Why has the quality of IB analysts declined?

Reading a lot of posts lately of VPs and Associates complaining about the quality of new hires. The frustration seems to be across both analysts and summer analysts, with common points being that they are less motivated than their previous cohorts.

Here are some reasons why I think this is the case now, but would love to hear more of a discussion:

  1. 80-hour work weeks are not appealing to people, especially when watching peers in tech or tiktok/instagram work way fewer hours to make more money

  2. IB produces fewer sexy exit opportunities now than it used to. VC/product/entrepreneurship seems to be go-to type of jobs that people look for nowadays, and IB doesn't position you as well for those. Private equity is no longer as sexy or alluring as it used to be

  3. People's attitude towards corporate America as a whole has changed. I see this especially in gen z as many view corporate work as soul-crushing or demeaning. Not saying this is right or wrong, but definitely a trend I have noticed. 

  4. People's attitude towards money and financial freedom has changed. The days of starting out young and gaining skills and working up the corporate ladder is no longer a thing. Seems like a lot more of the younger cohorts are focused on financial freedom - they want to make as much as possible early, invest it, and retire/travel/do their own thing.

  5. This one is kind of obvious to me: but brain-drain from IB to tech, quant, product, crypto etc.

Comments (68)

Most Helpful
Aug 4, 2022 - 11:21pm
PeRmAnEnTiNtErN, what's your opinion? Comment below:

I am probably going to get some MS from this, but here it goes anyway.  All of your points,  point towards there being problems with analyst, and not one with the attitudes of VPs and Associates. A few things I have noticed:  

1. It seems like there are some Directors - VPs - Aso, that got use to everyone being around their computers 24/7 during Covid, and now they still expect you to be even more reachable than ever before, which completely cooked a lot of good talent and that doesn't even stop them from treating analyst like shit.

2. A lot of directors and VPs are still remote and show no face time, while in-office mandates are being enforced for juniors.  I think this makes it pretty hard to want to serve directors well when juniors barely even see them.  

3. Going back to the money,  sure times are tough right now, but they are a little less tough for people who are earning millions a year and are 10+ years into their careers. The bonuses across the street (at most banks) were pretty insulting for juniors.  Sure, this is probably led slightly by expectations, but damn rents are higher cost are higher and we are out here getting stiffed.  

Generally, what I am getting at is that it can be hard to look in the mirror and say that everyone sucks, when it feels like the goalpost have moved on what is required for an analyst.  

  • Analyst 2 in IB-M&A
Aug 4, 2022 - 11:35pm

Corporate America sucks ass. You got that right. So much meaningless bullshit and busy work that amounts to nothing. Self congratulatory attitudes and posturing all over the place with "hustle culture". I don't blame gen z'ers at all for not giving a fuck - I don't either. Realistically, none of this shit matters, and only a tiny percentage of people will ever reap any legitimate reward for their hard work.

  • Prospect in IB - Gen
Aug 4, 2022 - 11:49pm

I think the more surprising reality would be if the quality of analysts didn't go down. It's been discussed to death but there's a million reasons why the perceived quality might be on a downward trend, and very few reasons to counterract the trend.

1. Proliferation of information via places like WSO has made the exit opportunity process much smoother/better informed. In general this proliferation of information outside of one's immediate bank bubble has diminished any sense of immediacy/authenticity in the overarching threat behind getting one's work done quickly & well. Can you even imagine how small a banker's world must have seemed in the 2000's when you spend literally all day in the office, with little connectivity? Junior bankers just don't buy into the whole fear-based structure that has long ran a bank's hierarchy to the same degree these days.

2. Banks have increased the number of junior bankers quite a bit as the corp-fin side of investment banking has grown. It's not difficult to see how this may have had an effect on junior banker quality, coupled with increasingly well-paying jobs in tech, quant, consulting, etc.

3. The overall culture of finance has changed rapidly since 08. Finance used to thrive on a mystical allure of secrets behind the scene, and the junior bankers were the SWAT team low on the hierarchy that took great pride in being allowed to participate in this world that "commoners" only knew as Wall Street. Well, now most of these banks have grown massively, gone public, have little fun (especially of a risque nature), don't pay 3x better than non-finance opportunities, and have done away with the culture of secretiveness they long tried to give off. Junior bankers have responded in turn by easing up a bit culturally - being a hardo is an insult now, not something to take pride in. They don't feel proud of the opportunity and eager to prove themselves, they feel like chumps as their stoner college friends work 30 hours (virtually) in tech making just as much if not more money.

