Whats the point of investment banking?
I've been on this forum for a while now, and I just can't stop thinking about this. "Whats the point of investment banking?" What value do you bring to a investment bank that makes them pay you anywhere from $100k to over $1,000,000 if you are a partner? Literally you're just being somebody's slave who is probably super lame and just kissing butt because you want to move up and taking crappy hours. Like lets be real:
- You need a Ivy League Education or go to a great university
- Once you get hired, you literally kiss ass.
- (Most Important) For all the hours you guys put in being somebody's little lap dog and doing all their work, if you focused that same level of attention and detail towards building your own company or empowering yourself, you will be (eventually) successful.
Isn't this pretty pathetic? You graduated from an Ivy League and you have to BEG for a internship at an investment bank, working horrible hours, and your wage is TINY compared to the person who runs it. That person is a Don. Working for him makes you his (%#%@%). And here is the real kicker! If you don't get an intern you are probably screwed at ever being an analyst, so it is literally do or die.
SECOND of all, you need to have all these "EXTRA" crap that you don't even care for, such as joining the financial club of your school, or making a stupid blog about the markets, just to SEEM MARKETABLE to your future employer.
Listen, some of you are probably super pissed reading this, and let me say this, Prove me wrong. Tell me what you do in an investment bank, that you COULDN'T do yourself, (Obviously deal with the big companies but, that skill set could be taught and learned without all these other uppity prestigious crap of going to an ivy league etc.) You aren't building anything at all. You are just doing some excel here and there, and acting like you're building something important but in reality you just get a tiny commission.
In conclusion, the real Dons are a Steve Cohen who was making tons of money trading before he went to a hedge fund, Ray Dalio, etc. Everybody else will NOT reach that level period. You guys think if you go to Harvard Business School, you'll magically just LAND these hedge fund jobs? Good luck! You want to get rich? I have a solution.
Our Society pays you on Intrinsic Value. If you get paid minimum wage, that is what you are worth to society at that time. The issue is that, if you don't work, you will not get paid. YOU TRADE YOUR TIME FOR MONEY. The only way to defy this, is fame. Being a Lebron James or Kim Kardashian defies this law because, they get paid extremely high for their line of expertise that isn't normal for most people.
Get out of this pay scale if you aren't an athlete or famous person.
The second way is to provide a value to the market place and get paid off that. For example if you own a restaurant, you are trading time for money. But if you franchise it to let's say 20 people, now you are free and you get money every month no matter what. Invest in real estate, and you also get money every month.
Back to Investment banking, lets talk!
First off, there is a sense of entitlement coming from you. Just because you graduate from an ivy league school doesn't mean you are entitled to anything. Second, you're assuming that everyone that goes into investment banking wants to be a billionaire. That's not true, many people just want to have a good quality of life. Getting paid 200-300k a year, while small compared to say a CEO, is still a lot of fucking money. Third, " You aren't building anything at all. You are just doing some excel here and there, and acting like you're building something important but in reality you just get a tiny commission." while this may be true, you are still learning. When yo learn, you can use that skill set for other areas in business that you may wish to pursue. You don't need to go to Harvard to learn computer science, you could probably learn it yourself if you tried really hard, but it sure does help.
Thanks for taking your time to comment. I'm just playing the devils advocate in this post just to see what people will say about this type of view. It just seems that there's a lot of time being wasted when it comes to joining an investment bank due to "appealing marketable" to your employers, when in reality once you get the job, the extracurricular activities were useless. For example, joining a finance club and getting a leadership position is probably 90% no interest in that club at all, just doing it because you want to seem marketable to the Investment Bank. Even going to an Ivy League, doesn't necessarily mean you'll be a great investment banker, because I'm sure it's mainly on the individual skills once you enter a bank, not on your school. Third, with getting a commission and doing excel, we all know you aren't building a Apple or Google, you're just getting work done for a higher up who assigned it to you. With that said, why is the compensation so high for this line of work, considering that almost anybody can do it if they 1. Get the opportunity to even get hired by an investment bank. 2. Have the work ethic to work long hours. Lastly, where comes the "Prestigious" oh we're investment bankers we are better than you attitude, coming from that is so prevalent in places like New York. I know not everyone is like this, but you do find these characters. Investment banking is about also being socially well adjusted and making people want to be around you as a team and get the job done, but it seems like these types of characters are the exact opposite of what the Bank wants when it comes to finding people who are socially well adjusted and not total $$$$#bags.
