Attractive alternatives to a career in IB
I'm an incoming summer analyst at GS/MS/JPM who has also done a few other internships in IB, PE, and VC. I've worked extremely hard to get here and am very grateful for all the opportunities I have been given. However, I do not find the work in IB to be very rewarding and I have also realized the value of other things in life. As a consequence, I'm considering other career paths which are more intellectually stimulating and have a better WLB without sacrificing too much pay and optionality.
Below are some other career paths I have considered and my thoughts on them. Would be happy to hear your thoughts and suggestions for alternative career paths.
PE:
In my experience, PE is way more intellectually stimulating than IB. However, there are still a lot of braindead tasks and a very large portion of your time is spent on evaluating potential deals that will never happen. Moreover, the hours are often as bad as IB if you're at a large fund.
Consulting:
Seems more stimulating than IB and PE, especially if you work on strategy projects rather than doing CDDs all day. Extremely broad exit opportunities. However, you have to travel a lot and in terms of exit opportunities it seems as if McKinsey > BCG > Bain are the only three firms that provide you with really good options. As such, you are placing your bets on recruiting for a very small number of firms. Compensation and WLB seem decent.
VC:
I did an internship in VC and really liked it. Very exciting companies. Great WLB and culture. Very few administrative BS tasks. As there is often quite limited information on early-stage firms, you will not spend a ton of time creating materials / models on companies. Comp seems reasonable given the hours. However, there are extremely few analyst positions in VC.
Corp Dev:
Seems to be very interesting. Appears to have great WLB. What makes me uncertain is the availability of analyst positions, career progression, and comp. Unlike the other listed career paths, it seems as if Corp Dev does not have a set career progression. Consequently, there is a risk that you get stuck pretty early in your career unless a spot opens up. My experience from working at regular corporates is also that they are often extremely inefficient and bureaucratic with a great deal of internal politics across all levels.
Happy to get your input
Seems incredibly boring to get assigned a bunch of companies and then being stuck with them. Exit opportunities don't seem that great. Comp is good, but considering the exit opportunities and that you're still working 60-70 hours a week it is pretty bad compared to other options.
Tech ./s ?
Unfortunately not an option for me as I'm graduating from a finance program next year. If I had any technical skills it would be a great career option. Nice pay with great WLB. I envy the engineers.
Tech firms don’t really give a shit what degree you have. If you can smash a coding test ahead of your peers, you’re in. It’s significantly more meritocratic than finance. Certainly is an option for you.
HF?
If you like VC, you may also like accelerators, incubators or CVCs. Especially well funded/organized CVCs may give you the best of both worlds if you pick the right industries.
I completely agree on ER, it was the most boring time of my career.
The VC internship I did was actually at a CVC. I found it very interesting but extremely technical as much revolved around validating the products. Moreover, the investments were made to gain technological abilities rather than to make financial returns. As a consequence, I feel that it would be difficult for someone from a purely financial background to fit well. Perhaps it is different at other CVC funds?
Culture is absolutely different at other CVCs, I found them to be a good mix of all VC activities.
If you have a good personality, my picks would be centered around business development. PE BD & equity sales (not S&T) are overlooked opportunities and people do very well with great hours.
Thanks for the input. Business development seems really interesting. Are there any good positions in business development that do not require you to do the consulting stint first?
Certainly, I don’t even know that I would characterize that as the typical way, particularly not any more.
People can go into both of these things straight out of college. Some people are just born for it. PE BD is maintaining relationships with investment banks and generating proprietary deal flow by talking with company owners to get off-market deals. Equity sales is a traveling business that has people make presentations on investment ideas to various asset managers. A good example is Redburn. It has some overlap with ER, but the salespeople I know are not crunching numbers, they’re traveling and selling ideas. 10/10 attractiveness for men and women tends to be expected, and PE BD people tend to be better looking too.
My two cents, working in equity research — it is absolutely not 70 hours per week, even for an analyst. It’s around 50-60 max, aside from during earnings. And, at a junior level, comp is almost as high as in IB (last year, including bonus at my bank, it was ~$150K ER An1 vs ~$180K IB An1, where IB worked probably 1.5x the hours). It’s the best combination of comp and WLB in “mainstream finance,” and with what’s been going on in tech, probably second only to quant finance in the overall comp/WLB/job security balance.
On a junior level, there’s a lot to learn, but admittedly after a year or two, I can see the job not changing much, which might hamper growth. Exits within finance include HF or asset management, and you can get a good buy-side seat after only a couple years. Yes, there’s modeling. Your “technicals” are probably on par with those among bankers. You just have to be okay with limited interpersonal interaction, ~$30K less than IB starting out, and not having an easy exit to PE. Beyond that, I can’t think of anything IB has over ER.
Opinion of post MBA ER? Know of someone who went this route (works at a BB) after a corp fin summer and was wondering about pay / opportunities.
Post-MBA ER will, like in IB, land you a seat that is one rank above those who enter from undergrad. The analogy is entering as an IB associate rather than ah analyst, but rank titles are weird in ER.
This means you’re expected to know how to model, write research reports, and possibly deal with clients (hedgefunds, company leadership) already. It also means comp will be a better, though not as good as in IB at that stage, as pay diverges between ER and IB as you rise in the ranks. I’d expect low $200Ks.
You can either try to advance to VP/MD on sell-side, or, like ER post-undergrad, try to go buy-side after two years. ER MD seems like a truly phenomenal job — you’re probably making seven-figures on 40-50-hour weeks, and meeting some heavy-hitters in the corporate world. That’s why no one really ever leaves it, though, so it’s a really hard seat to get, but since you’re a rank above the post-undergrad ER, you’re a step closer. On the buyside, HF placement (aside from the IB-obsessed Tiger cubs) and AM placement is really good.
Interesting input. Glad to hear that hours aren't as bad as I thought.
How much choice are you given with regard to the sector / companies you are assigned?
Is asset management / HF a typical exit route or something that is only possible for a few top achievers?
I assume that once you have spent a few years in a specific sector, you are pretty much stuck with that. What does job mobility look like given that the headcount in an ER team is likely much lower than an IB team?
How intellectually stimulating is the job? I have read plenty of ER reports during my internships in IB and PE. I have rarely found any original or interesting takes on a company. When I was in IB and we were doing an IPO, the research report was pretty much a copy paste from the analyst presentation. When I read reports on public targets in PE, the reports always seemed like a summary of the quarterly report along with minor updates to the forecasts.
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