4. As alluded to above, models and bottles have gone away. Youth culture as a whole is way more into investing these days and frugality is sexy. This makes having a nest egg and a general sense of financial security far more common, again, doing away with the power of the implicit threat of perform at a high high level or be fired.

The list goes on. And the recurring theme through these is that it really isn't junior bankers' faults. It's simply a natural and obvious conclusion to a lot of trends.

As well, honestly, the quality of associates has probably gone down by just as much if not way more lmao. It used to be considered an honor to go A2A at a bank, and a lot of the time that was accompanied with an MBA. Now you have people that worked low-level corporate jobs, did nothing in b-school for 2 years, and now complain about the quality of analysts...

  • Intern in IB-M&A
Aug 5, 2022 - 12:11am

This is actually why I wanted to pursue a double major in MIS and Finance because I sensed this issue when I first started college and how the IB space is no longer what it was in the early 2000's or what have you. Amazing points OP, I don't necessarily "hate" the current state of IB but its definitely not as glamorous as some may think it is haha, cheers.

  • Associate 1 in IB-M&A
Aug 5, 2022 - 12:33am

Minor factor (of many others) and somewhat just conjecture - but people's brains and ability to focus have degraded to unprecedented levels by smartphones and social media imo. It's only been a decade or so now since smartphones have become ubiquitous and I think they (+social media apps) have only gotten more and more addictive over that time. I think the impact is more pronounced on young people (now today's analysts) who have had smartphones since middle school and I think there's something to be said for that. Additionally, I think Wfh during covid allowed people to goof off on their phones significantly more. This combined with greater apathy by how weird/fake/pessimistic the world seems after the last 2 years are two potential causes I see that are resulting in lazier, less diligent analysts.

Aug 5, 2022 - 8:37am
FTPinsider, what's your opinion? Comment below:

I'll counter that by saying, yes I agree that phones and social media are a net detriment to society as a whole, but I think the pandemic era was also a huge culture shift in the workplace. We saw WFH become a thing, workers have bargaining leverage on their comp like we haven't seen in years, and greater general flexibility. I think this is where banks TRIED to cater to their employees for a time, but since Covid pretty much ended they completely went back to their old ways. I can't speak for others, but my bank is back in the office mandatory 5 days a week now and I absolutely hate it. So demoralizing when analysts and associates have to trudge through he subway in 95 degree heat only to find that our MDs and directors aren't even coming in that day. Clearly bonuses have been fucking shit despite record revenue and profits last year which is probably the worst thing, considering money is the only reason we do this stupid job. Banking pay had been stagnant for YEARS prior to 2021, and honestly we are still drastically underpaid despite the base raises. Also flexibility is such a joke. Hours are still dog shit despite waning deal flow. Talent will continue to decline because banks are putting no effort into retaining talent. They either need to pay us or fix the culture and don't seem interested in doing either.

  • Intern in Consulting
Aug 5, 2022 - 12:40pm

This. I'd imagine in the past when everyone was in the office and social media was less prevalent, your entire world would be banking and it would be a lot easier to get carried through by the camaraderie with other analysts. Now analysts will come home exhausted at 2am to their 3-4k a month apartment in NYC just to open tiktok and see some remote working tech guy in Bali talking about how chill his life is.

  • Analyst 1 in IB-M&A
Aug 5, 2022 - 12:59am

Agree with what's been said above. 

As someone at one of these BBs that just paid out laughable bonuses, can clearly see that analysts have blatantly just stopped caring.

Good amount of my class is just doing enough not to get fired at this point...why the hell would we average 90 hours for another 52 weeks just for another 19k post-tax bonus??

Aug 5, 2022 - 12:15pm
Stonks are only going down, what's your opinion? Comment below:

anglosaxonchad

We all know the reason😏

idk why everyone is posting long, quasi-philosophical explanations...

