As I understand, most people use banking as a stepping stone to either business school or private equity. Meanwhile, banking at the senior levels at a BB pays quite handsomely with MDs & senior VPs doing very well. MDs work less "office hours", so the physical load is not as strenuous, and their job is more sales based. In PE, the work is no less demanding / taxing, as you must source and execute investments successfully. This also requires tremendous effort, skill, and a good bit of luck. And in order to earn carry, one must put in as much "career time" as one would to become an MD.
Obviously senior PE executives make more money. Is the anti-banker bias on WSO simply a fiscal one? PE 5mm > IB 2mm? To me, it seems rather sophomoric.
There is a much higher probability of "crash and burn" on the buyside if you are not a successful investor, while career bankers are relatively secure and have transferable skills.
Can someone explain this peculiarity, or can I just discount the bias as a byproduct of delusional college kids having no idea about the real world? Discuss.
Career bankers may not visit WSO as often as people looking for exit opportunities on first day.
I'm not serious
Funny. Finish up your first year as a FT analyst then revisit the topic. You'll see very quickly where the hate is coming from.
Seeing too many BSDs in the office shrivel into little midget dicks in front of clients?
Spot on
Enjoy the next sick round of diligence you do only to have a Managing Partner torpedo the 'investment'.
Just like your arbitrary numbers here ...
Most IB bankers at the director level (ie career bankers) make their money more off deal flow, less of the quality of the deal for the person funding it.
The resulting incentive effect makes them - consciously or subconsciously - more salesman like, more cheerleading for the deal to close. Then they can collect their fee and move to the next deal. After all, they have budgets to make and near term bonuses to maximise.
What will a banker do if he's been working 3 months on a deal that will deliver $10-20m of fees (which may be 25 - 100% of the banker's annual budget) and he discovers a deal killing issue at the 11th hour? In many cases, he'll downplay the issue, sometimes creatively (eg finding a real solution), sometimes deceptively (eg sweeping it under the carpet).
This incentive effect can be mitigated to some degree by incentives to play long term greedy (eg maintaining good reputation), but usually the short term incentives dominate heavily.
What makes it more frustrating is that the incentive effect usually seems to operate at a subconscious level. That is, often the directors are salesmen who believe their own bullshit.
You can see the short term focus in how banks work as well. In downturns, I've seen investment banks drop entire teams because there is a need to cut costs at a headline level and the cut teams' near term profits aren't strong enough.
This occurs even when it's clear to everyone that the cut teams would add value later in the business cycle. IBs commonly take the view that they can hire a replacement team at a later time, rather than keeping a low performing team through the cycle. The market for talent is pretty liquid and an IB can let some other bank keep an out-of-cycle team on its books for a few years, then make an attractive sign on offer for the team's directors to come across when the market for their services picks up.
Bankers are well aware of management's short term focus and this reinforces their desperation to hit near term revenue goals. This reinforces bankers' incentives to cheerlead a client to financial close regardless of the quality of a deal. The desperation is more acute the more out-of-cycle the director's business is.
i love finding pictures for these threads
HE HATE ME! love it.
this post reads like a Northsider original
Nothing wrong with being a career banker. I almost went that route (i.e., was a VP at a BB) and love banking work. Believe it or not, some people actually enjoy having clients, seeing deals through, and getting paid a pretty penny to do it.
It's important to note a few things. Not many high performing analysts possess the skill-set to succeed as a senior banker. Your responsibilities change meaningfully once you get to the VP/Director level. Gone are the days at plugging in and updating decks and models. You now need to manage transactions, source business, and keep the junior bankers in check. There's a huge difference between these skills. Also, many kids see banking as a stepping stone and nothing will get them to stay. They are chasing a shadow (i.e., some vague image of prestige) and will find themselves chasing their tails at the mid-senior levels of their careers. Reality is a bitch in that regard.
Not everyone who gets into banking out of undergrad has the interest or skill-set to do well with a different mandate (i.e., less analytical and doing what you're told to do). I have had some great analysts (technical skills) who went on to the buy-side, which was a better fit long-term for their careers. It's hard to progress beyond the associate level with technical skills alone, whereas you can become a PM at a fund if you have great technical and domain expertise.
