Everyone is always talking about exits. “Best groups for PE” “Best groups for HF” “GCM exits?” “Corp Banking exits?” “Pub Fin exits?”
What about staying? Am I naive to suggest this? Is IB really that bad?
Can anyone shed any light on the analyst -> associate (and beyond) path? Why it was right for you? Why do so few consider this? Pros/cons, etc
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Good thinking. Sometimes it's better to stay put. Only make the leap IF you're absolutely certain you're leveling up and can trust the group you are going to. Otherwise it's trading Devil you know for the one you don't. And there's nothing wrong with being a career ibanker either.
I feel like a lot of people that are currently bankers and plan to stay on may not be as active on WSO as those looking to exit/college kids who view PE as sexy which results in a bias towards the later. Just my collegiate 2 cents.
Nah, turnover for banking analysts is pretty high. A very high percentage leave after two years.
Hi all, please could you check my post on my current work situation and how it wrecked my relationship, I really need some help, it would be incredibly helpful! The post is titled: "Toxic boss in M&A boutique: Take bonus and run or leave immediately?"
Thanks man, Alex
Do most leave voluntarily or are only a few taken to stay at BB (how hard is it to stay if you want to)?
it’s not too hard to make it to associate at a BB granted as most of your competition moves onto PE or other exit opportunities. It can be very hard to move onto as a VP and even harder to an MD position. Banking is a rough world and if you can’t perform you’ll be tossed out.
Good info thanks. How about in other divisions like AM or S&T?
Would u say this applies to all BB? Also what about if you are in AM straight out of undergrad? Thx
.
"BB asset management is sell-side "
Completely wrong.
Also completely wrong that AM firms don't hire undergrads.
Also completely wrong that getting into post-MBA investment roles in AM is "easy"
Also completely wrong that total comp in AM post-MBA is only $120-180k.
Please refrain from giving out completely inaccurate information.
100% wrong. Just delete this man.
A lot of it is just herd mentality. I was a former analyst a very long time ago, before buyside recruiting became the well-oiled machine it is today. Back then, the PE/HF industry was not as big, so it was not the automatic default option for analysts that it is today. Back then, being promoted to a third year was a real honor. Today, nobody gives real consideration to staying on in banking at all -- in fact, it's looked down upon.
The reality is that the grass isn't necessarily greener in PE (and being in HF, I can say that it is definitely not greener here either). I can name many people who went into MF PE and decided that it wasn't for them. For example, one former analyst stands out only because he was so convinced that MF PE was the be all end all. After he got his job offer from MF PE, he spent all of his telling everyone in the office how PE is so much better than banking, how he couldn't wait to do real critical thinking where his opinion would be valued, how he wouldn't do any BS work anymore, how nobody in PE had to kiss ass, etc. Then, he got to MF PE. After six months, we started hearing that he was really unhappy, because it was just more of the same -- long hours; lots of bitch work; lots of bureaucracy; instead of fixing formatting issues in slide decks for external clients, it was now for the investment committee. In the end, he left PE before his two years stint was up.
The reality is that you won't know if you will like banking until you are on the job. Everyone has a different personality. Different things appeal to different people. But, as an analyst, it is extremely hard to break away from the pervasive mentality that banking sucks and that it's only purpose is to serve as a stepping stone to PE, HF, VC, tech or whatever. People don't like to stand outside of the herd.
The reality is that banking does get better -- as an analyst, I hated all the things that every analyst here complains about. But as a VP, I got to do a lot of fun things like interacting with clients, running deal processes, determining what got put into the deck (and having smart associates and analysts under put it together overnight like magic). But banking is only interesting if you like client work. If you don't, then it will be horrible for you. So biggest advice is to find something that you think lines up with your personality and interests. Take the time to talk to senior people in your group and ask them about their jobs, what they enjoy about it, etc. If you do that, I think you'll be surprised. If anything, it will just help you make a more informed decision about why PE/HF/VC/tech is in fact right for you.
Thank you. This is great. Super helpful and insightful
You mentioned that being in HF has shown you that the grass is not greener there either. I've seen all the criticisms of banking from older friends such as grunt work, no visibility on schedule, brutal hours, dislike of deal oriented nature, etc. I was wondering what do you feel are the issues that come with working at an HF?