Less money, less prestige, less bitches that's why.

this is literally the reason... comp is 1/4 for juniors, market & inflation adjusted vs the 80s (remember Liar's Poker? Salomon Bros bond sales grads were on >£50k base for London in those days...) It's the not the unparalleled career path anymore

  • Intern in IB - Cov
Aug 5, 2022 - 1:53am

About to wrap up my BB IB summer internship and I can confidently say I will not be going back and I'd rather risk finding something else than work 70-90 hours week in and week out. I used to be a person with 5-10 year plans and always worried about what's next. Was able to take some time out and reflect and I really don't see myself doing PE, which is the top reason why people wanna do this job in the first place. After seeing how this industry truly operates, I would rather take my talents somewhere else thats not in this industry and have more flexibility. Some of my peers at different banks are thinking the same thing as well. 

Back as a freshman I admired this job a lot and thought all the smartest and brightest kids are doing this. Oh how wrong I was lmaoo.

  • Prospect in IB - Gen
Aug 5, 2022 - 8:46pm

Incoming 2023 SA. Advice on where instead to look?

Aug 11, 2022 - 8:56am
Chosenmonkey74, what's your opinion? Comment below:

what do you plan on doing instead?

 

 

  • 1
Aug 5, 2022 - 5:35am
mergersandacquisitions78, what's your opinion? Comment below:

I would actually say the top 25% of analysts are better than they ever have been. Some real stars in this group, and people more informed and capable than I've seen in the past.

i don't think this is generational. I just think banks have overhired for the boom and there's a lot of mediocrity in the bottom 50% (which is worse than ever) and people who really didn't want to do this. 

there's also a lot of Associates, VPs, D (and I dare say MDs) who don't have the substance and we're cruising along because of the boom.

In my view non MD headcount will be down 30-40% and analyst classes will be halved or more in 18 months and much of the mediocrity will be gone.

Aug 5, 2022 - 10:49am
PeRmAnEnTiNtErN, what's your opinion? Comment below:

Can you actually highlight on the mediocrity that you are seeing?  What difference are you seeing in todays analyst that are were not prevalent 5 years ago? 

  • Prospect in IB-M&A
Aug 5, 2022 - 6:53pm

In my view non MD headcount will be down 30-40%

are you saying a lot of fat is going to be trimmed amongst the Associates, VPs, and Ds ?

  • Analyst 2 in IB-M&A
Aug 5, 2022 - 9:26am

I think these problems are less prevalent at non-public banks. By virtue of being publicly owned, comp is under much greater scrutiny at the BBs/public boutiques and it's much easier to rationalize paying people less or paying them in stock, which objectively just sucks. Also they all have to pretend to be woke and virtue signal out the ass while actually not giving a shit about employees.

Aug 5, 2022 - 10:26am
TimesNewMoney, what's your opinion? Comment below:

Not for nothing, shitting on the generation that comes after you is classic human nature. 

It's like being in a fraternity. Every year the new pledge class is the biggest group of pussies yet. 

Every new Analyst class is the laziest / most entitled group of Analysts yet

New, popular, young musical acts the kids are listening to are dog shit compared to the music our generation used to listen to

The politics and values of the new generation are degenerative 

The shit the kids wear these days is stupid, offensive and tasteless...

So on so forth. Idk if the newbies really suck that bad or if every generation simply thinks the next generation up is full of fuck ups because they're different than what one is used to. 

  • Intern in IB - Cov
Aug 5, 2022 - 11:58am

As Billy Joel said, we didn't start the fire...

Aug 5, 2022 - 8:51pm
anglosaxonchad, what's your opinion? Comment below:

The real answer. Do you retards really think that IBD would be such a mess in 2022 if only thoroughbred, polished men of the purest, WASPiest heritage from Yale/Wharton/Dartmouth filled the holy ranks of the likes of MS/GS/CVP/PJT?

  • Intern in IB-M&A
Aug 11, 2022 - 8:59am

Yeah any Indian or Chinese kid from the Bay Area can absolutely whoop the ass of any of these "WASPS" who are lazy and not nearly as intelligent. Times have changed keep up.

