) except to exit into private equity or attend business school. What happens afterwards when you are 30 or 40? Are you on a sustainable career or do you milk it for all its worth until you get canned?
My views:
1) Financial services has recently been highly volatile with low job stability. (I don't know if this is generally the case)The skills you gain as an analyst tend to be more technical but success in the industry requires cultivating contacts and being highly personable. Essentially, once you're a VP or MD and you're fired or have your reputation tarnished, it's difficult to maintain your lifestyle with the skills that you actually have.
2) Undergraduate students have no idea what to do after they go to business school and/or enter into private equity. This is of course after they've exploited the numerous "exit ops" after being a 1st or 2nd year analyst. It seems that students are short-term greedy and don't have concrete plans after 5 years.
3) The more I meet MD's, the less I want to become one. I may be unlucky, but I tended to meet staid and boring individuals. I don't want to be a workaholic who puts off fun until 50. I feel that people who enter into the industry tend to just put up with a lot of crap for the money, and there is a lack of job satisfaction.
So, just some uncertainties I have regarding the industry and the people who enter. How pervasive is the attitude, "I'm going to make so much money that I can retire when I'm 40?" Thanks for any input, especially from older professionals who have a much better perspective.
1- the industry has been and always will be highly volatile with low job stability; this isn't something new. I was reading an article in the throes of the credit crisis about lay offs on wall street and how this marks a major paradigm shift in Wall Street excess and culture and will shake the way banks do business to the core. The more I read the more I kept getting a dejavu feeling. Finally I went to the date on the article and it was published in 2001, I had the same article almost 10 years prior.
2- Undergraduate students have no idea what they want to do after b-school? So what? There's nothing wrong with that. You've never worked a day in your life, much less worked in such a demanding environment making such huge sacrifices. You have no idea how you'll deal with it for a protracted period of time, if you'll be a rock star or mediocre or below average, how much you'll enjoy it once the novelty of it wears off etc... there's nothing wrong with leaving undergrad at 21, 22 years old with the intent of getting on the 2+2+2 track and figuring out what you you're going to do long-term somewhere along the way. In fact the kids who are the know-it-alls and swear they know exactly what they'll be doing 5 years down the line are immature and naive.
3- I think its a mixed bag. I know a lot of MDs that are actually pretty cool. Its usually the ones that are laid back and not completely full of themselves that are normal. How many MDs have you met exactly? And of those, how many actually gave enough of a shit about you to have a real (non-recruiting) conversation with you?
As for your actual question about long-term prospects in the industry... different strokes for different folks. Maybe you'll be a career banker. Maybe you'll move to the buyside, get your MBA and go back to the buyside on a partner track. Maybe you'll switch completely out of finance all together. Maybe you'll leave banking for a more moderate lifestyle in another finance capacity... a lot of women do this because of the challenges in such a demanding career and having a family (many move to IR on the buyside, HR in banks, etc...). Many people move to a CorpFin/Biz Dev type roles.
It all depends on the person. I know people who fit every single one of those scenarios I listed above. As you move through the 2+2+2 you learn to stop following the track and do whats right for you, because it doesn't matter where you work if you're miserable doing it.
2+2+2?
1) After working 90 hours/week for two years you have an insane work ethic. This is probably the most valuable thing you learn. It's just like any job, become a plumber, after 15 years your job options are limited unless you learn a new trade. Also, VPs/MDs (if youre not a moron) have been networking the whole time they've been in the business. Exit ops could include going to work for some other company in the same type of business or moving out to a company youve done work with in the industry you're an expert on. Or starting your own company.
2) What's your point? I think a lot of people have an idea of what they want to do, at least coming out of B-school. Lots of people seem interested in entrepeneurial pursuits, continuing in PE/IB/whatever, corpfin if they want lifestyle or a number of other options. It's up to you to decide what YOU want to do after you go to B-school (if you even do go).
3) You work your ass off in IB, that's just how it is. If you want a work/life balance, give some thought to PWM or corpfin or something that requires less of a ridiculous schedule. If you want to make so much money that you can retire when youre 40, look into PE/HF, but you're going to have to live a somewhat muted lifestyle.
Im not an older professional, but these are all questions that you can easily come up with the answers on your own. Dont want to work 70 hours a week until youre 50? Dont do IB. Think about what you may want to do after B-school, your ideas will probably change as you work as an analyst or whatever you do. It happens, it's normal. Make a bunch of different plans if youre concerned about what you are going to do after so you have a general idea of different post-analyst career paths. Seems like you need to do some introspection, not have other people tell you what to do.
As an aside, the douchey senior bankers are the ones where work is still their #1 priority, its still the most important thing in their life and their #1 priority... which at 40-50 years old, is just fucking sad. In addition, they tie most of their self-worth up in their careers so they feel the need to make themselves feel important by being douchey and posturing how successful they are.
