Associates who started as analysts: Why did you stay in IB?

To the associates who started as analysts at their investment bank, why did you stay? Why not leave for buyside, corp dev, etc. after your two years?

I'm genuinely puzzled by this, which is why I'm asking. I did an internship in banking, and worked in banking as a full time analyst for 3-4 months on the West Coast (until I was able to hop over to buyside fortunately), and absolutely hated it. Maybe my experience was different (I did work at 2 different banks though), but I spent nearly all of my day formatting powerpoint slides, or googling information to put into powerpoint slides (proprietary information my ass).

To those who stayed on, why did you stay on? How did you find any of this work engaging or intellectually stimulating? What are your long term goals with this job?

Comments (55)

Aug 13, 2018

Bump, any idea?

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Aug 13, 2018

One of my associates was A2A and we asked her why. Her answer was basically she didn't see the appeal of private equity because she'd a) make the same or less as an associate in Banking b) she wouldn't know what she was walking into because it's hard to gauge the culture of a company without many employees unless you know someone well and C) there was a good chance she'd end up at some shop with a worse brand name than the bank she was at. And she didn't go to corporate development because she said the job wasn't really bad enough in her opinion to want to take that paycut.

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Aug 13, 2018

Seems like a what's the least worst alternative situation rather than following your passion. But then again, I suppose if someone's ok with that, who's to judge?

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Most Helpful
Aug 13, 2018

Read through this thread, I shared my thoughts and others did as well: https://www.wallstreetoasis.com/forums/why-banking...
No offense though OP, but you don't know anything. You've had an internship and lasted only 3 months in banking. You haven't formed any meaningful relationships in the working world and thus haven't had the experience of working with someone you respect and can learn from. You haven't contributed meaningfully to a full M&A process. Haven't gotten to travel and work with a variety of talented business owners and operators. Haven't mentored any young colleagues who were like yourself. Haven't even collected a bonus.

All of those things you get out of banking and have contributed to me staying.

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Aug 13, 2018

All of that is fair, I haven't done those things. I'm curious, is getting the opportunity to do all that worth 5-6 years of formatting powerpoint slides, and then spending another 4-5 years QBing building the powerpoint deck as VP? All jobs have crappy aspects, true, but some jobs certainly offer more meaningful work even at more junior levels. This is what I'm trying to understand. Your post does clarify a lot though

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Aug 20, 2018

So do you think that PE shops and Corporate buyside roles don't use PPT?
They just draw all their presentations on post-it notes then, is that right?/

You inability to quickly master the basic skills of the Microsoft Office suite is poor justification for giving up a rewarding career. Although I suppose if you extrapolated that since you were unable to master basic skills, then you would be unable to have a rewarding career as the rewards require a basic, triple digit IQ - then yeah I guess your argument makes sense.

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Aug 22, 2018

Maybe you were unfortunate enough to spend all your 3 months formatting slides, but doesn't make sense to generalize that for banking everywhere, and then extrapolate it 5 years forward. Bankers don't sell powerpoint slides for a living. Now that you are on the buyside, perhaps you can let us know how things are a lot more exciting?

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Aug 14, 2018

How does the compensation differ over the long-run? I'm talking BB associate/vp/director/MD vs MM PE (fund sizes $1-2B) associate/vp/principal/partner (not MF/upper MM).

Does BB IB win on this one?

Aug 20, 2018

if you want good comp, you'll have to go EB. Nothing beats making Partner at a PE firm, but until you make VP at a PE firm with good returns, EB comp will beat it easily (unless MF PE).

Aug 20, 2018

Touched a nerve, it seems

Aug 22, 2018
Quaneaser:

Read through this thread, I shared my thoughts and others did as well: https://www.wallstreetoasis.com/forums/why-banking...
No offense though OP, but you don't know anything. You've had an internship and lasted only 3 months in banking. You haven't formed any meaningful relationships in the working world and thus haven't had the experience of working with someone you respect and can learn from. You haven't contributed meaningfully to a full M&A process. Haven't gotten to travel and work with a variety of talented business owners and operators. Haven't mentored any young colleagues who were like yourself. Haven't even collected a bonus.

All of those things you get out of banking and have contributed to me staying.

+SB

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Aug 22, 2018

Aggressive response, but like the sentiment +SB

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Aug 22, 2018
Quaneaser:

No offense though OP, but

classic

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

Aug 13, 2018

my best friend from childhood went analyst -- associate - VP - Director - MD, and is now the co-head of his group....making baller money and living the dream. He rented a baller house in the hamptons for the summer and we were hanging out last weekend...life is good.