"you're just getting work done for a higher up who assigned it to you"
You've basically just described almost every single job out there in this world lol.
"why is the compensation so high for this line of work"
Because this line of work is a lucrative business. Would you rather have the MDs keep all the money and the analysts make minimum wage? I don't understand where you're going with this.
Cliff Notes Version: Be Lebron James, Kim Kardashain, Ray Dalio, or Steve Cohen.
Got it.
Thank you, that was needed.
If you do not have the mental capability or discipline to completely read my piece of excellent work, then I can not hire you. We only want winners with an "I can accomplish anything" attitude. You didn't even try to read the whole thing, therefore you are not hired and I will make sure all the other local hedge funds take note. - Champagne
Hired into a philosophy club of a disenfranchised finance majors?
Gold+stein = Goldstein
Lmao ignore OP, that's apparently what all the other banks did. Don't worry champ, I'm sure I can put in call to the back office for you, get you a nice 40k/year gig in ops
You're acting as if IB is the only rigorous and competitive career path that undergraduates take. We all have similar notions of power/prestige/knowledge that we attach to our perceptions of investment banks. We are all almost competitive, power-hungry, money-chasing undergraduates who want to fulfill our lives intrinsically while also being better off financially.
You want to work at facebook/google/Amazon/microsoft as a SWE? You need to have robust academics, unique and often top-tier extra-curricular activities as well as personal projects, and go through several layers of phone/whiteboard/superday-style interview sets to even maybe just get a taste of what it would be like.
You want to get into medical school and be a doctor? You need to have top academic performance, good extra-curriculars as well as a plethora of little activities and experiences that makes you less cookie cutter. Don't even get me started on how it'll be another almost decade of med school, residencies/fellowships/internships and constant competition to get into a specialized practice as well as a decade of collected student loans.
You want to go to law school? Get a 3.8+ from top undergraduate schools and also have good extra-curriculars and experiences.
So I mean if we all wanted to live limited, often unfulfilling lives we could just work typical f500 corporate jobs making 40-60k, maybe 100k by the time we're 30 and have almost no job progression or lateral positioning. The perks/benefits/salary compositions between regular "business" roles and those pertinent to wall street are pretty substantial in my view and often what drives kids.
A majority of regular people in the business world are somebody's bitch and someone's working slave. You are in most places making just as little of a real impact as you would be as a simple entry-level analyst. The benefits and general perceptions surrounding IB are greater however and most of us here are willing to endure the horrid road ahead
Excellent post.
Good post, basically summarises into: ambitious folk doing what ambitious folk do best.
Malcolm X autobiography fan?
Actually I've never read his haha
What's the point of doing IB?pp (Originally Posted: 03/24/2014)
Pay: as a first or second year analyst after taxes and housing and food, you save close to nothing. You are basically working 100 hour weeks just to stay alive.
Learning experience: most tasks are mind numbing and menial, although you do learn a bit
Prestige: this is not 2006
So basically what I can muster is the network you develop, the resume padding, and most importantly exit opps. Is the only purpose to do two years of IB is an opportunity to move to the buyside?
was hoping someone was actually curious as to what benefit IB brings to clients and we could discuss whether the benefits get watered down or if they're really tangible, maybe then going into a conversation about incentives...
nevermind, 2/10, wouldn't read again
I was actually hoping to go that route, but some of these dudes are really butt hurt, which is hilarious. Forums are about learning, and having nonsense back and forth banter dilutes the integrity of the post.
