Reflecting on my Investment Banking Experience: Lessons Learned
As many 2nd year analysts begin to leave, I thought I'd reflect on my own experience in banking. Here are some takeaways:
Job Related Takeaways:
The hours bankers actually work are a bit exaggerated and a lot of people conflate time spent in the office with time spent working. A lot of time is spent waiting for comments; you might be in the office from 10am to 12am (14 hours) but do nothing for half the day since your comments didn't come until 5pm.
The difference in size between bulge bracket banks and boutiques is overemphasized during recruiting. What really matters to you as an analyst should not be the overall size of the bank, but the size of the group you are joining. That's what really will affect your experience. You can join a small group at a bulge bracket (<5 analysts in each class) and get a similar level of "intimacy" vs. a boutique.
When I was recruiting, I didn't quite appreciate the pay differential between bulge brackets and boutiques. It's not just the $10k difference in base salary. Over two years as an analyst, this could result in up to $100k+ in less cumulative income if you work at a bulge vs. a boutique. After-tax, that's roughly a year of business school tuition! I'm not saying that you should always choose a boutique because of higher pay, just that the difference was a lot more significant than I had expected. See below for Year 1 compensation for a typical analyst: Signing Bonus: Bulge ($10k) vs. Boutique ($15k - $25k), Salary: Bulge ($85k) vs. Boutique ($95k), Bonus: Bulge ($60k) vs. Boutique ($80k+).
Modeling is so overrated. Modeling is not some glorious process; it's just linking a bunch of excel cells together while also having the functionality you want for the analysis (i.e. sensitize certain drivers). What's more interesting is the thinking behind the numbers that go into modeling, which you don't really do too much in banking.
A lot of the analyst job is just reconciling numbers: I can't tell you how much time I've spent checking multiples, checking to make sure the client's financials tie to each other across different files, etc.
Many companies are surprisingly disorganized and a lot of their own financials will not tie or will be extremely poorly formatted / hard to understand. I'm always amazed by how the world seems to run properly with the vast majority of things so disorganized and people so clueless (including bankers).
Life and Career Related Takeaways:
Having had to cancel a lot of plans because of work, I realized that my time is my most valuable resource. We all have a limited amount of time and cannot get any more, no matter how rich or powerful you are. Going forward, I am placing a lot of importance on work life balance and when I think about compensation, I will think about it in terms of $ / hour, not the absolute $ amount.
Treasure all your friendships. Unless you are going to go to school again, it's pretty tough to forge the same kind of bonds. I am resigned to the fact that as we get older and work, our social circles will inevitably shrink. It's difficult to manage a demanding career, while also maintaining friendships, finding a significant other, and keeping close with family. And not to mention also having to take care of yourself and your own health.
I am not suited for a client services job. I thought a lot about how banking could be improved, and there are a ton of things that I think would make the job more sustainable for me (like some sort of regular WFH policy), but there are parts of the job that are impossible to remedy (like last minute fire drills). Having to always be at the whims of your client is just not something I enjoy or would excel at.
I tend to dwell on things and one thing I always try to remind myself of is that life is too damn short and I shouldn't take things so seriously. Who cares if you're not top bucket? Who cares if the EBITDA doesn't tie on the football field? Just fix it and do your best. A technique that usually works to help me remain calm during banking is to think about how inconsequential we all are in the grand scheme of the universe. Whether you become the next Henry Kravis or you are middle management for a small company, will it really matter in 100, 200, or 1000 years? Probably not.