Disclaimer
This post isn't meant to be a salty venting, but more of a sharing some of my self-realizations from the past year on things that I wish I had fully understood 12 months ago.
“Congrats on closing your deal!”
“You were a rockstar on this one – we couldn’t have done it without you!”
“You were the keystone of this transaction. This deal would have been dead in the water without your insights.”
“Congrats. Is that project I asked you to do last night (while you were up at 2:30 am closing this deal) done yet?”
A Lost Rockstar
Ah, the closing of another sellside, one which is very meaningful to our firm. I’m told that I should be excited, yet, I’m not. Not in the least bit. The empty congratulatory words coming from distant senior bankers may have once tickled my fancy, but now they are just lip service. You can’t eat or wear lip service. Of course the senior bankers are excited - they get paid on this! However, when they give me the same hugs and pats on the back and speak to me about the fee as if I had ANY economic interest in this, it’s downright insulting. How stupid do they think I am? I get paid the same, whether or not the deal gets done and regardless of the amount of time that I spend on deals.
Sometimes guys argue that the economics from the firm trickle down to juniors. After multiple years, I can assure you that this is not the case unless you are at a firm like Qatalyst or Centerview. Let’s be intellectually honest. Street pay, plus or minus a couple of percentage points each year is your ceiling, regardless of the performance of your firm.
Long Story Short,
the carrot is no longer enticing. Banking has been one of the best learning experiences that I have ever had, but that is about it. It’s a stepping stone, nothing more, and I encourage everyone to view it as such. You will be hard pressed to find a better learning/pay platform coming out of school, so I will offer proper kudos for that. However, once you have your stamp of survival (e.g., resume experience) from your analyst program, get out and go utilize your newfound abilities.
Food For Thought
This may or may not be my last post on here, so with that, I just wanted to leave you incoming monkeys with some food for thought if you are considering staying in banking past the analyst role:
Talent vs Tenure
1) Unless you are an owner of the firm, you are just a resource, regardless of your abilities, experiences or talents (This will piss off a VP or Director but facts don't care about your feelings – look at how your seniors talk down to you). Right now you’re probably thinking to yourself, “But they said I had a bright future here and that I had great potential! They care about me and say I'm a future leader!” Before you continue reading, please watch this ~30 second clip and see if it sounds familiar.
Please. Stop kidding yourself. Trying to prove that you are an equal to your seniors or that you add meaningful value to the revenue of the firm is akin to a younger sibling attempting to prove to the world that they are “mature”. You will always be viewed as “little brother” or “little sister”. Sorry, hate to break it to you. If you need some help further understanding this, please go read Monkey Business. Still don’t believe me? Watch how your seniors treat people when a fee falls through or a deal is on the rocks. Fees come before everything – including people
Lifestyle
2) The lifestyle doesn’t get better as you move up the chain. I can assure you of that from first hand observation. Yes, I’m even speaking about MD’s and Partners. Have you ever seen a senior banker that more often than not isn’t stressed out of his mind, can actually take vacations (real ones not working remotely), or doesn’t have to put fees before everything (family, faith, relationships)? Now you’re thinking, “Alright he’s wrong here. I know they work less hours than an analyst.” That’s where you’re wrong, kiddo. It’s all relative. Are they at their desk 90 hours a week? Nope. But they are always online and let’s say they work 65-70 hours a week, not counting travel. Not to mention that I’ve had partners and MD’s on the phone on Thanksgiving, Christmas, Easter, Memorial Day weekend and even pull all-nighters with me. Awesome lifestyle huh? Give me a break
Is the pay really that good?
3) Whenever I bring up the two prior points, the typical response is, “But the money bro…” Hate to break it to you, but you are a W-2 employee, which is the WORST tax position that you could be in as a high wage earner. As a senior banker, you will still likely have a mortgage, a car payment and maybe a boat. They will just have an extra zero on the end compared to some of our blue-collared brethren. Are you really rich? Does your time belong to you? The best part, and yes I’ve verified this with 90% of senior bankers that I’ve spoken to 1-on-1… you will get hooked on the lifestyle and you will live beyond your salary, meaning you are stuck relying on your bonus (a.k.a. golden handcuffs). Have fun with that. Plus, the days of the big money MD’s are essentially over. Major fee winners are the exception, not the rule. How many rainmakers ($20MM net worth or more) work at your bank/boutique? Yeah…figured
Banking is NOT a meritocracy
4) Lastly, Trigger Warning (did I write that correctly?) Banking is NOT a meritocracy. And please, for the love of everything that is right in the world, stop with the sports analogies. Banking is the complete opposite of sports and is more like a labor union at the local mine or steel mill. In sports, if a freshman has the ability to be a starter, he starts, regardless of the tenure or feelings of a senior bench-warmer. In banking, if an associate or VP is crushing it, sorry, still have to “pay your dues” and “accrue tenure” e.g., wait until the senior graduates and moves on. Banking emphasizes that hard work can beat talent and persistence overcomes this or that. However, in sports, when talent works hard…it’s over. Anyone that has played in Division-1 level athletics or higher understands this very clearly
Further Advice
All in all, I hope that as you dive into the banking scene you follow this simple advice:
a) You are there to learn, so make an effort to learn something every day despite how crappy the work will be
b) Develop meaningful skillsets, even if they have to be on your own time
c) Listen more than you speak – everybody views you as a child anyways so stop trying to be the smartest guy in the room
d) Have an exit plan 12-18 months before your two years are up, be it PE, HF, startup, you name it
e) Try to have fun and smile whenever you can – make the most out of your two years and treat your fellow bullpen occupants like a band of brothers as you’ll all need that support group
f) If you follow the “What I Wish Every First Year Analyst Knew” thread, and they offer you a third year or associate role, please refer to bullet 1
Mod Note (Andy): top 50 posts of 2017, this one ranks #9 (based on # of silver bananas)
Couldnt agree with this more.