Its a pretty pathetic and pitiful existence if you ask me, and I've started to come to the conclusion that all of these people are the ones who somewhere along their junior banker days didn't see the light and realize that they need to find something that they find personally fulfilling.. 10-20 years down the line, its too late and they're stuck with what they've got and they refuse to let go of this delusion that they did in fact get all they wanted out of life.
Let's start off with clarifying what I was saying. It was quite clear and doesn't really warrant clarification, but I'll humor you anyway.
I was speaking to the poster characterizing all/most senior bankers as douchey and full of themselves. My point was that's not entirely accurate, senior bankers are generally pretty normal. The douche bags among the bunch, generally behave in this manner because they're unhappy in life and think that making themselves feel important at work will make up for it. In the instances I've seen, they're unhappy because they misappropriated their time along the last 20 years and didn't realize when they had gotten their career going and needed to develop their life outside of work. Those are the guys who generally behave like self-important douche bags. Work is all they've got, and they'll be damned if they don't swing their stimulate their ego.
Secondly, you sound incredibly green. Making MD in banking is not exactly the crown jewel of lifetime achievements. And being a successful banker isn't all that impressive, although it may seem as such to a 20 year old vying for a banking job. To devote every waking hour of your life in order to become a MD at JPMorgan is, and I use this word seriously, pathetic. It's the definition of not knowing how to appropriately spend your time and not understanding the law of diminishing return.
I disagree with your MD being boring assholes. About a month ago, I met an MD on campus who was the fucking man. He was interesting to talk to, was not a one dimensional know-it-all, and bought everyone a bunch of drinks at the bar after the alumni event.
On the other hand, I've met another MD who is an egotistical douche bag. I had an interview with him (as a sophomore) and he started asking me questions in Spanish because I told him I studied abroad for a few weeks in a Spanish speaking country. At the end of the interview, he told me IBanking is on the same level of NFL, MLB, NBA, etc,. and I couldn't cut it.
The funny thing about this....the asshole was an MD at some no name boutique in Cleveland and the cool guy was named a partner at Goldman the week after he was on campus. MD assholes are like any other asshole ....they have an inferiority complex.
Thanks for the posts. I definitely agree that I need to some more introspection, but I also need more information to make a decision. I want to try to avoid a path that leads off a cliff (in general whether it be an engineer or plumber, not saying investment banking leads off a cliff at all).
Feel free to judge and bash this dilemma that I'm facing, but I've thought about pursuing a career in medicine. Also, feel free to make the connection between medicine and banking (hint: it sure as hell ain't altruism). I'm an engineer and more technical, and I know that medicine is perhaps even more of a structured path than banking. Once you're 27-29, you're almost completely SOL if you decide you want to become a specialist or surgeon. I realize that this is a 180 degree turn, probably shows that I'm not man enough to fulfill my greed, but I just want to see what the culture and attitudes of investment bankers are. I'm also in the process of researching the lifestyles and culture of doctors.
What happens to people who put life ahead of work and realize that they want more balance in their life? Do they go to business development or work in the corporate finance departments of companies and in general earn less income? Since money is a lubricant for many unpalatable experiences, I just feel that it'd be a shame to come out of banking in a job that anyone with a finance degree could do, especially after enduring so much. Sure you come out with a work ethic, but I'm sure that special forces soldiers and MIT engineers can put up with a lot as well. I guess I came into university without an idea of what the financial services industry does or what the culture and ideology of bankers are. I don't want to follow the herd mentality and I want to be more aware of opportunities, career satisfaction, and lifestyle after the IB, MBA, and PE.
You want boring try working with accounting firm partners.
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all office jobs are boring..except trading ;)
I would love to know what the OP ended up doing!
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This post can't possibly be legitimate; you are definitely a troll. If you think an annual 7 figure income is not "rich", then you are an unemployed college kid. Furthermore, if you had a guaranteed (understand, nothing is guaranteed) 15 year path to amass an 8 figure net worth, you are certainly an imbecile if you forego this path for another, more "efficient" one.
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There's no trolling here, you're the only one that sounds like a college kid. He's right on the money. 7-figures in NYC is not rich, its upper middle class. $1.5m is high-six digits after taxes.
If you're married with 3 kids, you're living comfortably but you're still budgeting and being smart where you can. Keep in mind no MD is living the lifestyle of a public school teacher. It costs money to live that lifestyle. And sure... maybe you live in a $3m apartment/house and that means you're rich based on middle American conventional wisdom, but you don't feel rich, you still think about money. Especially given the volatility in this professional where you need to bank a big chunk of what you make to smooth out the earnings volatility and support your lifestyle... which gets exponentially more expensive once there's a wife and kids involved.
People throw all these numbers around and it sounds like so much money, until you're actually making it. Then your tastes get slightly more expensive, your lifestyle gets a bit more expensive, you get a bit older and you're living comfortably but aren't exactly flying private, driving ferrari's and chartering 100 foot yachts for the summer.
