Is Investment Banking Boring?
Mind you I'm in ops of a totally different dept but it seems like IBD is boring. Would much rather do ER/AM/S&T/ etc.
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I've found it pretty boring and tedious so far
Yes but ops is more boring
I agree that ops is pretty dull but the morale and camaraderie are pretty good at my firm.
Thanks. You can have a lot of fun in ops outside of work so that's a plus. I take my junior employees out to 5-10 mlb or NCAA games and it's a great time. Can also leave work at 3 or 4 and go to my son's basketball practice. Don't think the same can be said in the cutthroat BB IBD sweatshops.
My ass is always going 100mph to be worried about being bored
Do you make twerking videos on youtube?
Boring af
Everyone who says i want to do i banking because I want an exciting career is a liar. If I become a MD one day, I will auto ding anyone who says this to me in an interview
What are you supposed to say?
I have answered this question for DCM and IB with the fact that I really (honestly) enjoy the breadth of tasks in this space. Old post, but I'll answer anyhow. I worked for very lean, smaller shops where the entire concept-to-completion deal was on my plate. Pitch, participating in pitches (even at a junior level, being given a section to pitch), research, writing, creating CIMs, modeling, credit analysis, going to credit committee, helping investors/lenders with their credit committee submissions/due diligence/inquiries, writing term sheets, reviewing legal docs, hosting and attending lender/investor meetings, working directly with senior management at clients, overseeing the deal process, strategizing on structures and lender groups/levels/fees, determining pricing, valuation, assisting on closings and fee calculations - all part of my job, pivoting in every direction each day. Love the variety of tasks and interaction with clients and MDs. I also covered broad spectrum of industries, so this is really interesting. And yeah, can be really exciting and fun. As such, I think a good answer is the broad variety of skills you get to develop, and varied quantitative & qualitative tasks, communication and team work are great answers.
I can tell you that even at VP level, it is damn boring - because you are still involved in the so called execution part of the job (i.e. managing work stream, managing associates, reviewing works). Although I get to do more of the relationship building/ deal origination/ client management process, I am still expected to more of the so called technical work. So unless you move into Director/ MD roles, it will still be boring as hell.
Now that I am a director for two years; it is still boring as fuck.
IB is a very linear career path, but that is exactly why so many choose to enter it. Most transactions are similar in nature and involve similar processes. Most promotions (at least up until VP) are based almost entirely on seniority and years worked. This affords individuals a greater oversight over their careers as opposed to other fields that have far more variables involved. That being said, at the MD level, working in IB is almost like working for oneself. Sure, MDs are employed by a bank, but they bring in their own business and are only as good as the last client they brought in.
Of course it's a safe career path, and I don't think that's an insult or that there is anything wrong with choosing a safe career path. If you're graduating from an MBA program and sinking in student loans, IB is a sure fire way to pay that debt off.
I think skillsets are all relative. What one person thinks is an extraordinary skillset, another person might find too pigeonholing. For what it's worth, the exit opps from IB are incredible, especially at the senior banker level. I have seen associates and up exit to head of corp dev, CFO, head of finance, various PE roles, etc.
In my very biased opinion, Equity Research seems to be underrated on this board
Because 20 year old college students are idiots like that wannabe GS guy. ER at a fidelity, wellington. T Rowe, etc. beats the fucking hell out of pumping out pitch books. This board thinks that ib is the end-all-be-all yet there are other routes to b-school than working at JPM.
100% agree, ER appears to be the redheaded stepchild of Wall Street despite being a very fun career, similar comp, and better hours. I think for those people in junior roles starting out, ER builds more actual technical skill than IB. Bottom of the totem pole in IB you're probably up till 4 AM being a powerpoint monkey and "formatting", in ER you're at least building/updating models, attending 1x1s at conferences, taking an earnings call while the analyst is on another, preparing earnings notes, etc.
Yet for some reason people act as if banking builds this superior skillset that is somehow absent in research - I think this is bullshit. On the sell side I've been brought over the wal with the blessing of compliance a ton of times to consult on potential deals the bank was doing in my industry. Are the bankers smart guys? Absolutely, ton of respect for them. Do any of them have any skill that I don't, any ability to model/analyze companies better than me, evaluate a deal better than me? No, they don't.
In the news, SocGen is outsocuring their ER capacity. Just saying. http://www.reuters.com/article/us-socgen-fintech-research-idUSKBN13Q3LF
Did ER myself in my early days. The problem with ER is that you will not have the deal transaction experience that you need to move into more lucrative roles. A friend did that from ER at BMO to an emerging market private equity fund - but that is very very rare.
