Guaranteed FT Offers Will Lead to High Turnover and a Ripe Lateral Analyst Market in 2021-2022
Going through a 10-week internship at any bank (BB/MM/Boutique) can and should be an absolute grind. The interview process simply just isn't enough to decide which students are "cut-out" to be in investment banking and while many of you think that its possible to "fake it" for the 24 months, I haven't seen this work out for many people. The internship allows you to take IB for a test ride and to figure out if its for you and for your team to evaluate if you're the person for the job. For those who aren't given FT offers, it probably just isn't the industry for you (barring some extenuating circumstances). There are a few likely scenarios I see:
If you intern at a sweaty bank (say Moelis), you understand what you're getting yourself into for those 18-24months and you understand that your life is going to be difficult. A guaranteed FT offer doesn't teach you that and you'll be shocked when you land on the desk and have a terrible time, likely leading to high turnover.
The internship allows your team to understand your work product and in 10-weeks they can make a determination on that and not give you a FT offer if you're going to be a larger burden than help when you come on FT. That opportunity is now gone. When the team realizes you don't have a great attention to detail and given the economic situation, wouldn't be surprised if you're let go within 12-months.
The internship also just simply shows you what the industry is all about and its possible that you'll just decide that its not for you. I know a few people that decided this that got FT offers and a few that didn't and they just pursued corporate development or internal finance roles.
All three of these scenarios will lead to high levels of turnover with the analyst class of 2021 and I believe that banks will be quick to cut their losses on kids and lay them off during tough economic conditions. The need for good analysts will be much stronger and the lateral market will flourish.
Agree with your main comment, but to think those who don't get FT offers "aren't cut out for industry"... wow, that's quite the extrapolation. (I know you qualified it with mentioning "extenuating" circumstances). But really with any industry, if one doesn't get an offer or things don't work out with one employer, that doesn't mean he/she can't thrive with another employer in the same industry. Justin Turner, All-Star 3B with Dodgers, got released by Mets and never made an impact with that team... so should he have just quit bc he didn't get a FT offer from Mets? No, he grinded, persisted, and now makes 16 mil a year living his dream with the Dodgers.