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Which one of you guys makes $1mm a year? I'm sorry but you're all delusional. I'm 28 y/o with a lot of work experience and I've lived in NYC for 15 years. $1 million a year+ in annual income is rich by any city's cost of living or living standards.
Once again I pose this question to all those that are scoffing at 1mm: 1) How old are you 2) Are you clearing 7 figures annually? If not, stfu.
Is Investment banking actually GASP a good long term career? (Originally Posted: 05/03/2013)
The general consensus in WSO seems to be that the main purpose of IBD is to exit out to either PE/HF/Corp Dev etc. and that the majority of life-long bankers are those "who couldn't make it" to PE/HF etc.
I've networked with some bankers from BBs (and even MM/boutiques) and the majority of them seem to be very happy with their career and life - which is the exact opposite of what I've expected it to be, after reading many posts on WSO.
Among these several information sessions, the keys to note were:
Only the analysts thought it was "hell". Generally in-line with WSO consensus - IBD sucks and it's exit opps or bust.
2nd year associates and above were usually very happy about their career (especially the A2A promotes) and told me that the lifestyle of IBD as noted in M&I and WSO is mostly exaggerated (long hours but majority is just downtime doing useless stuff/nothing) and refers mainly to ANALYSTS. Once one reaches about 2~3rd year associate - life gets a lot better and weekends are mostly free (unless a deal process is going on but even then it's not severe during weekends).
The 3rd year associates I've talked with all told me similar information: in terms of promotions, reaching VP is not that difficult as long as you are dedicated (basic 3 years analyst, 3 years associate) and that the difficult part starts with VP to Director and so on to MD. However they also noted that the lifestyle and compensation of a VP is pretty good, so it's not that bad to be "stuck" there. (If a VP has a hard time bringing in clients, he can just focus on execution of deals, although this wont help him get promoted)
Now I know I'm dealing with information given from a smaller sample size, but is this information true? Is a long term banking career not as bad as WSO makes it out to be?
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you need to explain how you get 60% average tax rate.
GET ANGRY!!!
I was drunk when I made that post! stop it!
Measuring how bad something is based on opinions, is one helluva slippery slope. You seem to have some selection bias in the people you are talking to. It could be you are trying to rationalize that the downsides of the job aren't that bad or maybe the people most willing to answer your questions are the ones that have the most positive things to say.
Is IB THAT bad? No, but after doing IB most people can find a job that pays the same/more, with less hours, and more responsibility and control over what happens than a sell-side gig.
IBD is a real career and a good one at that. If you want a life of traveling and pitching clients, it fits the bill quite nicely. But that isn't necessarily what most IBD analysts want to do career-wise hence the negative perception. I wouldn't get too excited about the lifestyle though. Even if you're not in the office 100 hours a week, you'll probably be on the road a lot.
will banking make me happy in the long run? (Originally Posted: 03/29/2009)
wife and kids and less money seems more rewarding
To everyone saying that a person making a million dollars a year isn't rich, have fun being very poor the rest of your life; statistically speaking, you won't come close to that number at any point in your life.
1 million/year goes a lot farther in places outside London and NYC. I think I made that really clear. Also, I agree that 99.9%!of WSO will never make close to 1 million/year in their lifetime.
The ends justify the means
no... banking doesn't do shit in the long run because no one does banking for the long run... people who are qualified leave and make more money and people who aren't qualified get canned... those mediocre pussies in the middle become MDs
IBnutz said it right. Don't do it for the long run, it'll eat away at your soul.
I would never do this shit for long-term, but I also don't find the idea of wife and kids appealing.
Or you can aim for Partner or VP "in the long run".
Getting a wife? Have you seriously considered putting an end to models and bottles?
I would not call VPs and MDs of Lazard, Greenhill, and Moelis a bunch of mediocre pussies.
Flgators, does your bank give you a sign-on bonus in return for castration? Nobody goes into banking for a lifetime of analyst hours/work.
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Best type of bank for long-term IB career? (Originally Posted: 05/24/2014)
I'm curios as to which type of bank you all think would provide the better long-term opportunities if I choose to stay in banking. If someone were to build a career at one bank or type of bank (however unlikely that may sometimes be), do you think the learning opportunities, level of responsibility over time and earning potential would be greatest at a top BB (GS/MS/JPM), a lower-tier BB, or a top boutique?
Obvious arguments for top BBs are reputation etc, lower-tier BBs and boutiques are ability to grow business/improve bank reputation.
What do you all think?
The thing about using 52% vs 60% is that it's $80,000 every year. But I suppose now you'll tell me that $80,000 in discretionary income doesn't get you very far...
I would choose a top boutique because top BB bank due to volcker. Also, in trading, the bigger shops pigeon hole traders too much. I wouldn't want to be over specialized in one product.
^this, I know some people who switched banks just for this purpose (either to get promoted, or have a higher chance of getting promoted).
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Long Term IBD goal (Originally Posted: 06/17/2012)
Hey fellow monkeys,
seeing as many of you seem to know a lot about general IB Internship/FT roles, I thought you could give me good advice in how to pursue my long term goals. Let me give some background first.