Never took years off to goto business school...just worked his way up...and it all happened pretty quickly. Is there something wrong with that?

just google it...you're welcome

Aug 13, 2018

Nothing's wrong with it. I'm just trying to understand what value people get out of banking other than purely the money. The day to day for both analysts and associates, and even VPs doesn't seem particularly exciting. I do agree that the Director and MD levels seem pretty interesting. Regardless, this isn't a post bashing on anything, just someone trying to genuinely understand why you would want to stay on as an associate

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Aug 20, 2018

Yeah he totally didn't know bankers make a lot of money at those levels.

Just so the OP doesn't have to say this to every butthurt comment, my take is he'd like to know why people saw that as worth the trade off.

Funniest
Aug 20, 2018
want2trade:

my best friend from childhood went analyst -- associate - VP - Director - MD, and is now the co-head of his group....making baller money and living the dream. He rented a baller house in the hamptons for the summer and we were hanging out last weekend...life is good.

Never took years off to goto business school...just worked his way up...and it all happened pretty quickly. Is there something wrong with that?

"Rented"

Aug 20, 2018

spent ~100k to rent a house for the summer...so that they could rent a different house next summer...implying that 100k for a summer house was not significant.

just google it...you're welcome

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Aug 14, 2018

Some people really like doing deals (more than say, overseeing an portco). Some people probably stay out of inertia too. Also, some mid level bankers lead pretty cushy lives.

Some random thoughts:

IB > PE in the sense that you don't have skin in the game, and as long as the deal gets done, you get paid. In PE, the deal also has to go right. Like yes you get mgmt fees but those will dry up eventually if your fund doesn't perform.

IB > corp dev in terms of pay and alignment of business interests internally. Like in IB everyone on the deal team wants to get the deal done. In corp dev, you deal with different stakeholders who may have different incentives and different ideas about what is best for the company.

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Sep 24, 2018
CHItizen:

IB > PE in the sense that you don't have skin in the game, and as long as the deal gets done, you get paid. In PE, the deal also has to go right. Like yes you get mgmt fees but those will dry up eventually if your fund doesn't perform.

I can understand why some people might think this way (like maybe an accountant or an insurance adjuster jk ;) ), but precisely this is what would attract me more to PE vs. IB. Having skin in the game gives you alignment with what you're doing and makes the work more meaningful imo...

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Aug 20, 2018

It sounds like you interned/worked at investment banks that were a complete joke. You probably know next to nothing about the industry and the fact someone was willing to hire you after 3-4 months on the job means they expected you to know absolutely nothing going into that role.

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Aug 20, 2018
therealgekko:

To the associates who started as analysts at their investment bank, why did you stay? Why not leave for buyside, corp dev, etc. after your two years?

I'm genuinely puzzled by this, which is why I'm asking. I did an internship in banking, and worked in banking as a full time analyst for 3-4 months on the West Coast (until I was able to hop over to buyside fortunately), and absolutely hated it. Maybe my experience was different (I did work at 2 different banks though), but I spent nearly all of my day formatting powerpoint slides, or googling information to put into powerpoint slides (proprietary information my ass).

To those who stayed on, why did you stay on? How did you find any of this work engaging or remotely intellectually stimulating? What are your long term goals with this job?

OP.

Believe it or not, there are people who are different than you in this world

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Aug 21, 2018

Yes, I do believe it; that's the point of this thread. I understand many people view it differently, I am trying to understand their perspective to understand how they view their return on time, future career prospects, vs. the work they perform.

I'm not making this thread to bash on IB at all, to be very clear; it provides some unparalleled exit opps (along with MBB). But I'm trying to understand why there are people who stick in IB for the long-term, given the nature of the work at the junior levels.

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Aug 22, 2018

It seems your 3-month experience, together with your two internships, made you feel that banking altogether lacks value. But the truth is, you are wrong. Intern lives (and like it or not) suck for everyone and somehow I feel they are designed that way. First couple months of being an analyst suck, and that is really because you have absolutely no value for the team but doing basic PPTs and google-searching. Unfortunately, you saw that, fled, and assumed that is the whole of a banker career. In short, you skewed judgement comes from a very narrow experience and ppl here don't like that.

Coming from an EB background and currently in PE, I actually do see value in bankers. To name a few, they know the markets well, collect insane intel when need be in an M&A, and also know how to build a good equity story for our PortCo. And when it's an LBO, I'm usually more than happy to have them take care of the debt side of things. All those are value. For certain strategics who lack the professional expertise of the Sponsors, I would imagine those attributes will further magnify (disclaimer, there are also things I don't like about banking and bankers, but just saying there are values).

BTW, PE is not really a holy grail from what I'm seeing. You might get stuck in VP while all your friends are making calls as a BB MD. To some that could also be an appeal.

