Just How Bad is the IB Talent Shortage Really?
As my profile title suggests, I am in Consulting not IB (former IB experience). While I do M&A consulting, my role at this point doesn't involve anything a banker would do, except for living in Excel / PPT. M&A Consulting is a massive industry and as most bankers/PE guys know, much of the work has zero financial modeling, industry analysis, etc.
However, I am getting reached out to by 3-4 recruiters every week looking to fill roles at various IBs, ranging from EBs / BBs to banks I've never heard of (I know the vast majority of banks with 50+ employees, as some of my experience was at tiny banks). I'm having banks reach out that I never would've dreamed of trying to get me to join their team.
For those that care, the consulting industry as a whole is extremely short-staffed, like the worst its ever been short-staffed. However, despite being in consulting for multiple years at reputable firms, I get maybe 1-2 emails a month from recruiters asking me to jump ship to a different consulting firm.
I am trying to understand if banks are reaching out more because:
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IB is somehow even more short-staffed than consulting
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Recruiters think I am an easy target because IB > Consulting from a prestige perspective, so I will jump on their interview requests
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IBs are hiring more recruiters who are more efficient, and it is leading to more outreach
Curious to hear any thoughts
Just my opinion, but I think banks (and sounds like consulting firms) were caught flat footed with just how bad their retention issues have always been. Banking is very much a means to an end job. Yes, we all know analysts cycle through every 2 years, but the same generally applies to associates who depending on circumstance cycle through at the 18-24 month mark (I'm at the 15 month mark myself and I'm shocked I've stuck around this long honestly). After getting the credentials of banking down (you know just to say ex-GS on my LinkedIn of course) I move on to something with a better lifestyle, similar base and stock options/equity. This has always been the case, but with COVID and people being able to really think about what this job does to your life (especially if you're married - ugh) it's just not worth even pushing through to the arbitrary credentialing benchmark so people are leaving faster. Tons of buddies in my associate class dipped right at the 12 month mark, it's been wild. So with all this deal flow banks don't know what to do except to expand the search pool outside of traditional channels (hence your outreach). I actually think it's great to do this because the idea of banking being some closed off prestige hoarding industry is seriously dumb for long term growth and competing for good talent vs tech/other industries where the talent pipeline is much broader. I say all this to say that the issue is pretty bad because banks never dealt with the core issue of their industry being a pitstop along the way to happiness for junior bankers- there are huge gaps at the VP level at banks because so many associates have left.
I couldn't agree more, based on my anecdotal experience. I switched consulting firms for a promote 7 months ago, and just now exited to a Corp Dev role. I was only in the Consultant role for 7 months. Simply put, I wanted a better wlb. I was working bad (but not IB-level hours) for an BB Y1 Analyst base but no bonus (comparatively)... I have a longterm gf and am close to my family, so I wanted a lifestyle improvement. So now Ill make the same amount working 40 hours per week.
Yes, I wont make IB money, but Im ok with that. IB is not only exhausting, but it is tough work. Hope you're hanging in there and your firm is incentivizing you to stay put, or you are out regularly shopping for better offers.
this is completely spot on. also as other industries like tech and healthcare have been booming there’s a huge supply of well paid jobs outside of IB scooping up the talent. after 18 months of WFH i think people are starting to realize there’s more to work life balance than better hours. assuming deal flows stays elevated (even if not at the highs it has been) i’d bet there’s going to be another big supply shortage post bonus cycle this year with so many banks mandating RTO.
What do you plan on exiting to?
I think the differential in recruiter reach out has more to do with which industry has higher demand for M&A skills more than anything else.
Consulting also had high turnover this past year. But they wouldn’t use a recruiter to try to fill generalist spots (they used their referral system for this), so that’s already a large percent of the turnover that you wouldn’t get recruiter reach out to fill.
No recruiter would reach out to you to fill a consulting role that isn’t an M&A role / something adjacent given that is your background.
By contrast, banks have much more openings with need of M&A skills, given that is what they do. Sure, your skills might not directly translate to what banks need - but the recruiters might not know that.
So not sure if there are differences in turnover between the industries, but there are just less roles that it would make sense for consulting firms to use a recruiter to hire you for.
Well put and good points, I agree completely.
(management) consulting > ibd from a prestige standpoint
general prestige by tiers is:
pe mf (bx/apo/kkr only)
mbb
ibd absolute cream of crop
ibd eb/hf quant
pe umm/vc/ibd bb
tier 2/pe mm
ibd boutique/er/corp dev
am/s&t
Please remove the Private Equity Principal tag from your name. You give us a bad rep (as you are not one).
AM / S&T should be much higher on this list...they are moving large sums of money daily while bankers are formatting spreadsheets
am is fine, its a respectable (but not prestigious) role for those who value wlb
s&t was way more prestigious back when banks could prop trade
This is a garbage take
MBB > HF quant? I'm sure those quants are weeping with their first year 350k+ TC offers
Just earlier this year in Feb/Mar/April - they literally hire any one with a pulse. Srsly. Slowing down slightly but given the exodus of bankers there is still a supply crunch.
How could one take advantage of this being late to IB?
I can not understand how can this even be a problem, it is not a rocket science job. At the actual wage it should have "infinity" supply. Maybe it is a frictional continental problem of people leaving and not enough college educated americans wanting this job at this salary?
it’s not that the salary isn’t attractive it’s that there are alternatives that require equally or more attractive which wasn’t the case in they hey day of finance. the calculation isn’t “can i deal with the BS of this job for $200k” its “can i deal with the BS of this job that doesn’t exist in another industry like Tech for the incremental $20k”.
Sure, I agree in a American perspective, however why junior position in the industry is not heavily outsourced? We do not even need to look in South America/Africa/Asia, in continental Europe is already close to impossible(unless prop trading/tech research very very small industries) to get this level of salary.
Sure, I agree in a American perspective, however why junior position in the industry is not heavily outsourced? We do not even need to look in South America/Africa/Asia, in continental Europe is already close to impossible(unless prop trading/tech research) to get this level of salaries.
Mentioned earlier in the thread, but nature of analyst turnover has changed. Used to be 2 years and out - now at least 50% of people I know are leaving after 1 year to go to PE, corp dev, etc. Creates a huge talent shortage because AN1s are a net negative value add until the 8-12 month mark - basically as soon as they become efficient / productive, they leave.
Very good point
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