I'm a second year at Oxbridge(rather leave it ambigous), doing Computer Science and I've secured an internship at one of the major BBs, albeit in their Technology(front office tech, for what it's worth) Division. While applying, I thought this would be more of an algorithmic trading - basically strat/quant role. However, it turns out that it's more of a software development role that isn't even near to the standard investment banking roles, not with the work/benefits/exit opportunities.
I will do the internship nonetheless, as the brand name + salary I'll get must be worth something in the long run.
I was interested in how likely you guys think it is that I can network my way through to IBD/S&T roles? It's not just about the salary or the ego trip - my long term goal is to do an MBA and a role in IB Technology will not get me far in that pursuit. Do you guys think that if I apply for an IBD role next year I can leverage this internship? I wasn't sure whether I want to do a Master's degree before the MBA(seemed like a waste of time), but if that's what it takes to have another year to do the internship, I'd be ready to do it. Do you guys think that doing a master's in mathematics(which I'd be inclined to do), would work better for breaking into IBD (or even S&T), than continuing Computer Science?
Thanks in advance!
I'm a second year in UK as well (even more ambiguous) ;)
Basically, your internship will add 0 value for IBD/S&T. Just apply for a summer internship again next year, but choose IBD/S&T instead. It's pretty much your fault for not researching what the role actually entailed... I've seen this happen quite a lot though, so don't worry too much. At least you know now. The course you do does not matter, literally. (Have seen History of Art students get in)
Just apply for a FO role when the time comes, explain your reasons for wanting to make the switch.
You guys are all nuts. I would like to live in the fairy tale fantasy land where a million bucks a year is not rich.
IB: Long term, or means to an end? (Originally Posted: 05/28/2014)
Back when I first joined WSO I wanted to do IB for all the wrong reasons. I'm in VC now and occasionally deal with bankers.
This is a legitimate question: Are most of you IB-bound guys (and gals) here looking for a career in IB, or just a great learning experience and a springboard to propel you toward your ultimate goal? (Or, for those who would admit it, just money/prestige?)
I have to say that in working with some senior bankers on a recent deal, I don't envy what they (or their underlings) do in the slightest, and I personally feel that I got super lucky jumping right into my long term goal and not having a layover in IB.
The caveat is that there is an inherent competitiveness built into some service oriented professions like law and IB, which is admittedly attractive. However, it just doesn't seem as fun.
Thoughts?
most analysts/interns i know fall into two camps. 1. the person who knows they want buyside from the getgo. reads 10-k's, writes up investment research on their own free time, etc. 2. the prestige ones/i don't know what the fuck i want to do with my life.
i've never seen an analyst who dreams of being a BSD MD.
This makes a lot of sense. It's good to hear, because IB MD sounds like a headache.
I am seriously considering IB long-term and genuinely enjoyed my (extended) SA stint. I live/work in Australia, where it is much more of a long-term career than in the US - a significant proportion of those who enter IB want to do it long-term/become MDs, and a lot of MDs I've seen really love their jobs.
Well, I'm at a growth shop, mid to late stage VC. I positioned my blog posts as "Lessons from PE" because VC is technically a branch of PE and because I thought it would resonate a little more and require less explaining. I didn't want the title to distract from the "success story" aspect so I kept it general. Going back, I would have been specific. We actually do the occasional buyout if it truly qualifies as growth, but it's rare and we never do super leveraged, financial engineering deals like a mega-buyout or top MM would.
Not sure what the point of this thread is. Sounds a bit like you made it to VC and now all of a sudden look down upon IB.
+1 for being candid.
Talk is cheap, but I can honestly say that getting into VC has been the most humbling experience I've ever had professionally, and I am far from looking down on IB as a profession. I have even worked with some who have been really helpful in a deal process.
That said, I work with some bankers who are constantly in the way, trying to game investors into leading the deal at higher valuations, name dropping other top firms and crossovers just to spur deal interest, withholding data including complete financials until the end of the process and then setting a hard deadline, presumably so we'll only skim through our diligence.
To the extent bankers facilitate the deal, I love them. To the extent they are an obstacle or worse, manipulative of the deal process, I lose respect.
Regardless, the intention of my question really was to see what people want to do long term.
I see IB as an entry to the business world, where you get experience learning about either certain industries (TMT, HC, NRG etc.) or about the M&A/R&R-side of businesses. It obviously doesn't hurt that the job itself pays well and the recruiting process to receive a job is fairly formalized, as one can see by looking through the posts on this site.
Pretty sure 90% of analysts going into it planning on leaving, and that number is probably 99% percent after their first year.
Why do most analysts do it?