The only useful thing that I can say is that from the skill that you learn putting together an initiation report at ER, the format is almost the same in IM (M&A) or Prospectus (IPO). Other than that from ER, you will never learn how to put together a Sales & Purchase Agreement (to be used in M&A transaction). Just saying.
I agree with you about how much people exaggerate 'skillsets' you learn at any introductory job (banking, consulting, etc). Quite frankly, most of these things are process jobs that you could learn to do while applying very critical thinking. The same can probably be said for ER at the junior levels, though if you push for the opportunities you can learn about companies, interact with CEOs, and develop skillsets that would be useful as an investor or enterpreneur.
The reason ER gets short shrift is that banking has stronger exit opps (including to the public investing side). I don't have a good explanation for this except that people are lazy. A lot of people on the buyside started in banking and there is a well developed process/pipeline to the buyside from banking via recruiters, etc, so people hire more bankers. "Bank prestige", also serve as proxies for talent (b/c you had to compete to get that banking spot), so recruiters/ employers can make the (lazy) assumption that the banking kids are the smartest/ hardest working talent around. Never underestimate the power of lazyness
Work in IB now, previously worked in Equity Research. They are very similar (in terms of skill set), however I would say that the work in IB is a little more fresh given the transaction based work, i.e. once a deal is done, you see the tangible effect it has on your bonus, and you move on to another deal vs. endlessly covering the same stock while never directly generating revenue for your bank (ER). That said, I have many friends in S&T and it sounds a hell of a lot more exciting than either one of the previously mentioned fields; sounds like there is more pressure though, and hours can be brutal if you aren't an early riser.
Never did any work in S&T, I work in corporate banking which is akin to IB (transactional in nature with some relationship building/management elements), work closely with our IBD industry coverage group, and have friends that work in ER.
Would echo whats been said here already - the transaction process has very similar/recurring elements across deals. You are essentially going through the same motions for different transactions. Each deal will be nuanced and may require figuring out how to do something, but largely same core skill set is used.
Lets not forget the other half of the job, pitching and market updates. Our IB coverage partners cover x number of clients in our industry and are getting in front of management multiple times a year to ensure a consistent flow of ECM/DCM business. They will bring a book with them each time that provides an update on the sector, financial position of the company, market updates for ECM/DCM, and some other items of interest. A few of these slides are "off the shelf" or provided by product partners; however, the others are continuously refreshed/updated so its rather repetitive.
Same thing on my side of the house in corporate banking. I manage a group of existing clients that tap the bank market every 2 years. They are constantly pushing out tenor of existing bank facilities and re-financing to achieve better terms. Given they have several different facilities (I.e. revolving credit & term loans), sometimes the different facilities are re-fi'ed at various times throughout the cycle as opposed to doing both of them together. This includes more frequent touches to the client. The elements of analyzing the credit transaction are all the same given consistency in process is needed (i.e. you cant use different underwriting methodology to analyze various clients, then you wont have a consistent credit process).
From my perspective, what I have enjoyed the most is doing a transaction for a new non-public borrower that we previously have not had a relationship with. This means there will be lots of financial & operational due diligence, meetings with management, negotiating docs, and structuring a new deal.
From friends that work in ER...you are covering a subset of companies and each time earnings are released you will be publishing a re-cap of earnings, updating model, etc. This is very repetitive from quarter to quarter. The fun parts would be bringing new companies under coverage or the value-add research you are writing outside of the typical quarterly updates.
I think the fun aspects of the transnational side are idea generation, pitching new ideas, winning the business, hand off to someone else to execute (i.e. senior bankers originate idea and VP & below execute).
Are parts of the job boring? There is no questions about it. Reformatting a potential buyers list because an MD decided to add a new firm at the last minute and then after you have finished formatting it decided that he/she wants to rank the firms differently at 4am is not just boring its infuriating.
Is sitting in a management meeting with the client's C-suite and the Managing Partner of a financial sponsor going through a deck that you created boring? No.
I would say (without any direct experience in the careers the OP mentioned other than IB) that a higher percentage of the day-to-day in IB is more boring than some of the other career paths but occasionally the highlight moments make the dull periods worth it.
If anyone is interested, I can go into greater detail on the boring and exciting components of stages of a deal in a longer post but below is a small sample on how every stage in a process can have both rewarding and boring
Pitching -
Rewarding: Digging into a company/industry, figuring out the positions, investment highlights, building a comprehensive model (where you are building from scratch or truly customizing a template), and being in the meeting where an MD crushes the pitch to the c-suite of the potential client using the materials you put together can all be rewarding.