  • Associate 1 in Consulting
Aug 6, 2022 - 6:11pm

Some LMM/MM shop or boutique out there should institute a strict no diversity hiring policy to scoop up all these victimized non-minority (i.e. HIGH QUALITY) candidates who have been DENIED their birthright to enjoy a seat at a top firm thanks to the DIVERSITY RECRUITING scourge that plagues the industry

I imagine whatever firm does this will fly up the league tables thanks to this simple trick!-- all these sharp and hardworking candidates that BBs and EBs have written off are just sitting there ripe for the taking... 

MAKE INVESTMENT BANKING GREAT AGAIN

Aug 5, 2022 - 11:36am
Timothy-Bryce, what's your opinion? Comment below:

I think WFH during the pandemic has had a big impact on the last couple classes. During the thick of Covid, our interns were remote and weren't able to really do any real work due to MNPI concerns (Noone to supervise them). Then offer rates were essentially 100% because there was no real work to really judge them on. So weak interns weren't culled as they typically were in the past.

Then when they came back for full time, we were still WFH which made it much harder to train them effectively (not their fault). Due to it being much more difficult to train them, alot of associates/vps opted to just do the work themselves, leading to a bit of animosity towards the new analysts. Now that we are back in the office, i think analyst work product has improved significantly (at least on my team). 

Aug 5, 2022 - 1:20pm
thesteezeman, what's your opinion? Comment below:

WFH definitely the biggest culprit in the short run.  It is difficult to be motivated and to learn while remote, and managers also need to get back in the office to create the in-person culture these firms want.  In the longer term, I think a lot of these tech / influencer / entrepreneur gigs are going to be very challenged in a world of nonzero interest rates.  Stock comp is going to be less valuable after this year.  Hiring in tech and creation of new tech will slow.  For the young entrepreneurs, funding your dorm-room startup will be much more difficult than anytime in recent history.  Ad revenue is tanking which harms both tech and influencers.  The talent will shift back to finance within a few years.

Aug 5, 2022 - 6:04pm
IncomingIBDreject, what's your opinion? Comment below:

With the low bonuses, total IBD compensation is not even at parity with tech compensation (not even factoring in stock) at the junior levels. So what rational person would take 1.5-2X the hours with lower pay? We can talk all day about how finance has a higher ceiling, but even that starts to fade when factoring the extremely high COL compared to remote tech job working in some random beach town. 
It's not an exaggeration to say that front office roles need to at least double or even triple their base salaries if they want the cream of the crop to start coming in again. People can use every excuse under the sun, but at the end of the day this is purely a compensation issue. Smart people will gravitate toward what provides the highest pay.

Generally speaking wage suppression has only been getting worse in Corporate America and it's no longer like the good old days where employers paid pensions and promoted those who were loyal to the firm. Corporatism came in and saw everyone as a cog in a machine. If you do that and don't adequately reward talent, expect smart people to create their own firms or go to the startups that do.

Array

  • 4
Aug 5, 2022 - 6:39pm
throwaway909101, what's your opinion? Comment below:

This is a fair point.

Though while Tech has high earlier career comp, it grows significantly slower (and yes much lower ceiling).

I really hope people aren't making career and life decisions based on 1-2Y earnings vs 3Y+.

But understand it's tough to swallow the hours for what may be lower comp, even in short run.

Aug 5, 2022 - 7:52pm
IncomingIBDreject, what's your opinion? Comment below:

https://www.levels.fyi/companies/google/salaries/software-engineer
https://www.levels.fyi/companies/google/salaries/software-engineering-manager

https://www.wallstreetoasis.com/resources/careers/salary/investment-banker-pay-bonus-guide
 

Seems like at least up to MD the salaries are fairly equivalent and maybe even slightly better if the lower compensation bands are used for IB. Except that one job is 45-50 hours a week with an occasional 60, and the other 80+. Maybe once one hits global head /partner status in IB or gets significant carry in PE do the salaries start to diverge but how many people are going to hit that level and want to risk grinding away 15 years of the prime of their life at the hopes of hitting that status? If we keep this discussion to MD or below, tech wins by far. 
 

Because of this the brightest have a lot of reason to head to tech, hence the quality in decline of IB analysts.