-They want to get into PE/HF and dont have an easier/safer way of doing so -They want to make 120k in their first year out of college and not a lot of other places pay that -They are not sure what else they want to do and think that IB opens enough doors to make it a good start for whatever -They dont mind signing up for the hours because they know that they are more or less on their way out before they get in and will be recruiting for PE in a few months
When I was in b-school most of the post-MBA associates had similar reasons for entering. People on this site always say that if you enter as an associate, your in it long term(which often holds true). However, the ones I talked to seemed to think they still had a chance at the buy-side(and couldnt get in out of b-school) and had the attitude of "yeah ill work a lot, but im just going to do this a couple years then go do something else".
I think this is very true. However, I imagine that a lot of the post-MBA associates don't anticipate how hard it is to quit. Going from 300k after year 2 compensation to sub-200k at a corp dev job isn't exactly easy to swallow.
Mr. Manager - the job of the bankers on the other side of the deal is not to help you. Its to get the best deal for their clients. Of course they are going to be pushing you to do ridiculous things. One of my favorite parts of being a banker was getting buyers to overpay when I was advising clients on the sellside.
I realize this, and I think it causes inefficiencies. Sophisticated investors won't invest in any hot tech if the fundamentals are not sound, and there is no way to know whether or not they are sound if there's no time to analyze the statements. Maybe I'm naive, but I would think the best banker go for the OPTIMAL deal. I mean... say you jack up the valuation for your client, great. But then you have to do things like issue preferred participating shares etc, which gives up more upside to the investor unless you want to risk them walking away from the deal.
Mr. Manager, did your firm hire your own bankers in that deal? If not, you have only yourself to blame for getting pushed around by the sell side bankers.
By the way, what would you say to those who think buy side is better because buyers always get to push around the sell side bankers? It seems in this deal you just talked about, it's the other way around.
VC firms don't hire buy-side bankers when participating in a round of financing for a private company. However, sometimes private companies hire bankers to help them find financing, especially later stage companies not specifically looking for VC funding. Some VCs won't participate at all if there is a banker involved in the deal. So the fact that we are seeing roadblocks isn't our fault because we would never hire our own banker to push back in the first place.
That said, VCs will use bankers to source deals, get information and get opinions on competitors, etc, but this is usually through personal or firm relationships.
And to be honest we aren't being pushed around. The scenario isn't about us being bullied...
The best analogy I can think of is that it is like we are buying a house. We love the neighborhood, the house has great curb appeal, and we feel strongly that the property could appreciate very quickly. However, the seller's agent won't budge on price. This would be okay, except they won't let us inside the house at all. We are provided a few outdated interior photos and some sketches of what the interior could look like in a few years, and are expected to be satisfied. We like the property enough that instead of just walking away, we are stuck dealing with the seller's Realtor because he is preventing us from talking to the seller directly.
A bankers job is to do the best thing for the client. That could involve a combination of valuation, structure, terms and governance. In this market environment, where "sophisticated investors" are a dime dozen and essentially commodities, that is more often than not, cast a wide net and find the investor who is willing do the deal exactly along the lines that the client wants. You may not like it, but given that there's so much money chasing deals, it works best.
In a more difficult environment, or for a more complicated transaction or in a situation where a client wants to transact with a specific VC, you may see more love.
But right now, there's always someone who is willing to pay top dollar with limited due diligence.
You're right, though valuations are coming down, we have seen exorbitant valuations over the last year.
But you couldn't be more wrong about "sophisticated investors" being a commodity. Investors in general are definitely a dime a dozen, but here are a couple of facts:
There is an enormous performance gap between top tier VC and buyout firms and their mid-tier counterparts. There are precious few that post consistently top quartile returns; most VCs, for instance, including the 'name brands', are still chugging away on the steam from one great investment that made their entire fund back in the early ten years ago. The fact that there a many poor-performance firms for every good one is proof enough that "sophistication" is not a commodity. Which leads us to...
There is a huge difference between smart money and dumb money, ESPECIALLY to the entrepreneur/company. Sure there are lots of firms willing to throw their money at any hot start-up in hopes of lucking into the next Whatsapp, but that's not how sophisticated firms work. Consider:
Dumb money means a firm with no value-add and potential to harm the company. Dumb money cares only about exits; their diligence is poor, they chase the hot stories only, and they will not stick around when the company starts to fail. They overreact to hiccups, they repel better investors, they tend to be more litigious, and they will simply be poor partners. In private equity, you are sharing or giving up ownership. You'd never hire a harmful employee, so why give a huge chunk of the company to an average or dumb (dime a dozen) investor?
Smart money is simply the opposite. They will give you the cash sure. Maybe even offer less of it. But they will be better partners and help you navigate the growth or turnaround of your business. Only sophisticated investors offer smart money.
This is a difference that is in the DNA of the firm, and bad firms don't become "sophisticated" overnight. It takes the right combination of special people with particular expertise and a deliberate and disciplined strategy to even consider becoming "sophisticated".
Unfortunately, you're right that far too many investors are willing to throw money at anything these days. Unfortunately, you're also right that these are the investors many bankers search for. Why? Because quick deals at high valuations mean more fees more frequently, which directly translates to revenue for the company and bonuses for the bankers. And none of this helps the companies, which means that this kind of banker gets rich by NOT doing his/her job, at least until they are weeded out because they get a reputation for poor service.
