I’ve noticed a few more UK-related questions popping up and as this site has (understandably) been very US-centric over the last 5-10 years I thought a brief overview of what the industry is like in the UK would be helpful.
Who Are The Firms?
Bulge Brackets – the usual suspects
Mid Market Full Service – Smaller firms of c.100-500 people providing all the expected services (Research, Sales, Trading, IBD) but focussing more on the mid-market (£250-£1,500m MC). Key names include Jefferies, Numis, Peel Hunt, Investec, Liberum, Stifel.
Small Cap – focussing on AIM companies (more on this later) with MCs usually £5-£100m. Some names include Shore Capital, finnCap, N+1 Singer, Zeus Capital.
Advisory Firms – Rothschild, Lazard, Evercore, Moelis etc. Rothschild in particular are a dominating house
Big 4 - Big4 professional service companies are increasingly trying to compete more against the Advisory firms in particular with their corporate finance teams. Typically these are execution / advisory roles only, focussing on M&A and IPOs. No underwriting capabilites. Deloitte / EY / KPMG / PwC.
How Do You Get In? If you’ve read any of my posting history you may have gleaned that I think the US system and its emphasis on ‘networking’ is absurd and just an attempt to learn and force basic social skills. Well good news! It’s very different in the UK.
There’s 3 top ‘target’ universities (what you refer to as schools) - LSE / Oxford / Cambridge and then you have places like Bristol, Durham, UCL, Imperial just below these, with the wider Russell Group below that. If your university is not in the Russell Group you’ll struggle to get in.
Recruiting is done with a lot of skills assessments, usually online tests covering maths, verbal reasoning and logic. Once you pass these you may be invited to interview and from there the process is the same as the US.
You do not need to try and caddy for an MD’s brother-in-laws father every other weekend or cold call everyone working in the industry for an ‘informational interview’ – in fact doing this will just make you look a bit odd. Try and get to know a few people from your university or that you have some kind of link to but remember these are basic social skills and you can’t really learn them.
Many firms offer a 'Spring week' during the Easter holidays in your first year and this can be a good springboard towards getting an offer for an internship.
Internships are done at the end of your second year of university and then you may or may not get a return offer. The route in is a lot less structured and you often see people joining as analysts who’ve done Masters, PhDs, some other line of work etc.
Note that there's also a lot of 'off cycle' internships offered to people who have just left university, but the hiring rate from these is generally lower than the classic summer programme.
It’s also quite common for people from Big4 professional service firms who either started in audit and got their ACA and moved to CF/TS, or who started off in CF/TS to move across to IBD (at an Analyst3 or Associate level). It isn’t so easy to go to a bulge bracket but the Advisory places (Rothschild, Lazard etc.) and Small/Mid Cap houses are frequent recruiters.
Where Do You Work? London of course, not much regional presence to speak of although some of the Small Cap firms (see above) have offices in Manchester, Bristol, Edinburgh etc.
Within London there are 3 areas to know about.
- The City – the financial heart of the UK. The ‘Square Mile’ located on the eastern side of Central London.
- Canary Wharf – new business district about 2 miles away from the City in the east. Many of the banks are headquartered here
- West End / Mayfair – about 2 miles west of the City and home to private equity, hedge funds and other asset managers.
Note that ‘the City’ is our equivalent of ‘the Street’ and can be used to refer to anything in finance.
What Do You Do? Working in investment banking (or as it’s often referred to here – corporate finance) is pretty much the same as the US. As I’m writing this I can think of 3 main differences which I’ll highlight below
Role of the Broker – broking is very much an old-school UK service but is still absolutely key in the City. A broker is essentially a retained financial adviser who will advise a company on all matters relating to investors and the markets. Being the broker (sole or joint) also puts you first in line for work on any transactions so winning a broking client is very important.
The Takeover Code (the Code) – the Code governs all M&A in the UK involving public companies and this also applies to overseas firms trying to buy UK companies. The Code is a set of rules and principles which outline what you can and can’t do on an M&A process, timeframes, requirements to announce etc. Knowing the Code is essential for working in M&A.
Sponsor / Nomad – these are regulatory-type advisory roles which are required on most transactions. The Sponsor or Nomad will typically be a bank or Big4 firm and will have to liaise with the regulators (FCA / UKLA) on behalf of the company to make sure a transaction is executed properly. These are required on any IPO and on many M&A transactions.