I think HF, much like PE, has much more variance than BB IBD. In banking, there's greater uniformity of pay, job expectations, etc. In HF or PE the shops can range greatly in terms of size of team and AUM, and their unique strategy. So it's just harder to compare. A 3-person HF or an 8-person PE shop managing a $100mn fund is going to be completely different than a multi-billion-dollar shop of far greater scale. I can mostly only talk about PE, though I did serve HFs that were sister companies to my PE shop, and also served HFs when I was running cap intro at a BB. The hours/intensity, comp and lateral exit options vary so wildly it's almost like comparing apples and shaving razors.
it's 2am here and i've been cranking since 7am monday - yes, it's a grind
Think one key difference is the type of work being done. IB has changed a lot in the last 20-30 years. Back even in the early 2000s the really good experiences I heard about are different than what they are now. As an analyst you do the work, you end up meeting clients, etc. The entire industry was bureaucratic but less so than today.
People on this forum may disagree but I personally think the job is interesting after you put in maybe 15 years into it. Once you get to the SMD / MD equivalent level and you are actually guiding the deal along the way. The process work is pretty stupid. So much of the job is producing output to show you did something vs. producing only what's needed. Putting 15 years into a job to be able to exercise your mind in an intellectually stimulating manner is pretty difficult. There are other jobs that pay competitively where you have a bit more autonomy, you think for yourself, and hopefully if you put together some materials it actually says something. We've all seen / had to put together the 80-page deck that doesn't really have a point, but needed to have 80 pages to be "thorough". Again, I know Ill probably be get MS and someone responding how their elite group only puts together super thoughtful materials / doing really important deals but we all know its just not true. Finally, M&A is largely value destructive. Do you want to spend your entire life perfecting a craft that destroys value? This may be a little too reductive towards banking, but largely you are just a service provider who gets paid for advice on a vary narrow band of things that are at the same time important (providing capital & market access to companies) and not important at all (an uncomfortable amount of M&A focuses on reducing interest expense and saving money on taxes, cost synergies are real but usually de minimis to long-term value and revenue synergies rarely work out, outside of specific industries). I'm generally curious to hear the other side of this because no one's really explained it to me and I'm wrapping up my two years. What's the spark in your job that makes you want to stay? A director I know said he does it for the clients and the money (he's like a walking cliche) but at least he's honest and he's really good at his job.
At the same time, MF PE isn't all that different. That entire industry is just as bureaucratic as IB. Spending all your time making long investment committee presentations and turning a model to get a slightly higher IRR in the hopes that the deal gets done. I'd say the difference I've heard from a few people is while you are still doing a lot of grunt work / annoying stuff like that, you are in some cases encouraged to speak up or taking initiative on doing creative research analyses is looked favorably upon whereas by and large in IB the only initiative I've seen being rewarded is sending out a call invite / putting together a shell before it's asked for which is more or less trivial to being with.
Think one of the above posters got it right that you just have to find the right firm with a good culture doing work you think is interesting. I do think though that with all the options in the world a well educated, naturally curious, and competitive person would get bored in IB until they are at the point in their career where they are driving real decisions (not what charts to show on what page).
Shouldn't the title of this thread be "Going Long on Investment Banking"? Also, I don't think many people are cut for this game long term. Wonder the %% of people who stay more than 6 years? Probably less than 1%...
In my analyst class of ~10 in my group, 9 of us left and there’s still 1 who has stayed on. Staying in banking is an option any analyst should consider but I think it’s a different mindset than reasons for pursuing PE.
Reasons to stay on: 1) Work hours improve significantly as an analyst promote. You know how to navigate your group, get on the best (experience or work hour wise) deals, work with the best (experience or personalities) people, and also have some level of pull with the staffer to push for working with your favorite analysts. I can’t highlight this enough—most of the late nights in banking are due to team inefficiencies vs. actual client or deal deadline (also for the latter, you feel much better about the late nights because they were necessary). Being in a position to be able to somewhat minimize those inefficiencies (at least for yourself) is huge and you can really set yourself up for very sustainable hours (or go extreme and become a “pdf only” associate. More on this on the next point).
2) You are way ahead of competition. Let’s face it, with the exception of true gems here and there, average MBA associate is of lower drive and/or smarts than the average undergrad analyst. Again, I’m generalizing but it is true based on my experience. As an analyst promote, your job is a cakewalk AND you look great even if you do average work (for your standards or your analyst class standards) because your MBA peers are still ramping up. Even if you only review PDFs you will be able to review much faster and with more accuracy than your peers, until your peers ramp up / gets filtered out throughout a couple years.
3) Pay is great. Especially relative to the work you have to put in as an associate at a bank vs MF or UMM PE firm. You might work more than MM or LMM PE associates but you get paid more than them so that’s ok. Your pay will be slightly below (in most cases, ~25-50k maximum) or at par (if you are top bucket in a well paying group) with UMM / MF.