Fortunately, there are good bankers out there that really do want, and get, the best deals for their clients.
TL;DR: The best deal isn't always the most money. In fact, it rarely is.
At the risk of sounding snide (not my intention), didn't you "have a layover" in Accounting? And isn't it equally fair for the IB Analyst to take satisfaction in not having taken a respite in the Big 4?
Have to say that I agree with @"JustADude"'s sentiment here, as much as I respect your story. This isn't a post I would expect from you, to be honest.
As for dealmaking tactics, I have found that, within reason, most bankers with in large-cap M&A (admittedly the only IB to which I have exposure) pursue relationships and integrity over a "quick fee". It's unreasonable to expect a broker not to respond to the incentives placed before him, but, in my experience, you're being overly critical of bankers in this thread.
Thanks @NorthSider. +1 SB for your candor.
I did spend my first year out of school at a Big 4 and I'll admit wholeheartedly that starting in IB would have been much more beneficial in every single way. And it is more than fair to say that any IB analyst should be grateful every day that they aren't in the Big 4.
So yeah, I really regret the way I worded the paragraph you quoted above, because it sounds super condescending and also, as you point out, hypocritical (both unintentional). My question inquiring as to why most people get into banking was sincere and simply out of curiosity. But saying "I don't envy what [bankers] do in the slightest" was the wrong thing to say. I simply meant that I love what I'm doing now, but it definitely doesn't sound like that.
I apologize, because the last thing I want to be is the guy who thinks (or even seems to think) that he is better than other people because of his job or anything else. My conversation with @mergersandacquisitions78 is merely arguing that a bankers job is to add value to the process and do what is right by the client, and that doesn't always mean getting the best valuation which I think you'd agree with.
Incidentally, we closed the deal and everything went pretty smoothly after that post. The bankers I worked with turned out to be really great and actually were instrumental in lowering the overall round and amenable to lowering the valuation and I think everyone got a great deal, in large part because of the bankers hard work on a difficult and unique deal.
I completely am in agreement. In any M&A transaction, there are a series of sometimes competing priorities: price, terms and conditions, quality of partner, governance, employee issues, etc.
In a cash sale its very easy, its almost always about price maximization and minimization of pre or post closing risk. Sometimes when selling a family business, social issues are also important.
When looking for a significant primary growth capital investment, I always advise my clients that price is important but not the most important thing. Getting the right partner, terms and conditions and governance and aligning interests is much more important for long term value creation.
jesus, this thread was well intentioned and it turned into an argument about incomes, for fuck's sake.
OP, I'll try to help
people skills help in EVERY profession, not just banking. kids on WSO think that if you're a model machine, you will be desirable. the truth is, even the quants have to have people skills to ascend to management and real money. same goes for engineers, IT, medicine, biotech, etc. ALWAYS be working on this, and don't be ashamed of it.
completely agree here, the grass is greener mentality is pervasive and I think it's pretty crappy.
this is where we part views. the rainmakers I've met (though not so much in IB, more in PE, RE, pharma, IT, etc.) love their lives. they make great money, work very hard, spend tons of time with their families, and basically just have the balance they want. you don't have to put off fun, you just have to adjust your definition. if "fun" is fishing or golfing or sailing every day, then yeah, you may have to put that off, it's called retirement. fun can be having the ability to see your son's baseball game on saturday (a MD would be able to do that once in a while most likely), it can be spending friday night with your wife on a date to a nice restaurant followed by a concert. it can be a short guys' weekend at the beach for golf, boozing, poker, and shit talk. all of those things are fun, and busy people do them all of the time. don't have the misconception that just because you have no life as an analyst it will ALWAYS be like that. it will come in waves, and you will have time to do the things you want, even if it's not as often as you'd like.
I agree on the "rich by 40" perspective. unless they have a liquidity event where an investment goes up by an order of magnitude, they have family money, or they don't ever live large and save at a rate of 60%+ (we have a client who's 40 and worth $4mm, he's in the latter camp), you're not getting there. if you make $500k a year and live in a $400k house (normal in the suburbs of my area, if a bit small), drink $10 wine and don't ever go to steakhouses, you're in the minority. part of the beauty of money is it enables you to experience the finer things without feeling worried. you can play that $200 round of golf and not starve yourself for the next couple of days.
people think they'll be rich by 40, until they actually get there and realize "holy shit!" which is not a bad thing, most people I know who are doing well want to keep the gravy train rolling, and most have kids so 40 would be a pretty inconvenient time to retire from a college perspective. if you want to know what it's like when you're 30-40, it's like a lot of other careers, you're just starting from a higher income base. people in banking move to all other parts of industry if they're not career bankers, but they're all pretty normal people, they have families, hobbies, friends, and personalities (unlike a lot of WSO). don't sweat it dude, life's a treat.