We'll start with those two and hopefully people can add on more.
clients that need IB services are at an informational disadvantage, they don't know how to value their business, how to structure a deal, pros and cons of same, and they have no network of buyers. this is where IB & PE come in, people need advisors in these sorts of situations. the benefit is maximum value, ideal structure (issuing debt versus giving up equity, being allowed to retire versus having payout be contingent on owner employment, etc.)
this is secondhand info, I've never worked in banking but have many friends & family who did and still do. the way I've heard it described is like this: analysts are working on a deal, which has to go to associates for review, then VP, then MD. all along the way there are revisions or things that the client wants to see that need to be put in, but because VPs and MDs are likely not glued to their desks, analysts are sitting and waiting for these revisions to come back before they can move to the next step with that deal. I'd always heard that about 7pm-11pm was quiet time, where you were waiting to hear from your higher ups if it was okay to split, but it's too late to start on other work. if I ever wanted to catch up, I'd call around 8pm and nearly always get them. though not as regular, they say there are many of these quiet periods during the day, where you're either waiting on instructions from higher ups, or you're not working on a deal. so yes, you are in the office for 80 hours a week, because in order to get deals done in a timely manner, people need to be ready to act when instructions come in. however, 80 hours a week of constant work? nah. this was corroborated by a family member who worked at JPM/MS/GS in the 80s & 90s, he said most of the nights they were ordering pizzas waiting for their MD to get back to them with changes, after which they'd make the changes, get the final ok, then go home.
By your logic, what's the point of any entry-level job?
If you can't save any money as even a first year IB analyst, you're an idiot.
Yep. All-in, a bulge bracket analyst (bottom bucket) would make ~110-115 in the first year, and almost all your meals and cabs are covered.
@ltohang I can only assume you are trolling, or incapable of basic personal financial planning.
Still the best way to start your career if you're interested in advising or investing in large companies.
Definitely (as you suggested) the exit ops. The majority of the "better" finance jobs like getting their people out of IB. In many cases, the experience they gained in IB isn't even the best match for the new position- but that's still where they like to get them from. I have no idea why, but it happens. Also, headhunters aren't in the business of "taking chances" on people. They're in the business of making money. And that means placing the easiest possible people as quickly and as often as possible. So you want to give them exactly what they're looking for, and in many cases one of them is IB experience.
Kinda random side note on the whole IB thing. To any youngins considering doing it, my advice would be to do it ASAP. Right out of UG, I would have been willing to work 100+ hrs while on fire if I considered it a good enough experience. Unfortunately, coming out of a "non-target" that wasn't even an option for me. Fast fwd a couple years and several "resume building" occurrences later- and these same IBs are finally giving me chances and I'm turning them down because it's a lifestyle I no longer have ANY interest in pursuing.
tl;dr- If you think it's something worth doing, I'd get it over ASAP because you're only going to want to do it less and less with time.
Point of investment banks for a full-service bank? (Originally Posted: 09/11/2016)
Can anyone add any clarity on what an investment banking division adds to a big, full-service bank? With a focus on corporate finance.
Struggling to answer a question on this, besides the obvious of generating profit.
Briefly skimmed your post and got cancer from it, holy shit. I don't think you really understand how things work.
Please explain.
No.
It is simple, he said your post is a pain in the ass to read and nothing worthwhile can be drawn from it. Also, he thinks you don't understand IB or how anything else works nor did you remotely try to inquire.
Idk if u are a confused kid being hyper-enthusiastic about deciding your future... maybe i can kinda relate - if u srs, PM me.
It adds value to clients and picks up incremental income. If you already have the relationship in place why wouldn't you leverage it? If you can be a one stop shop, with a product that has great margin and is not as highly sensitive to interest rates as core commercial banking products, why wouldn't you? There's also a litany of advantages, if you have wealth clients then you can better serve them with better access to IPOs and new debt issues.
Doesn't get an internship in banking
Posts on WSO shitting on banking
Not true, I'm just playing the devil's advocate to get different viewpoints, and so far we got some good information and also a lot of bums trying to be funny.
OP, fuck you.
You'll do fookin nothing you little twerp.
It's a fucking forum you retard. Nobody suggested they would do anything.
Why don't you use the search function, or google for that matter, to find your answers? The info is readily available and I doubt anyone here wants to waist their time spoon-feeding it to you. "Playing devils advocate"? LOL ok
Eos facilis autem recusandae ratione eius et. Voluptatem quidem omnis provident ut. Veniam dolor dignissimos et labore at.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Facilis quisquam impedit consequatur explicabo fugiat voluptatum. Id consequuntur ad eum magnam distinctio. Aliquam ducimus iusto deleniti consectetur deleniti molestias vitae. Est pariatur libero ratione autem non ex maiores.