This post could be written for any "high-powered" career....banking, consulting, law, medicine, etc. Maybe you just need a vacation.
Not sure why you're getting so much MS, because that's the truth.. Big4 partners work around the clock, doctors don't sleep, and Big Law is just as much of a rat race as banking. If you want to be successful you're going to work a shitload, not sure why anyone would think otherwise. Even if you were to go the entrepreneurial route you're going to be stressed out of your mind because if your business/product doesn't work out you're fucked.
Replace "successful" with "makes a lot of money". I hate how America defines success as having a lot of money cause there is way more to life than that.
Wrong forum.
Even if all of your points are valid, where are you going post-banking that will allow you to make a comparable amount of money? Please enlighten those of us who still prioritize money over lifestyle, what better options are out there? And please don't say PE or hedge funds because we all know that's banking 2.0...
Q: Where are you going post-banking that will allow you to make a comparable amount of money? A: Don't worry about what I'm doing. Your career path is for you to figure out. There is no set path and you are an agent unto yourself. However, I will tell you that the opportunities are out there.
Q: [For] those of us who still prioritize money over lifestyle, what better options are out there? A: It's pretty simple. If you value money over lifestyle, then you are essentially choosing to stay in finance or other professional services. I already said in the post that you'd be hard pressed to find a better platform in terms of pay unless of course you want to be a business owner. However, keep in mind that I'm not necessarily saying to start a new company.
Great responses. Although, I want to point out that entrepreneurial pursuits aren't the only things that will allow you to make a comfortable living. In fact, the entrepreneurship route is a way to get an excellent payout for your efforts and risk taking. I mean that there are jobs that will allow you to make ~100K, which is a comfortable lifestyle that can be or not be in finance.
Banking is awesome, but let's be honest about what it is: it's a continuation of HS-->>College. Even post-banking jobs like PE represent that. No risk is involved, no ideas, no creativity, just a straight and narrow path. The pay is almost abhorrent, since it's such a distraction to how mundane and boring your life is. But, working a job my whole life is not my goal, so that description is probably very subjective.
My two cents / my opinion:
Owning your own small business / entrepreneurship. A small business allows for way, way better tax bracket, lifestyle, money. If you look at studies the highest net worth individuals in the U.S. have most of their net worth in business equity aka their own business. Real estate is pretty good too. Most of the wealthy people I know (net worth upwards of 10mm) are either blue collar people who started their own little small business selling stuff ranging from pipes to stuff like a supermarket to stuff like windows and doors. Others got lucky with real estate back in the 70's and early 80's. Heck, I even know of associates in well known MF's doing real estate as a '2nd job'.
Survivorship bias and power laws. Sure, the VERY wealthiest own businesses, but the step below that is highly paid professionals. There are plenty of small business owners barely scraping by.
Most finance types I know simply don't have the stomach for entrepreneurship (nothing wrong with that).
Meaningful advice: Try to join Centerview or Qatalyst
All. Very. Accurate.
For the people that stay in banking, or those that value money over time and relationships. You will regret it. You may never admit it to anyone (I believe only people with some type of personality disorder stay in banking long-term).
I promise one day you will regret it. All the money in the world can't buy back time or experiences you missed out on.
I really enjoy your writing and your un-sugarcoated style, but I'm not really seeing the point to your thread, which may very well be because I've become so jaded that I just assume that people know that IB will not lead to great wealth.
One thing that I really appreciate you pointing out is how senior bankers do not in fact work less hours than analysts do. I found this true in IB and am now finding this true in corp dev, but the most senior employees at a firm are almost always also working the longest hours. As you said, sure they are not in the office for long periods of the time, but they are always online, always plugged in, and always on call. The idea that it gets easier as you move up in a firm is not true.
Agree with your point on corp dev.
But what a lazy generation to think everyone deserves to work less and get paid more just because of seniority. You get paid for your valuable contributions to a business - contribute more (relationships, fees, etc), you get paid more - that's life. No one deserves to get paid more for contributing less, we are not kings.
I mean long hours are true no matter what way you go. If you want to make a ton of money, you have to work all the time. My grandfather founded an engineering company that went public back in like 2000 or something and I swear he never slept. But he was pulling in like over a mil every year, so no one complained and he loved it. And we still saw him on the weekends. So if you love what you do, then long hours aren't an issue. But if you hate what you do, which in your case it seems like you weren't too fond of banking, then of course the hours and work seem like a waste of your life.
Some good points, but for all your years in banking, you fail to understand something basic about it. Which is: originating is way, way harder than executing. Comp reflects this.
Sick! Is there any way you can PM me and give me your entire life story as well?
+1 SB for you.
All solid points. As someone who became VP albeit at GASP a Tier 2 investment bank and no longer worked 70-80hrs a week, but travelled 4-5 days a week (sometimes 2+ flights a day)--the work never gets easier. If anything your technical skills begin to matter much less and it becomes about generating top-line which means... Sales. Banking is brokerage my friends. It is also turning--has turned--into a perfect competition economy which makes getting fees all the harder.
And to the politics, yes. Unless you're in the top 1% of performers, at bonus/promote time its all about the most senior guy batting for you. If someone senior to them says 'I don't think so' you are proper fucked.