Boring: Reformatting, slightly tweaking text/colors, printing and binding books, troubleshooting the printer when it breaks down in the middle of printing fifteen 80 page decks, driving out to MDs houses at 4am, etc are all incredibly boring (more accurately extremely tedious and frustrating).
Overall, when you are busy days fly by and you don't have any time to step-back and think whether the day-to-day is boring. However, when you have some downtime to reflect is usually when the frustration settles in over the mundane tasks that are destroying your social life and then you look down at the gut you have recently developed from indulging on the meal stipends and late night snacks.
There are six sorts of people that work in investment banking as an analyst. I care about 5 and 6 who are smart enough to get it. The rest will find it boring, :
Those that are really just incompetent and have no concept of what they are doing or why. Equities in Dallas. (20% of the analysts)
Those of you that are bright, but are millennials that wish your coworkers went to yoga sessions with you and that kale juice was served in the office. Tech busts await (10% of the analysts)
Those who consider investment banking boring because they do what they are told and are the drones that populate the office on an everyday basis, which represents a lot of you (40% of the analysts. Many of you will get jobs on the buyside but your careers will stagnate as you work for a declining industry without the capabilities of dominating it. And no one makes less money than a mediocre guy on the buysde)
Those of you who are good analysts and stay on because you don't really have the buyside potential or initiative to leave. You will get fired as VPs or Directors and get decent but lower paying jobs for corporates (15% of the analysts). Nice kids but workhorses and not thoroughbreds.
Those of you that really have skill, investment acumen and ridiculous work ethic and will make it work at one of 10% of private equity shops and hedge funds that will make real money in your career (10% of analysts). By and large these people are smart enough to appreciate the intellectual complexities of the deal business, but want and capable of doing something more and I respect them for that.
Those of you who stick in investment banking because you have gotten beyond the analyst tedium and love doing deals and all it entails (5% of analysts). This is all it takes and all we really want to sustain the business.
Make Banking Boring Again! (Originally Posted: 06/11/2012)
Good morning monkeys.
In the face of the recent trading fiascos of JP Morgan, over the past month several articles have popped up that attempt to paint the $2bn trading loss as behavior that was detrimental to the entire financial system before the crisis. Many argue that the behavior of JPM and its peers has not changed since the crisis, and the behavior has only become safer due to banks having larger cash reserves.
Last month there was an op-ed piece in the NY Times about making banking "boring" again. You can find the article here. The article furthered an agenda of stricter regulation and adherence to the Volcker Rule. We all know regulation always fixes everything, right? The main gist of the argument is that the author isn't happy with the level of risks banks take on under the guise of providing clients with the best returns, when in reality bankers are trying to line their own pockets and folks like Ina Drew make $14mm per annum.
The bottom line is that boring banking is safer, and boring banking goes hand in hand with stricter regulations that would disallow hedges on hedges and mandate that banks use excess cash on hand to invest in government securities or set up subsidiaries that have higher capital requirements, ultimately separating capital markets and investment banking from the vanilla banking (read: lending) arm of a bank.
The way I found this rather old piece was through an article on Bloomberg that argues that this is in fact not the solution to the problem. You can find the Bloomberg article here.
The author makes a few valid points:
The author argues that a new Glass-Steagall Act, something implicitly suggested as a countermeasure in the above NYT article, would not stick. This is pretty obvious: Glass-Steagall is draconian and antiquated, and even greater regulation through a Volcker-type legislation is an extremely contentious topic. What banks need is to be held to a higher standard by investors across all lines of business, and those that fail to measure up should be shed.
I personally don't know how to fix the problem of overly-risky trades taking place in the capital markets divisions of banks. I also am not entirely convinced that it is a problem, but that's another story for another day. What I do know is that banks like JPM are extremely large, diversified, and complicated entities. This is, in some ways good, and the author in Bloomberg claims separation of services is antiquated and that banks should be large and complicated entities. But there is a problem when dealing with large and complicated entities in the manner that the article suggests: holding a bank to a higher standard with the potential of shedding it quickly becomes impossible.
First of all, what does "a higher standard" even mean? And secondly, you can't simply shed banks that do not meet this higher standard when large, diversified, and complicated banking entities reach the threshold of "too big to fail".
If we do agree that there is a "problem" here, I see the only solution as stricter regulations similar to the Volcker Rule. Simply holding banks to a "higher standard" or forcing banks to create subsidiaries for capital markets seems overly-complicated and expensive, not to mention not tenable. What do you all think?
Just bring back Glass Steagall and repeal the Commodities - Futures Modernization Act of 2000. In a sane world, this is what we'd do. It's far simpler than Dodd-Frank and effectively eliminates the problem of TBTF and interconnected zombie banks.