Curious as to why anyone stays in IB after your analyst years

If you were a) doing the same pitches repeatedly to the point where you could do it in your sleep & clearing $250k+ all in vs. b) going into a situation where you had to start over from scratch, you’d choose A. Also, some people just don’t know what they’d exit to, so if you absolutely don’t hate it, why not stack.

It's worth noting, a lot of people just like continuity. I know in my own experience, a lot of first generation students, especially those with rough home lives growing up, pursued IB to get out of the whole lifestyle they grew up in. They made it, they make a fuck ton, what they want isn't to risk their career capital. They're okay working longer hours, okay doing a lot of grunt work, okay with the overall lifestyle, and if they stay they're basically guaranteed to not need to worry. If they go to a PE firm, they need to learn a lot, have potential to be fired, and have a lot more mental stress. In HF, less hours, way more risk of being fired. They aren't senior enough that they can really jump ship to some nice role in IR or something. So why not just stay? The tradeoffs of leaving are like, not great. 

It's all about perspective. For you, and many others, IB is a grind to get out and seek greener pastures. For a few, it's pretty much the most stable thing they've had their whole life. You do the same thing for years, get very good at it, and make a lot of money. 

Plenty of these people go leave to corporate jobs, especially post MBA. 

The job gets easier and you accumulate a lot of political capital. Every A to VP at my EB is considered a super star in their groups and has incredible leverage on getting what they want. 

It’s not a very fulfilling job; however, the pay is immediately better as an associate than any buy side roles.

If you’re fortunate enough to get into a hedge fund then you may see significant upside 2-3 years in, but no guarantee of a job in a year.

The thought of slaving away during undergrad to get a high paying prestigious job, and then just leaving the industry to a job you pretty much could have gotten without doing banking (talking about more corporate 9/5 “exits” that are mentioned here) never made any sense to me. If you always wanted to do that, why wouldn’t you just start there instead of banking? Now leaving for PE/HF, etc makes more sense obviously

Best risk adjusted path I can think of or at least when I joined a few years ago. Would probably have been a surgeon or lawyer if $$ did not matter for schools, parents' financial status, etc.

Struck out in banking and was targeting certain healthcare coverage groups (with the intent to get exposure to specific subverticals I enjoy following). 

I imagine if you can stomach the hours at the analyst / post MBA level for 2-3 years, like what you cover, and genuinely like your coworkers / your firm - why change? If your life gets busier (with spouses, children), try to find a more lifestyle firm which definitely exists in any service industry. 

I've seen a few IB MDs go into PE and then go back to IB. I assume if you're good at bringing in business, it's a lot easier to cover clients rather than being an investor / operator. I work in consulting now and the partners who bring in a ton of business often are just winning deals / ensure their current projects are on track. It's a lot more of selling rather than doing.

I recruited primarily for VC when leaving my analyst stint. I got 2 offers but had questions about both. One had a ton of AUM, but I basically would have been their first US employee in SF, where I had never lived before. The other, which was a tier 1 VC at the time, had a questionable founder who later went down for personal reasons. I sort of felt that in the process on #2. 

I ended up going to a tiny tech boutique IB in a tier 3 city that a 3rd VC referred me to as the position I interviewed for there dried up (associate I was meant to replace decided to stay - that shop was my first choice). I loved the people at the IB so I just went there, and it was a great experience and not bad hours. I left to found a HC tech company, and at times I wish I never left, although I'm certain they'd take me back. There are niche boutiques with 20 people out there that crush it: we had over $1M in revenue per employee, but they are mostly off everyone's radar. Comp was great, people were great, the partners exclusively sourced through their networks (almost zero pitching) and towards the end as a senior VP I was working maybe 40 hours and getting paid well with high performance reviews and a promotion to partner on the table (I started sourcing stuff there as an associate as the comp model aligned with that, again no real pitching/bake-offs just stuff through my network).

There's something to be said for the LMM, at least in tech and with a dataset of 1.