The Markets FTSE 100 is the headline market although the FTSE 250 is more representative of the UK economy. The FTSE 100 is dominated by financial services and international commodity firms whereas the 250 contains a lot more industrial, consumer etc. Tech is not such a big area in the UK.
At a high level there are 2 markets – the ‘Official List’ (Main Market) and AIM. AIM is for smaller companies (usually up to £300m market cap) and contains a lot of E&P, mining, start up tech firms etc. The Small Cap firms I mentioned at the start will often focus exclusively on AIM.
Moving On As with recruiting, there’s some more key differences here. Most people do not go to business school. Typically you’ll do 2-3 years as an Analyst then either move up to Associate or move to the buy side. There’s only 1 business school in the UK worth going to (LBS) and as I said, nobody really cares too much about an MBA.
Hopefully this is of some help to all the aspiring UK corporate financiers. Happy to answer any questions anyone may have or elaborate.
Mod Note (Andy): top 50 posts of 2017, this one ranks #27 (based on # of silver bananas)
I would add one more thing in regard to "how to get in": spring insights. From what I have seen, the typical path in the UK is: get into a top uni -> spring insight (anywhere between 1 day and 2 weeks, but usually 1-2 weeks) -> return offer for SA -> return offer for FT
Good one.
Yup Spring Weeks are essential some good students do like 4 spring weeks during the break in first year at LSE, then summer in second year (impossible to get a summer in BBs for 1st year) but try to get a summer in boutique is recommended.
I heard Off-Cycle were incredibly hard to get yes, I do not know why, mostly because they do not have a typical amount of space for that and I guess they take you only if you are really worth it (?).
Associate at MM then lateral to BBs should not be a problem, your door of entry will be your specialisation for a smooth transition, if you work in aviation finance for example at natixis/BNP then, to move you'd have to go with the biggest underwriters in the field for that financing (and a BB as you target it) like GS or CS for example, its an example but you get my point. Depending some fields MM are much more prestigious than some BBs.
Friends from France, from EDHEC, Audencia, etc. are all in places such as GS, BlackRock, DB, so London is very well aware of the worth of the biggest finance programme from top schools from each countries (tbh in some bannks/department you have a very high % of foreigners compared to uk guys)
I sent a fairly long PM to someone on this recently covering the different aspects of Big4, which I'll link below and I highly recommend reading for an overview. Bear in mind the salary figures I quote there are based on old FX rates so the USD equivalents are now lower.... Happy to comment on comp if of interest.
https://www.wallstreetoasis.com/forums/big4-ma-an-explanation
At a high level, going into both is fine (and a step up from audit) and it's certainly possible to get hired into many firms with 12-18 months in TS or CF.
In TS you'll see a lot more deals and they'll be pretty large (usually), but you'll only focus on the due diligence side. In CF you'll actually be taking a lead advisory / execution role (i.e. exactly the same job as you'd do in IBD) but the deals are usually smaller, often for private companies, and further between.
I myself did a grad scheme in audit, then some time in Big4 CF before moving over to IBD and many many other people followed exactly the same path. Mid market firms, small cap houses, advisory firms etc. all LOVE ACAs and it's often a pre-requisite for recruiters.
In short, both are good with CF probably being marginally better but either can get you to IBD.
One very important point for working in London, when ordering a beer, it goes like "please may I have x" rather than "I'll take an/a x".
Pretty solid write-up.
Would add that there are 6 target schools in the UK - i.e. you forgot Imperial, UCL and Warwick and then a slew of semi-target schools i.e. schools that are present every year in analyst/spring week/intern classes but in smaller numbers like Bristol, Durham, Nottingham, etc. As for European targets, most banks recruit at the top Italian, French, German, Portuguese, Scandinavian and Spanish business (or technical schools).
Age is also not as much of an issue here because of how many people come from European Masters programs or those who took years out before starting university. Being older than 21-22 is more common than most would think.
Re:Off-Cycles, they seemed primarily aimed at those on year in industry courses, europeans with mandatory internship requirements in their masters programmes or those who've graduated. Placement years are also becoming more of a thing lately in the UK - not just in back office but also front office roles.