There's a reason why there is such a high fallout rate among junior bankers. The lifestyle blows for the first 5-10 years and it takes a very unique skill-set to succeed as a senior banker… just as it takes a very unique skill-set to succeed as a key decision maker on the buy side. Very few people have what it takes to progress on either side. Accept this. It's the absolute truth.
Be open minded. Do what you enjoy. Don't be afraid to travel a path that others feel is unorthodox. This path is often times the best path for both career and general happiness.
Ok so number one was a bit of a tangent. More specifically.
Banks are large organizations are inherently political and often a true minefield to navigate. See all those guys at the top of the banks (Dimon, Lloyd etc, not to mention their liutenants and the Senior MDs)? All of those guys had to dodge mines, pick sides, backstab (or be part of a backstabbing crew) etc in addition to trying to bring home the bacon by closing deals, selling product, lending money, or trading stuff. This is like a full time job. Who do you suck up to? Who do you help out? Who do you backstab or not help? When do you shut up? Remember that this is all in addition to your day job (which is not a 9-5 and has its own pressures).
This stuff is tiring/draining/morale sapping and plenty of people hate that as well. Of course if you are happy to be a VP/Director/middle management and not gunning for anyone's seat, you may be ok as long as markets don't tank and/or people like you...
Whereas in PE, once you are there, you've got fee income. The capital is locked up and if you do well you can make a TON of money that's in your control (ie. you invested it etc), whereas pay is bank determined (your unit might do great but if the bank as a crappy year...). I'm over-simplifying a bit but hopefully you get the drift.
A bit of a ramble, but younger folks would do well to at least be aware of the enormous role of politics at any of these big organizations. It's one of the reasons people aren't thrilled about being career bankers etc, in addition to a million other things.
@devoutCapitalist - great points. I suffered through the career inflection point where you go from being praised for great execution in one performance review to being hassled for not bringing new business the next year. I clung on for a few more bonus cycles than normal, then jumped out of front office.
I often wonder if some of the gender discrimination cases brought against IBs in banking may be more about this standard struggle, less about gender discrimination (eg "Leading female banker suddenly told she is underperforming", "Top client accounts transferred to male bankers [maybe just transferred to better relationship people?]"). However, there's so much gender discrimination in the world, this the ability of women bankers to bring these actions where I can't doesn't make my top 1000 injustices requiring correction.
@Jamoldo - great point re: politics. I'll get self-referential to a post I put up early last year which tangentially touches on this topic: http://www.wallstreetoasis.com/forums/why-do-ib-directors-change-shops
@"SSits" - I just went and read the link. It's a timeless one that should be required reading for anyone on this board...
SSits, where did you transition to from your FO position if you don't mind me asking.
Look at his tag. It's literally in front of your eyes. And he is a verified WSO poster.
just curious: how does one move straight up in one institution, as in what do you have to do so well that warrants such promotion? What activities, skills must constantly be better than others? How often does this happen for people who really want it? Is it at all meritocratic, or is it really about knowing the right people?
Do you really think there is a "one answer fits all" response to this question, or do you think that it might literally change from employee to employee, boss to boss, industry to industry, and company to company?
A lot of people simply don't know about the functions provided by the industry to the rest of the market. Hence the reasons I think they criticise/hate this industry are (in order): 1. Ignorance 2. Ruing the fact that they couldn't get into this industry themselves because of ignorance above about the industry or not having the skillsets to get in this industry. 3. Envy 4. Some recent stories of dishonest practices by some industry players.
This question is almost a troll.
Meh. I left banking because I saw how MDs in my team were still subject to the beck and call of clients, working past midnight and working on weekends when a big deal was on. It'd be alright if the work was inspiring, but M&A process simply isn't. I couldn't stand the idea of having to do that when I was in my forties, so, might as well back yourself to succeed on the buyside. In any case, once you make the jump, you can always go back to the sellside if things don't work out, so, why not?
can't tell if humour or failed all buyside interviews
Why do so few people want to be career bankers? (Originally Posted: 02/24/2007)
Is it because they think that the job would get tedious? Is it because of the money or the hours? Honestly, from what I have heard and read you will be working just as much and doing similar work ar KKR, TPG etc. so that is not a reason. Do you get paid substantially more in PE than in banking? I can see why people would want to make the switch from banking to HF, but I don't see why they would want to move from banking to PE.