40 hours jobs that pay well...when you are "old" (Originally Posted: 05/10/2008)
Imagine you are in your late 40's or entering your 50's, you had a great career (a fruitful 20-30 years) you have a nice house, cars, money saved up, kids on track, so basically nothing really to worry about. You wanna enjoy life, travel, but still wanna do some interesting work, that pays reasonably well (around $100K) but you won't need to put in more than 40 hours a week.
What are the options? What kind of jobs, companies, industries can you think of?
Would be interested in your thoughts!
Easy. Run your own business.
Why would you want to take orders from someone else?
bang on point.
that's the plan buddy
SEC and Federal Reserve. With several years of finance experience and Grad school, I believe they would be starting you at between 100 and 120K. Normal raises in a 10-15 year period would bring that salary up to around 150-170K. Those two agencies have a higher pay scale than all the rest so that they can compete with the high paying finance field. Or......
Take a few years and get a PH D in a three year program (UVA)and teach for good pay and plenty of time off.
Ugh, working for the government? How embarrassing.
The government would need to pay me considerably more than 150k-170k to compensate me for the humiliation involved.
Yea my dad runs his own business, works like no hours (he plays golf liek 6 days a week) and makesavery varied income of between like 70K and 300k depending on how the weather is (he sell hurricaine shutters). And he lives at the beach. Not a bad life.
So what do you do? -I work for an investment banking firm. Oh okay; you are like my brother, he works for Edward Jones. -No, a college degree is required in my profession
I doubt most people would consider working at the FED to be embarrassing. SEC maybe. Keep in mind we are talking about someone who has already had a successful career in IB/PE/HF, made plenty of money, and is looking for something easy to occupy their time. Prestige has already been accomplished. My personal plan is to run scuba diving trips after I retire from the business world.
Freelance Consulting. Try to use your network to set up some consulting gigs. You only have to take on as many projects as you want.
The problem with running your own business and only having to work 40 hours a week when you are 40 or 50 is that you must start that business in your 30's. I have no intentions to start a business in my 30's.
Teaching career sounds very good to me actually. I have been thinking about it...it would be a nice thing to do when older. Are you able to start a PhD when you are "this old"? Wouldn't the MBA be enough at some business school? Must not be Harvard and the likes...
Freelance consulting is also something you can do parallel with teaching so that appears to be attracting.
I have onve heard about a company that uses ex-consultants in sort of freelance projects. It was mentioned that they do not have to work a lot, but clear around $300K a year. Anyone heard of this? I know it has been dealt on this forum, but I forgot the name.
Which idiot told you that?
If you're over 40 or 50 or whatever, there's nothing stopping you from starting your own business. I hope you didn't think entrepreneurship was the exclusive preserve of 20 year olds in Silicon Valley. I actually know a few 40+ year olds who've successfully started their own businesses.
Alternatively, you could buy up one or more existing small businesses and work on improving them. I also know a few people who've gone down this route.
In the cases I have in mind, the people work extremely flexible hours, as little as a few days a month. The trick is always to hire the right people then delegate. 40+ year olds are far better at doing this than 20 year olds.
I gotta say, never disappointed in the idiocy of some posts... starting a company is not an easy thing to do and not something you can dismissively toss out there as an alternative.
It reminds me of an adult asking a kid what he wants to be when he grows up and the kid replies with "I want to be a millionaire."
In my view, starting any kind of company requires a huge amount of time and energy in the first X years. There might be guys who can make it with "just a couple of days of work a week", but I highly doubt it is the general picture. A strat-up is very riksy and when you are in your late 40's, maybe you do not need that stress anymore. You are in a good position if you can continue doing--as a freelance, or as an enterpreneur--exactly what you did at your previous job, bringing over the clientile, i.e. continue being a consultant. This represents minimal risk and that is what an older dude might be looking for.
Some ppl might jump at me for this idea :-) : One of my friends works as a local branch manager--that serves small- and medium companies--of a national bank (non-US). He is out by 4 p.m. sharp every day and on fridays, he's out by 2 p.m., the latest. The branch performs pretty well on a national basis, so they clear ok bonuses as well.
How does this sound? Does someone have friends, familiy who do this job? How do they like it? How does this pay in the USA?
plus,
you gotta live your own life.
bish
bash
bosh
zing
Technical recruiter ? you can make 100k if you are good with relationship building
If you put that money to work correctly (say in real estate) you would be able to live off the returns and then follow a passion or "career" without worrying about the pay. If you like cooking become a chef. If you like working out open a gym. If you like painting put some paint on some canvas day after day.
Buy lots of franchises.
Lots of my professors lectured (with just an MBA) and then had some side business (consulting).
Take a seat on a board. Beyond low hour commitment per year and you'll almost always clear six figures, assuming the company is large enough. You need to maintain a strong reputation to get these seats though.
I've been meaning to comment on this, as a 30-something who has spent their career in banking, and with no immediate plans to leave.