4) there’s a clear path to promotion. At least in my group, we all thought it’d be easy to get VP or even Director promotion if we stayed. MD is a slightly different beast. This point probably varies more across different banks and groups on how common promotions are. We all knew going into UMM/MF that we will most likely need MBA and/or that promotions from PE associate to VP are not a given.
So, tldr; my peers stayed on because work gets really easy, pay is really good for the level of effort needed, and path to promotion is clearer (and you get more money for decreasing level of effort until you hit D/MD, at which point you have to grind to get business.
Now coming to why analysts don’t stay.
1) Banking was never considered a career. This was true for all of us and is still true for those who stayed. Watching how MDs live their lives, we all told ourselves “fuck that, that’s not my end goal”. Call us foolish but we thought we could do better than our MDs. So that’s why most of us left for PE or corporate—because we thought we deserved better and because we wanted to search for a career vs. a job. Now it’d be a separate conversation if PE really panned out to be the career we were looking for (for a number of us, it wasn’t and they exited PE just as quickly or even faster than they left banking...in search of their ideal career). For those that stayed, it’s all about the $$ they make until they are ready to jump onto something more exciting (usually these people knew PE wasn’t for them, really valued money and no wasting money on MBA for family or person reasons including option to pursue low paying jobs down the road for a more fulfilling career or to settle down, and/or just didn’t know what they wanted and pay/work ratio was optimal in banking for the time being.
2) Analysts exit because they want to learn and develop. Associate role being easy for analyst promotes is a double edged sword. Your life gets better but your work gets boring. You were a well oiled machine as an analyst. You are now a well oiled machine that only has to run at 50% capacity because there’s another machine (analysts under you) at disposal. I remember one of my associates who was an analyst promote kept saying “I’m just cruisin’!”. He eventually left for growth equity because it got too mindnumbing.
I think those two are the top reasons for leaving (outside of just general burnout) but since reasons for leaving are well documented in this forum, I won’t rehash. Anyways, hopefully gives some perspectives those that are just now entering banking. Last thing I would say in all this is don’t underestimate the psychological and physical toll banking will have on you...burnout is real and in some ways looking back, that made a lot of us want to kill ourselves at the idea of staying in banking any longer than the two years we all initially signed up for as a rite of passage.
This is great, thank you.
Do you have any insight on other front office roles with better work/life balance, say DCM, ECM, S&T, corporate banking, even public finance.
Do these roles get overlooked because they aren’t able to exit like traditional IB, when they really have a lot to offer for those who want to stay for the long term?
I am not as familiar with S&T, corporate banking, and public finance so will leave to others to comment.
Regarding product groups, they can be better lifestyle in the long term yes. But I didn’t consider product groups as a career because:
1) hours still suck, especially for juniors. ECM tends to be more consistently better but I’ve seen kids pull insane hours in DCM. Depending on bank set up, product teams hours are driven by coverage teams and their strengths so I’d diligence that a lot (e.g. consumer coverage really strong in DCM but not in ECM? Hours will reflect that). Also, if I remember correctly product teams hours weren’t that much better...start early (7-8am?), still leave after dinner, and still log in at night at the mercy of coverage group requests (more relevant point of analyst/associates). They seemed to have their weekend more though.
2) job is more paper pushing. Product groups are very much processing processing and helping coverage groups so there is not much strategic thinking around it. Personally think this point is really important for junior development. Even in the long term, you only get a seat at the table if the coverage banker invites you to the table.
3) because of #2, your career options are more limited. Product group skill sets are not as transferable outside of banking, so you’re either forced to move up, lateral, or move internally to a coverage group and reset from there. Now, like you said, moving up and staying at a bank could be an option. What I didn’t like about that option is because product teams are support roles for coverage teams, they are in less control of their destiny (I.e. your fees depend on coverage banker performance, your schedules are now at the mercy of coverage banker—you’ll see instances of product bankers being forced to travel at the last minutes at the request of coverage bankers, and your job security/pay and all that is also somewhat outside of your control for the same reasons). I’ve seen product group VP/Ds get stuck for a few years. Personally, control over my own career is very important to me and I didn’t want to sacrifice it at the chance of slightly better lifestyle.
An AtoA associate has told me that at his bank, analysts who have told mgmt that they are planning to stay on get better deals, better hours, and guaranteed top bucket instantly (even within their 2 year tenure) just because mgmt wants to make sure they are incentivized to stay. Is this something that's true for all banks?
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