I, personally, would be very happy with straight promotions and just climning up the banking ladder
Believe it or not, there is a world outside of the office. And no, not everybody wants to work for TPG.
This concept is obviously something everyone who considers entering the field has to wrestle with and ultimately reconcile to their perceptions of what truly comprises leading an edifying existence in the short time we have.
For some, wasting the duration of your 20's, the "golden years" of your life, trapped behind a desk on Saturday nights agonizing over some comps while your friends are out havinging a ball, bonding through defining experiences they will remember for the rest of their lives, might just not add up at the end of the day.
My best friend's older brother was a Wharton undergrad, HBS MBA educated, 28 year old VP at Lehman, when he decided that being able to be with his wife and family, to raise his children, to coach his son's t-ball team, the value of these experiences and relationships were ultimately something that transcended any number his bank account could ever reflect, so he left IB and says it was the best decision he's ever made.
It's ultimately a matter of reconciling what opportunities you have and what means the most to you. Look around at kids in your classes; many aren't very personable,they don't have many friends, don't go out on weekends, no girl-friend, probably haven't been laid in years (or ever!), etc. so spedning New Year's Eve locked up in an office vs. watching a re-run of Battle Star Galactica by themselves in their apartment isn't that much of a sacrifice. For others, it certainly is.
I agree with both of the above statements. It is all about finding a balance, and I agree that banking is definitely not balance conducive. But the crux of my real post is "are a lot of the coveted alternatives". Do you really work a lot less at KKR, TPG etc? I know you work less at HF's but not at PE, where most people want to move to. In fact, many of the successful people I know still work a lot, even on weekends, yet have managed to successfully raise children, families etc. One of professors was an economist for BB and later had his own company and he told us how they did a lot of work over the weekend in preparation for Monday's markets.
So, what I am asking is this. If most banking alternatives are equally, or insignificantly less time-consuming than banking, why do so few people want to choose banking?
This is not a life vs. career thread. It is a why one time-consuming career over the other?
Oh that one's easy: because of the upside (astronomical earning potential) and the more interesting work (in IB you are constantly selling).
The former head of investment banking and COO of Lehman Brothers retired in his 40s to pursue family life and charitable causes.
It shows even those that reach the top, understand that there is life beyond the office....and it's definetely true, there is.
Look at Hank Paulson now working for the government as the Treasury Secretary.
Hank Paulson is not a good example. You would be a complete fool not to make the jump from CEO of GS to Treasury Secretary.
I guess, but then the COO and global head of investment banking at Lehman shows that even those that reach the top realize life outside of work is extremely important.
I agree. Once you have a couple of mil. in a bank account, another mil. in a reteriment account, a house, and a copule of cars, you don't stay in it for the money. You stay in it because you love your job and you are too young to retire
PE sounds sexy until you make your first fundraising trip to Little Rock, Arkansas, to kiss the ring of the head of the investment committee of the IBEW Local 169 pension fund. The North Dakota Retirement and Investment Board runs $10B, and you better believe you're gonna be making a trip to Bismarck when they say so.
That would sound bad to someone who thinks CalPERS is going to come throw 100m at them as soon as they drop the PPM off. Personally a cross country fund raise sounds fun to me
Being in client services gets tiring, tedious and old. And it's not all about the megafunds either. Senior people at good MM funds are making millions and millions off their carry and are able to enjoy their lives.
Banking's appeal is much larger than banking itself.
BECOMING A CAREER BANKER (Originally Posted: 02/02/2007)
Do many current analysts plan to be career bankers? How about plan to become associates? It seems like everyone I know what's to be an analyst but none plan to do it beyond that. Why is that?
Well the 100 hr work week for two years usually crushes your social life, sleeping pattern, and soul. So majority of people want to get out of it and live a normal 40-60 hour work week in the buyside of the business and have a balanced life.
but aren't hours at top pe shops similar to BBs.
yes, but not a lot of people go to top PE shops.
Unless you're talking admin jobs, 40 hour work weeks don't exist on the buyside.
Wingman, how many hours do you work at your HF?
Is this average among most HF jobs?