I have said it before and I will say it again. Your career in investment banking only really begins when you make MD. It may be hard for someone just starting out to swallow, because its a long road to make MD, but the truth is: that's the step that really allows you to play the game. Everything before that is simply a well paid apprenticeship. So I while I think people should feel proud of making MD and perhaps look up to MDs, its no differently than completing your fellowship in a specialized area of medicine.
The variability of compensation as an MD is extremely high, and not necessary easy for junior bankers to fully fathom as they are paid effectively in a lockstep. I know MDs who average $20mm a year, and I know MDs who average $1mm a year. I don't know any BB NY MDs who average less than a $1mm (they would be forced out which is another reality of the job) and I would say post financial crisis average is around $2mm. As an aside, I always find it interesting that when people on this board compare careers, they look at the absolute top 5% of PE guys or HF guys who pull down $10m+ and compare them to the median BB MD. If you took similar percentile outcomes, except at the very top (top 1%), the compensation converges and I'd say median is still higher in banking.
Is $1mm a rich or upper middle class lifestyle? Depends on your perspective I guess. Certainly, even in NYC, it can give you a comfortable lifestyle with everything one could possibly need and more. Its not an extravagant lifestyle, but who really needs extravagances. Certainly, the top half of MDs pulling between $2mm-$20mm a year can quite quickly afford extravagances if one is so inclined.
As far as the long-term career path and lifestyle go, I certainly work very hard, but no harder than my peers in private equity or the senior corporate executives I cover (and there are MDs who work a lot less harder than I do). Another thing people tend to ignore that in corporate careers, people tend to work harder as they get more senior (vs. banking where the pyramid creates the opposite effect). But the fact of the matter is that people in successful corporate jobs tend to work hard wherever they are.
As far as the personalities go, amongst banking MDs, there are difficult individuals and good, well rounded people. But I don't think people should put MDs on a pedestal. Being an MD is essentially an upper mid level corporate role. Some of us will make it to the very top, others won't (there are many different grades of MDs). The good part of banking though is that even the ones who don't make it make good money, and the ones who do make it, make outstanding money.
I personally think being a successful MD is one of the most interesting jobs out there. I obviously still have to pitch for business but the more I do it, I choose my clients, not the other way around (i.e., if I put my time onto something, I will win it. The constraint becomes where I choose to spend my time). At any given point, I'm working with 10+ of the most interesting companies in my industry, advising on their most important strategic matters or raising critical capital. If I pick up the phone and call any of the top executives in my industry, I'm dealing with them on an equal playing field. And I have the time and running room to really dominate if I work hard for another 5-7 years.
Nothing good comes without sticking to it for a relatively long period of time. Successful careers in your 30s and 40s are built by working hard and developing real valuable skills in your 20s.
Where do most i-bankers end up? (10-20 years down the road) (Originally Posted: 12/09/2015)
I know that this forum is 90% populated by college kids and even high school kids looking to break themselves into a summer analyst position. However, there are a few Certified Users out here.
To those of you who have first hand experience, where do most people who start out as analysts end up? Is it truly a GUARANTEE to riches automatically, once you accept your first BB IB SA offer? I feel that a lot is said about how to break in, but there isn't enough information on what a high finance career looks like typically for people later in life.
Do most people make it to top PE (and do those that make it stay there to continue making bank?) Do most BB IB analysts end up with 1mm+ jobs by the time they hit 30s? For some reason, I just have some doubts about this mystical Wall Street career thing. Surely as an up or out field (finance as a whole, including PE/HF/IB), with its steep pyramids, most people don't make the cut anyway no?
MDs pulling in 8 figures? Correct me if Im wrong, but they are senior partners deep into their 40's and 50's. I was only referring to MD comp. after their 1st year.
Yes, these are senior partners who have typically been MDs for at least 5 years and more likely 10 years.
But like I said, your career in banking only begins when you make MD. Everything before that is just a high paid apprenticeship.
Very few kids from an analyst class end up with $1M+ jobs in their thirties, although I know a couple who do. One guy made a ton of cash at a HF, quit and now travels the world. From my analyst class ('04 BB in NYC) it's all over the board. I was one of the few people from my class to stay in banking post-analyst and then I founded a healthcare tech startup 3.5 years ago.
A large part of my class initially ended up in PE (a mix of mega funds and MM). I can only think of one guy still at a mega fund. Many more are still in MM PE and some of them are moving up the ladder in PE, two good friends just made partner. A bunch of people are in hedge funds, including some that originally did PE. Those are the two biggest categories, although I see more and more people leaving to do entrepreneurship and more senior corporate roles. I've recently seen several PE guys jump to CFO/COO type jobs at portfolio companies for their funds. I can think of 4 other startup founders from my class who seem to be doing pretty well.
Okay, so you know Managing Directors who make as much as Lloyd Blankfein, a CEO - far above an MD? http://fortune.com/2014/04/04/goldman-ceo-lloyd-blankfein-gets-a-2-mill…
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