A few years ago I'd have said comp is broadly comparable, especially at the Analyst level. Now however it's worse. For reference the base comp for a 1st year analyst is going to be in the region of $60-65k equivalent whereas a few years ago it would have been $75-80k equivalent.
If you stick with it and are successful you'll make a hell of a lot of money in both the US and UK so IMO it's not something to worry about.
As other posters have alluded to, the COL in London is absurdly high, possibly even higher than NYC. Add to that the fact that your marginal rate of tax/NI/student loan will be over 50% and that the average price for a 600-700sqft 2 bed flat in Zone 2 is about $650k, and it's very expensive when you're an Analyst.
EDIT: I didn't mention comp in my original post as I don't believe it's a relevant factor if you had the choice to live in the UK or US - there's so much more that will impact your day to day life than a few extra thousand dollars/pounds a year.
How non-target are we talking....? Top 20? Did you get all A/A* at A Level / GCSE?
Emailing people is fine, but it should never be forced like it appears to be in the US and there's no such thing as an 'informational interview' so please never use those words in an email!
Given your aspirations I'd suggest you take a look on LinkedIn and see if you can find anyone from your university working at a Wealth Management firm or one of the long-only funds and try and have a chat with them over coffee and get to know a bit more about what they do and the routes into their firms. Non-London is fine and may actually work better (I have Manchester, Bristol, Birmingham and Edinburgh in mind, maybe Cambridge).
Essentially you need to get some work experience, even if it's just shadowing someone, but don't stress too much if nothing comes up.
Although they're often black holes, I'd suggest you do all the online applications for a grad position at all the long only funds and the PWM divisions of the larger banks, particularly JPM, HSBC, Barclays, Credit Suisse. The odds aren't great but a lot of people do get in through these.
I suggest you do some research and find all the names of relevant firms you can, here's a few to start you off.
Asset Management - Aberdeen, BlackRock, Baillie Gifford, Schroders, Fidelity, Aviva, Standard Life, Legal & General, Henderson, Royal London, M&G, Kames Capital, Kilik, Credo Capital, Rathbones, Smith & Williamson, Invesco, Brewin Dolphin
Private Wealth Management (specific) - Charles Stanley, Brewin Dolphin, Canaccord, Arbuthnot
Private Wealth Management banks - HSBC, Barclays, Credit Suisse, JPMorgan, State Street, Investec, Canaccord, Cheviot
Also as a backup consider doing a grad scheme at a Big4, potentially in Tax. As I mentioned above, in PWM/AM you definitely do not need to be in London so do not limit your search to there.
Happy to discuss further in PM if you wish.
Strongly disagree with your no need to network advice!
Networking had a pivotal impact on my recruitment process.
1st year did no networking didn't get a single spring week interview.
Come second year I made sure to have known at least 1 person with a relatable background to me who would push my cv. Had emailing correspondence with a head of M&A at GS/MS/JP etc. and randomly got invited to a final round interview in the office without having done any prior interviews/calls.
Reached out to the head of lending at think CS/Barcap/DB and was invited to their summer party met all the team.
My contacts also got me interviews by pushing my cv for several elite boutiques.
Others contacts in MM outright said they'd just take me on for the summer.
Maybe it's not the culture to do it, if so that should only entice people to do more of it, it's a great way to get an upper hand against people coming from Oxbridge etc. (Note I come from a European university)
"UK" investment banking is history, R.I.P.
you never made it, did you?
For the IBD, it varies a lot, but if you look at the stats it's normally GS/MS/JPM at the top.
M&A: GS, JPM, MS LevFin: JPM followed by DB and BAML ECM: MS and JPM DCM: JPM and I think Barclays also has a fairly strong team Industrials: GS, JPM and BAML TMT: GS, MS and JPM Healthcare: JPM Real Estate: MS, JPM, BAML and GS Consumer Retail: JPM, BAML, GS, MS (Lazard is also very strong in this) FIG: JPM and I think also GS and MS Nat Res: it varies between areas like mining, oil&gas, utilities etc.. but normally its JPM, GS, MS, Citi and BAML
This is just my scent on it, using various different sources but I wouldn't worry about it too much tho, these tables vary and change almost every year and it's really not that important, any of the BBs will most likely have solid teams.