Depends. Most funds have no hard deadlines or schedules so you have a lot of control in your hours. Hours can really fluctuate based on investment strategy and market environment. With that in mind, you should expect 12 hour days. I put in about 15-17 hours, but I enjoy my work.
Keep in mind that if you work at a good shop, you'll be surrounded by people who love what they do and put in a lot of hours. It's not a job for these people.
I m not ruling it out as a possibility, but all I have been is a summer analyst, so I don't know. I think that it is definitely something I would be interested in, but things change
Wingman, do you mind describing what kind of HF it is ?
It's an event-driven value fund that manages a few billion dollars.
Banking - Long Term - personal life (Originally Posted: 02/21/2017)
Been a lurker on this website for a while, but am looking for some advice. Basically am considering several routes and like some inputs (especially from some older guys):
Quick background, I am in audit and have been for 6 months but hate the work with a passion. Passed the CPA, went to a non target school and have always been pretty decently academic. Went to the non target school because of the plethora of scholarships that were available. Fast forward to now I am trying to get into finance (preferably banking). I have tried to network my way into an analyst position for a couple months, but I have not successfully done it. Had some first round screening calls at a MM IB and at an EB IB, but didn't make it to the superday. In my defense it is the winter season when most places are mainly just looking for analyst 2s. I have thought about trying again and gunning for an analyst 1 come august when most banks need to fill their classes.
Work a small boutique with low deal flow (1-2 deals a year with some fairness opinions thrown in) but very good work life balance. Usually off by 6, 70% of the year. Obviously pay is lower, around 70-75k/year for their analysts.
Had a friend mention that they should be able to get me into KPMG corporate finance, which from what I believe is like a MMIB. Not sure how the hours to pay ratio is though
This is what I've been considering the most. Staying in audit for another 1 1/2 years and going back to B school at a top 15 school of course. I actually have a decent chance considering I am latino and can spin my story the right way(both parents are ethnic) and should be able to score a 700 on the GMAT since I am decently academic and passed the CPA on my first go. Also graduated with a 3.7 and did my undergrad/masters in 4 years which should help to push my b school chances as an "aspiring latino looking to lead in the business world which is predominantly white" (have been reading poets and quants a lot lately). From B school go into the associate path of course.
My main questions arise because I originally just wanted to do banking for 2 years as an analyst just to learn and maybe go to PE or something else with a better work life balance. With the whole b school stint thrown into there, I would be looking at banking for the long haul. So for senior bankers, how have you found the long hours to affect you in your personal life (marriage, kids, etc)? Or would you guys recommend me not go to b school and take one of these other offers?
Your advice is appreciated, thanks
You can go directly from KPMG to a BB IB analyst level position since its Big 4 Accounting
Career Bankers in Canada (Originally Posted: 01/27/2018)
Hey all, I'm a Richard Ivey HBA grad hoping to get some information about the industry. First off, I don't really want to go to the States or into PE/HF because to me there's too much risk and a lot of Canadians stay in IB.
I'm hoping to get a FT position at a Big 5 bank in Toronto and to stay there for my career. So can someone explain his career banking works? Is it generally more stable than PE and HF? Also I'm a bit worried about the "up or out" atmosphere I always hear about. Does this mean that if someones in a VP/Director position for too long they just lay him off? Also what happens to MDs, do they have like a limit to how long they can be there or a yearly quota or something?
Thanks
Up and out just refers to the structured progression in a banking career ie. 2/3 years as analyst > 3.5 years associate > 3 years as vp > 2/3+ years as director then MD. Generally speaking this means that you cant stay as an analyst or associate role for 5 years or something. You either move up and are ready for the next level or you have to leave/are laid off to make room for the classes below you. There is a constant influx of new MBA/undergrad hires in banking, and everyone is gunning for that bonus or promotion etc. That being said when certain groups or banks get crowded at the top, you'll start seeing vps or directors doing an extra fourth or fifth year before being promoted (if ever). MDs stay MDs for as long as they can bring in fees, if they don't produce then they get let go.
I think a big five Canadian bank MD can be a stable good gig if that's your long term goal, although you cant really predict if you would make a good MD until youre in that role and are asked to generate business.. It's a tough transition to go from a execution guy (VP/Junior director and below) to salesman (directors/MDs). The main downside to a long term career IMO at a Canadian bank is that it isn't quite New York bulge bracket banking. You'll never have quite the same upside comp in good years, or prestige or marquee transactions on your deal sheet. It can be a comfortable lifestyle though without some of the negatives like massive layoff periods or amped up stress that are common in NY.
