Investment Banking, Management Consulting and Meritocracy
Hello guys, I would like to share a thought on IB and management consulting. I want to emphasise that I am implicitly speaking of the entry-level experience till, say, 4-years deep into the job.
As many people on this site state, a significant part of the IB job (at least during first several years) is just putting together ppt presentations, endless font adjusting, some menial work on updating models and sometimes you get a really fascinating topic to work on, but it's just sometimes. And the hours are awful.
On the other hand, in the high tier management consulting (think MBB) you are engaged in higher-profile work (compared to parallel seniority in IB) focused on solving real-life business problems, getting a lot of exposure to how really various businesses work. And the hours are not that bad compared to IB. I think that many of you could agree with the conclusion that the consulting appears to be much more meritocratic environment, at least at the beginning of one's career.
So the question goes: why is the IB more often treated as some kind of more prestigious, "higher-tier" industry to work in, while consulting seems to be filled with more meritocracy and gaining solid business-related skillset more than the IB? Are young investment bankers really over-complaining about the meniality of their jobs or there is indeed some kind of unreasonable tag on the IB experience, not backed by too many rational arguments?
PS I understand that consulting isn't giving that much of strict finance experience but is this really making that much of a difference?
My understanding, having worked in large corporations that engage consultants from McKinsey and Bain, and from conversations with my dad, who is a CEO and loathes management consultants, consultancy isn't so much about solving fundamental business issues than overcoming internal politics (90% of the time). E.g. if two managers have different views of the direction an organisation should be taking, an Ivy League MBA from Bain makes a good 'impartial' third-party to pick a winner. Anecdotal accounts from senior management and executives are that there it's difficult to trust a person with (often) no real-world experience to fundamentally improve their businesses. This view probably wasn't helped by Jeff Skilling taking his blue-sky approach from McKinsey and promptly managing Enron into the ground.
Of course, my understanding is biased because I'm in Southeast Asia, where businesses are generally more conservative (and smaller).
I'll second jmmtn4j here.
Bankers make things happen. Consultants say what could happen. Pretty sure bonuses in banking have at least an extra 0 behind the number compared to bonuses in consulting.
On bonuses: the pay is a little higher while speaking of entry positions, but I am convinced that on the other end the pay is mostly comparable (think MBB Partner and IB MD) with sometimes the MBB guys having an edge. Also, the demand for IB services is quite volatile and strongly dependent on the condition of the economy, while there is a constantly growing demand for consulting services observed - bad times are drivers for survival consulting actions, good times are drivers for inducing even more growth. Sometimes it might be the case for i-banking, but not even close to the case of consulting.
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