Every so often a single comment appears on a thread which merits a post all its own. The following is one such comment made by WSO user Relinquis on the Bankers Threaten to Walk thread. I thought it was so good that I got his permission to repost it as its own thread. This is excellent career insight/advice. Take it away, Relinquis:
A few points (you'll want to send some hate / monkey shit, but it won't change reality...)
- Investment Banking Analysts aren't bankers:
Analysts at financial supermarkets aren't bankers. They are staff. Associates / lower VPs are junior bankers (in training) and their compensation will matter more to long term retention and performance than analyst level pay. When you see their compensation drop "permanently" this is a bad sign...
- You guys are employees:
You guys are employees. If you don't like your lot, leave your employer or organise to negotiate (unlikely). Having said that, bonuses are part of the deal for employees. Your employer can't set expectations of bonuses and then constantly disappoint them without expecting defections, bad ink or long term changes in the kind of employee they attract. If this is happening, take it as a bad sign.
It's not realistic to expect comp at the junior staff level to be tied closely to corporate performance. You guys aren't partners / shareholders / CEOs. Analyst bonuses are rounding errors.
- This industry is going through structural changes:
Big banking is going through structural regulatory changes as well as economic ones. It might make more sense to think of how these changes will shape possible roles and careers for you than to worry about the jobs of the past.
It might be a good thing for bankers in the long term. It might make their work meaningful again. what do you guys think? Will the partnership model make a comeback? . Would you rather be a VP at a proper boutique doing deals based on your relationships and expertise or at a financial supermarket that wins deals based on loaning out your grannies savings? The latter is shrinking due to regulator / economic forces.
If you haven't, I'd recommend reading John Knee's "The Accidental Investment Banker". Regulation will shape the nature of banking (it already has).
-Alternative careers in finance:
It might be time to consider alternative careers in finance or alternative types of firms if you want to be a highly paid employee. The buyside is interesting and can be lucrative (I'm biased). On the sellside, how are firms unaffiliated with your grannies savings doing? Cantor Fitzgerald, boutique banks, etc...
The only way I could see myself on the sell side is if I was raising money for my own deals or if I was at a boutique firm where I could make partner at some point. It's just more meaningful work to me. I've never seen the appeal of being a lifelong employee of a large banking corporation, but to each his own.
- Don't define yourself by your job & don't postpone living your life:
Take a look at the comments on the girlfriend / entry level dating thread. You don't want to be one of these losers. Sacrificing your youth and relationships to a financial supermarket / other employer only for them to screw you on your bonus. Look out for yourself, your employer isn't going to do it for you.
Manage your career and focus on what you can control. What industry you are in, your education, the relationships you have developed, your client list and your transferable skills.
- Working for not much $55k, $100k, $150k, whatever...
You can't expect to get away with paying people less while retaining high calibre & motivated people. The market doesn't work that way. In the short term they will work less, they will leave or they will work for you and sell you out to a competitor (jump ship with your client list). Long term they will retain lower calibre people or those who choose to work less for less.
I'm not special, but I've turned down offers of $150k salary plus a bonus of 100 - 200% deferred over two years (I called bullshit, who pays 200% and defers the bonus?) while being out of work, because it was for roles that should have paid salaries of $200k (or less with a proper bonus structure). It's a signal that there is something seriously wrong with the company that makes that kind of offer. Sure, someone else who needed the job to make payments on their mortgage would have taken it, but they would leave to another role 6 months later.
The only reason employers would move to a model that pays less is if they are adopting a business model that doesn't require highly paid high calibre employees. So if this goes on for a long term, take it as a signal to do something else.
Manage your career. No one is going to do it for you.
That is some Hot Fire right there...I'm surprised that Dylan wasn't spitting that
Dylan, Dylan, Dylan, Dylan oh and Dylan
Do ib analysts/associates even get "real" client coverage? I have honestly seen 0 analysts in diligence meetings and can count the associates I've seen on one hand.
FWIW, I'm sure this varies firm-to-firm, group-to-group, deal-to-deal, but yes. I'm an analyst and have gone to a whole bunch of meetings already - diligence, pitches, org, etc.
Yes, yes, and yes.
yeah, that comment got Relinquis automatic Certified User status.
When is the community BJ for Relinquis?
Cool post, thanks for putting it in perspective.
Favorite part. Your employer does not care about you and will throw you away.One other thing - I'm in consulting, not banking, but think it holds true for me as well: there are plenty of people in other countries who are capable of doing our work and willing to do it for far less. Over the last 2-3 years, I've watched my firm send hundreds of non-client facing analyst roles to Asia, Latin America, etc.
Manage your career and focus on what you can control. What industry you are in, your education, the relationships you have developed, your client list and your transferable skills.
I feel like what Relinquis said hit home for me. I'm a Marine infantry vet who has been jumping back and forth between studying different fields in an Investment Bank to figure out what fits, and slowly realizing that for me, it's an ego thing of wanting to make money and be a shit hot bottles and models kinda guy. Sooner or later I'm going to accept that this lifestyle isn't as glamorous as I'd like to dream, and the opportunity cost of spending the best years of your life is...well, expensive. Expensive in a way that could never be matched.
I think I'd settle for a back office or even mid office position. I'm not managing my career for career, I'm managing it because I want to be happy. Isn't that why we're all here, reading the OP?
this might be easy in theory, but having worked non-stop for the last 4 months without any days off, 90-100 hours, right now all I really want is sleep at the end of each night. And I'm not even in IB!