.
Career Banker (Originally Posted: 12/31/2016)
Hello -- I'll be doing a summer of IB SA (think JPM, Citi, GS, MS) and if I am able to get a full-time offer I don't mind pursuing a career banker track (I don't feel entitled to a PE or Hedge Fund job and wouldn't hate myself if I don't get one as I value structure and security).
With that being said, I also want the pedigree of a top MBA program. What are my options here? Can I get the associate promotion, leave for B-School and return to my firm? Help me an others considering the same think through this!
Firstly, just focus on getting a return offer first. Thinking ahead isn't bad but you should focus on these intermediate steps first.
Second, nobody really cares about your educational background once you start. As a banker, your deal experience (i.e. what you've done, what deals you've closed) are the most important. If you do get an A2A promotion, going for it trumps the MBA route purely for building a career in IB.
Sure, the MBA route may help you build a network and pedigree, but so does working for 2 years -- you build relationships with your clients (sponsors, corporates) and other banks you work alongside a deal.
But, but, but...HBS...:(
What do ppl do who dont get A2A?
"I don't need the prestige of a buyside to mask my insecurities, but rather that of an elite MBA." Maybe you should just experience IB this summer to decide if you like it or not and go from there.
Plenty of people are career bankers. Less are career investment bankers. I suggest you start and then decide. Banking is transactional and relationship based. There is also a skill set switch that many people cannot make. A lot of people get tired of the dog and pony show and want to make the investment decisions (which can bring significantly more compensation). That being said, not everyone is interested in analyzing SKU level data and macro economic impacts of a number of MM industries and companies.
Realize this. A good foundation in IB can transfer to any number of product groups within a bank or other related careers. Once you start working you will realize that the "path" commonly talked about on this site isn't the only way to succeed and that there are many more routes in and out.
How common is the A2A promotion?
Is it something that is almost guaranteed as long as you don't suck?
Firms that groom analysts to be career bankers? (Originally Posted: 03/10/2016)
Main question is the subject line: What firms groom their analysts to be careers or have Centerview's value proposition/ hope for analysts?
I suspect this will be 100% concentrated in EBs, Boutiques, and MMs because BBs are setup to be 2-3 years and out. Additionally, to identify this further a better gauge would be to ask what firm has the highest A to A promotion rate and subsequently A to A to VP.
PWP really focuses on keeping their analysts and is a great firm for getting into HBS as well. Moelis and Lazard both offer associate opportunities to analysts and do promotions after two years. Greenhill has fewer associate promotions. Blackstone didn't really do promotions and it remains to be seen if PJT will change that. Don't know much about Evercore.
I wouldn't say BBs are all about the 2 and out. From firsthand experience, I know GS tries very hard to make analysts stay on as associates. Believe JPM has also been trying the same recently. If anything, I would argue that boutiques are more so the 2 and out system. Do think that boutiques are better for being a career banker when you're starting out because of the faster promotions (2 years vs 3 years at BBs) but have heard that it's better to jump to a BB after hitting VP for better client relationship building opportunities.
Evercore - heard that it's alright for A to A promotions. Not sure if that applies for non-NY offices.
Interesting post actually, Is it easier to get Mandates while being a VP at MS vs Being VP at a boutique ?
If you do a search for threads relating to MBAs choosing between BBs and EBs, you will see that this has been discussed many times. The consensus tends to be that EBs are a better choice for analysts because of the lean deal teams, greater responsibility, etc., but at the associate and above level, BBs are a better choice because of the resources they provide.
Solid 2nd year GS analyst = 1st year solid associate at any other bank.
LOL trolling at its finest.
Actually no, the correct statement = "Solid 2nd year analyst at bank j = 1st year "average" associate at bank i, for i,j from 1 to n"
GS tries very hard to keep people from recruiting/retain top analysts, but I'm not sure how successful they actually are in doing so.
Depends entirely on the group. A surprising number of FIG analysts take them (GS FIG has stellar PE placement too) while pretty much everyone in CRHG peaces
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