Array

  • 1
Aug 6, 2022 - 1:38am
anthro123, what's your opinion? Comment below:

I think covid is a huuuge reason, for various reasons including:

- College became an absolute joke during covid - virtual school simply does not work for most. I'd imagine the ability to simply cheat on everything would have a profound impact on one's motivation to study/work hard (i mean why would you waste your time studying if you can just like look everything up online lol) and I think some of this translated to interns and new analysts' work lives. You just don't really ever feel that sense of urgency I think (which in my experience, I felt like a lot of interns no longer had when comparing myself + my friends' interning experiences to interns I've had) 

- WFH is fine / can be effective when you know what you're doing, but starting out or interning remote is a literal disaster. Sure facetime culture is stupid/unnecessary but there is value to being in the office around your peers, especially when you're trying to figure out simply what's going on and communicate with others.

- Probably most important and big picture, but I think covid simply changed people's worldviews and outlooks on life (in a multitude of different ways). For instance, I'd say covid led to a seemingly mass exodus from banking in general in like ~2021 (probably bc people re-evaluated their priorities / thought life is too short to spend my time up all night working on slides that no one will even look at, no matter how much you pay me). Then this mass exodus led to a crazy ib job market (where a lot of new hires seemed to be from non target backgrounds/school), and honestly in my experience, a lot of these off cycle hires just sucked (which isn't surprising bc wfh/remote working doesn't work when you're starting out, like I've alluded to before). But overall I think covid caused people to re-shift their priorities and either re consider ib as a career or just approach it differently. 

- also edited to add something else i thought of that isn't necessarily new to banking but there's just a huge misalignment between incentives between senior and junior bankers. MDs are trying to win deals and directors/vps/maybe some associates but less so are hustling to try to make MD (so form relationships, win deals too, etc). as an analyst, like yeah deal toys and deal experience is cool but at what cost? there'd be bake offs where i was like uhhh i know my senior banker needs to win this deal, but i don't want my workload to get even worse and i don't really truly care about this soooo... glad we lost lol 

Aug 6, 2022 - 7:38am
Lawrence3, what's your opinion? Comment below:

Spot on with your first two bullets. It's so easy for kids to cheat these days. Then in the workforce, the answer to X is not easily googlable. I've long said businesses should start their own college like programs. Bring in high school kids, don't work them to death like IB interns, but ramp them up to a work week, and have staff there to specifically train them on what it takes to do M&A, or trading, or etc. Get creative with rotations and whatnot. You'd have a better quality pipeline and make fewer bad hires because these kids would have direct experience, know if the career is for them, and have plenty of education and training in real world problems. Would solve a lot of systemic issues and would force colleges to innovate instead of continuing to add bloat and raise tuition each year

Aug 6, 2022 - 1:32pm
mergelord11, what's your opinion? Comment below:

Its gotta be directly related to WFH - not just the analysts. 

So many juniors WFH that analyst development has really slowed due to the lack of facetime from both them and their mentors. I blame leadership. Its like having a workout trainer training you from Skype...smh i cant learn how to bust out squats like this 

Aug 6, 2022 - 3:02pm
IncomingIBDreject, what's your opinion? Comment below:

Pretty sure you posted in the wrong thread

Array

  • Quant in HF - Other
Aug 6, 2022 - 7:01pm

I'm not surprised. Why would any Ivy league grad do investment banking when they can work 45 hours a week at a tech startup and get paid 200k out of school? Yes, that 200k are high-percentile roles, but I-banking itself is a high-percentile role - smart, motivated people can and will obtain those jobs.

Good for them. Kids these days are smarter than slaving away at a meaningless bullshit job, at a meaningless bullshit firm, in a meaningless bullshit industry, to earn pennies while they make some sleazy old white guy rich.

  • Intern in IB - Gen
Aug 7, 2022 - 1:20am

Curious as to why you think of MBB here? Might be a naive question but is it mainly because of the broad range of possible exit opportunities?

  • Analyst 1 in IB - Cov
Aug 7, 2022 - 11:33am

1. They raised their base to be similar to IBD

2. Much better WLB, with basically Friday - most of Sunday wide open

3. Great benefits

4. Great exit ops

  • Associate 1 in IB - Cov
Aug 7, 2022 - 9:47am

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