When I do head out, I'm usually an exhausted buzz kill, liquor only helps me pass out quicker. You guys got any suggestions send them my way.
Unfortunately in this business there are so many super-competitive people that you arent going to be successful if you dont "define yourself by your job". I cant speak for everyone but what I do requires alot of commitment and I am only interested in working with people who have the same level of commitment because I am not trying to waste my time.
That said, being committed doesnt mean you cant get laid or have a social life...you just have to be committed to that also. Saying that you cant meet girls or have friends is kind of a cop out.
red bull vodka and/or bolivian marching powder
Not to be a dick, but you know what sucks worse than working all the time and making loot? Being broke and unemployed. Banking blows, but it sets you up for a variety of careers. Previous generations of people had to work their entire lives, making jack squat, to do better for their family. Now we just have to endure less than a handful of years to be set up.
People should keep that in mind when they begin waxing philosophically.
The difference is previous generations had a reason to work 100 hour weeks, to do better for their family as you pointed out; there isn't that same sense of urgency in the Western world today. People work hard to improve their standard of living, It doesn't make much sense to work 100 hour weeks just for the sake of working 100 hour weeks.
And that's why the West will become the new East and the East will become the new West. You don't get to preserve your wealth if you are working less than your competitors. Eventually your skills will just become obsolete and lose your spending power after you fritter away your parents and grandparents' hard fought capital.
People were made to work. Those who don't work as hard as their competitors will become extinct in the long run.
Very clear post with lots of good points Relinquis. One of the main reasons I accepted my offer from the summer was that the firm is a partnership and I did not see pressures from conflicts of interest. I also think that the partnership model offers the best protection against excessive risk taking in general.
I also agree with the fact that Analysts are not truly bankers. However, I think you can quickly move up the value chain if you start attempting to source the moment you begin working. In general I believe that your value to employers is under your control and can be greatly improved by taking appropriate initiative. Effort matters at the junior level even if you are unable to bring a deal in.
ANT, I hear you but I think he was dealing solely with the realities of the industry and wasn't discounting the fact that jobs in finance are extremely desirable.
You can't move up the value chain by trying to source. There are kids in my analyst class that have done that and they earned a reputation of being "that guy." You really think a senior banker is going to want to listen to your idea, even if they do they will parlay the idea as their own, give you zero credit, and you will be right where you started. This might work at a smaller firm or a boutique, but not a huge firm. Trust me, nobody likes that kid who kisses up to the MD and goes in and says "Hey have you thought about pitching XYZ company on a share repurchase?" It's very unlikely that you are going to make any meaningful inroads with a company in your sector at the age of 22 that a banker who has been covering his industry for 20 years hasn't thought of. Short of having your girlfriend/future fiancee's dad be the CFO of a company, it's likely that your senior banker will know the guy better than you because he probably talks to him once a week at minimum and golfs with him at least once a quarter.
Completely agree Rufio. There was a guy in my class that was like that and got axed hard because of it.
Does anyone here know if the guy in the article could have gotten his new job without having been an analyst first?
IMO, every society that becomes fat, lazy and addicted to pleasure so becomes a shit hole and conquered. Happened to Rome, is happening to Europe and will happen to the USA. Life is vicious and those who cannot handle a little pain and adversity will soon be dealt with.
I understand where your comment is coming from here, and I agree in sentiment but it's also exactly why so many of us are so fucking pissed off... You can't say "It's unrealistic to expect Analyst bonuses to be closely tied to corporate performance" but then have them fucking us in a down year and not comping us better in an up year. It's completely contradictory. Additionally, while I share your view and completely understand my role in the hierarchy, the reason I am so frustrated is, as you clearly state, Analyst bonuses are rounding error. Why then are they dropping Analyst comp potentially 30-40%? If you were to knock 20-30k off a Managing Director's comp it wouldn't make a difference at all to speak of. When you do that to an Analyst you're talking about a quarter to half his bonus, and in my opinion that's bullshit. You can't argue that Analyst's bonuses shouldn't in any way reflect firm performance and then pay them less when performance is shitty and pay them status quo when revenues are up without expecting to hear bitching. It's frustrating because if we were being treated as just processors, then our comp shouldn't fluctuate that much regardless of firm performance. Revenue generators should get dinged for not producing, not the guys who have no control over fees.
THAT'S the distinction I was trying to make. Other than that I very much agree with Relinquis's sentiments...
We once had Morgan Stanley / Goldman Sachs pitch us for advisory work for an acquisition we were contemplating... It was a $5 bn or so deal at a time when people weren't doing many deals.
One of the two brought in what seemed to be their whole team. From group head MD to the analyst. About 6-7 people. They sat across from us in the usual seniority based formation MD/Director or something/VPx2/Associate/Analyst... About an hour into the meeting one of our associates asked their top guy a finance related question... It was almost comical to see each and every one of them take turns to think for a second and then look to their right and ask a more junior guy to comment until they got to the Analyst... The looked like dominoes falling one after the other... The Analyst killed it. He knew he company's financials better than anyone on their team, but obviously did not expect that he would be asked to speak. It was his 15 words of fame. He was so proud it put a smile on our faces!
They got the mandate in the end, but I doubt that this kid was paid an amount commensurate to his contribution on the deal; However, he did manage to keep his job and my colleague who had asked the question did try hiring the guy a couple of years later at another fund.
Analysts get decent experience and exposure, but your employer isn't going to look out for your interests and as rufiolove mentioned may take advantage of a bad economy just because they can. Ultimately in your first year of work your labour is a commodity and your employers know this.
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