Love of the game

I mean your post is just generalizing to the extreme and not that accurate. It’s a leading question - you’re probably extrapolating from a shitty analyst WLB onwards and projecting that to the higher roles. I’m a director and been in the game since analyst - I don’t have to do a lot of the annoying shit I used to. The base case is not always just “slave away / you become unhealthy / you lose your friends” lol

Because after a while it’s not about you it’s about having a family and wife. A decent life in NYC that provides for your kids costs $1-2mm a year comp minimum OR $5-10mm net worth by your late 30s, and IB is the lowest risk adjusted way to get it, vs illiquid PE carry and HF where you can get zeroed 

Sometimes it feels like you literally can't exit to anything else.

That reality check hits especially hard if you joined a lesser known regional/LMM firm in 2020-2022 with the high (and probably naive) hopes of exiting or pivoting to a larger/better firm. Then pair this with a competitive labor market in 2023-2026 and it is difficult to pivot or land Corp Dev roles at all. 

PE/VC realm is a pipedream, and you're not capitalized enough to try for entrepreneurship. Social media influence selling courses/merch requires a niche intertwined with some other passion like fitness or demographic-specific retention engagement - so no luck there if you're a plain vanilla person.

You stick around and get promoted at said firm making 30-50% under market working 50-60 hours/week and "its fine" cause ~$150K is just enough to upgrade your housing situation from roommates (or a studio) to a 1 bed. You're certainly not in it for "prestige" and you stop referring to work as "Investment Banking". It's now just "M&A" since most assume you're trying to hype it up anyway if it's not JPM/GS. You're pitching frothy multiples to land mandates for a no-name firm; building Teasers and CIMs, and maybe work on a few SPAs (if your lucky) as you watch VPs and MDs above you get hired/fired constantly for not bringing in deals. 

At the ASO level, you punt a lot of the grunt work to analysts and have to double check everything, but still have some stability compared to your superiors (for now). You ride the storm and collect the paycheck while you can. It all sounds rather grim/soul-sucking, but once you also take a step back and realize there's people literally digging holes in the ground or working on sewage systems at a fraction of your pay - you try to find gratitude where you can. 

It's just a job and you're lucky to have one.

Ignore the title. Money + lack of better alternatives is the answer.

Truth is that personal fulfillment rarely matches with work, for good reasons. I don’t know may dermatologist that feel fulfilled about their work, mainly being injecting botox and collagen. I know countless lawyers that would love to become bankers (and some that did!). I know very few bankers that truly enjoy the job, and typically are sad and boring people (but highly successful tbh).

If you can exit IB to a top fund, go for it. You’ll likely make more money, work as much, and dislike your job as much as a banker. Some guys prefer to stay at IB vs going to a fund that initially pays less.

Better camaraderie in banking, the culture of PE is more cutthroat (would say the vast majority of PE professionals would agree). Cash compensation is king and that's what you get in banking, the prospect of carry is increasingly ~nebulous~ at some firms (highly firm dependent). Better upward promotion visibility in banking, In banking, you get analysts / associates working underneath you quickly, vs. the PE associate experience is ~3 more years of hard grinding.

I enjoy MM PE and it suits my long term goals, but 1) I work as much as I did in banking (and being on a live deal is far harder in PE than banking) and 2) the more day-to-day work isn't as glamorous as a first year analyst in banking thinks it is. There's a lot of relatively boring portco work to do. Some days, I miss the mathier orientation and complexity of the math in banking. Also, advising large public companies on WSJ worthy transactions in banking was sick. 

money and lack of better alternatives. you could take the leap to the buyside but I bet it is way harder to climb through the ranks there vs. if you're truly smart, why don't you stay and show it vs. your banking peers that you have so much disdain for

finding the right group helps. you're right in the sense that anything sounds better than having 4 sell sides within industrials on the go at once. think capital markets or sponsors groups can be more sustainable.

My parents at their peak, with one being an executive, made a combined maybe 500k? And you're telling me that I could make that at 27? There's ur answer.

Current A2 at an EB and leaving not only IB, but high finance as a whole after my analyst stint to go back to school for two years and pursue a more relaxed career path. Very happy with my decision!