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Aug 20, 2018

Several reasons why I see A2A promotes stay (mainly from perspective of a BB bank):

1.) You've built up a solid reputation and while despite being just recently promoted to "associate" in reality the way your team interacts with you is as if you were a basically a VP. You start quarterbacking committees, discussions, client calls / needs - this is all in contrast to when you move to MM PE, you are essentially starting back to the bottom of the totem pole and doing all the grunt work (that an analyst typically would do at a BB). I see this particularly true in product groups where certain A2As have developed an exceptional mastery of their product (Leveraged Finance, FX Swaps & Hedging, Securitized products etc), and there are numerous occasions that coverage VPs / Directors and sometimes even junior MDs reach out to that A2A for his/her preliminary thoughts etc despite their title just being just an "associate". Likewise you start delegating the "grunt work" parts of your jobs to the more juniors (KYC, silly PPT formatting) and focus on the more important, strategic aspects of transactions. Very senior bankers (i.e. group heads) begin to notice you and label you as up and coming talent

2.) Pay in Banking is is arguably higher than most lower/mid-MM PE firms that the majority of analysts end up in. Assuming you are quite ambitious and good at what you do, you'll likely be labeled as a top performer and be in the upper end of the bonus buckets (if not top). Note - I've read in the news that MS is currently in progress of actually raising associate base pay (currently at $150k) this summer and I'd bet the rest of the street will likely follow suit through till early 2019.

3.) By an A2A you've become so efficient at almost all parts of a junior banker's job (particularly the admin parts, which take up a surprising amount of your time as an analyst), that you do things instinctively instead of waiting for a VP to tell you to do something, which allows you to save a lot of time. For the rare times you don't know something or can't find something, you know exactly who in the bank to contact to find out (friendships you've developed in the trenches in coverage/product groups, or my favorite ones: close relationships you've developed throughout your time in IT, operations, portfolio, printing, security, front desk, roadshow team etc. you'd be surprised how knowing a good friend in these "back office" functions can make your life so much easier as they can bypass so much bureaucracy for you if they like you haha). Likewise VPs notice this and just trust you to "run the show" for most parts of discussions, committee papers, admin archiving etc, that you are able to set your own schedule (to an extent) instead of having a VP breathing down your neck constantly asking why _____ has not been completed ASAP. If such a VP still treats you in that way, then you have enough clout to push back to them in front of the team and at worst, you can request not to be staffed with one of those bad apples and not have it be viewed negatively on you (it will probably hurt that VP's image more, as it's not to their interest to piss off top talent)

To the OP, it's probably going to be difficult for you to relate as you've only technically worked in banking for 3-4 months, but live deals are actually quite interesting and fulfilling (once you remove the admin parts of the job). The type of bank you are in will also influence this (i.e. working at GS/MS with heavy deal flow and lots of resources vs. working at a no-name boutique with barely any deal flow)

Just my 2 cents, but hope this sheds some perspective

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Aug 20, 2018

This is really interesting. I'm an A2A promote at a no-name boutique (w/ a strong name in our key mkts), and have been recruiting to funds for sometime. The more I learn about PE, the more it seems like it's not the 'holy grail' it used to be. Also the more I get trusted to run process, steer the ship w/ clients, and define strategy, the more exciting the work gets. Considering scrapping the PE search altogether, and focus on moving up to a solid MM or even EB if possible. This perspective is super helpful towards making a decision.

Also thx to @Quaneaser for the same reasons.

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Aug 26, 2018

Can you elaborate on why the more you come to understand PE the more you realize it isn't the holy grail?

Aug 22, 2018

This resonates very well with me at a top MM IB. I actually left for PE and came back to the firm I left (they called me). I'll post my thoughts in a non-reply comment.

Thanks for sharing, 10x. +SB

Aug 21, 2018

Another factor that people havent considered: some banks actually prioritize work life balance (strange concept i know)

There are the sweatshop EBs/BBs and burn through analysts, knowing that in 1-2 years they'll exit to hf/pe, and then there are emerging banks/MM banks that want to groom their analysts and associates into meaningful careers.

I've been at my bank for a year now. No one in my group works past midnight, our deal flow is steady and we're open to hiring more people when theres more work. MD is good about keeping a positive culture where people's boundaries are respected.

Plus I'm really well liked here. The senior bankers trust me to do a good job, and honestly, leaving for a sweatshop for better exits seems like a risk with minimal ROI for me.

In general, your outlook seems really narrow. Not everyone likes PE/HF, not all banks make you do ppt 12 hours a day, and not everyone is gung-ho about traditional exits.

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Aug 31, 2018

How do you recognize which banks prioritize work life balance?

Aug 21, 2018

For people recently getting into PE and looking to get into PE, you really need to have a realistic view of what working in PE will actually mean for you comp wise long-term (answer is not much). BB/EB/top MM IBs will pay comparable if not better than most PE funds. Not everyone gets into MFs/upper MM. Vast majority of funds are MM/LMM that most have barely heard of and don't pay as well as IB (excluding carry which is further discussed below), but have incredibly strong track records regularly hitting >5x on their investments (for LPs, it's not about the "prestige" of a fund, it's about returns).

For most people, PE is just another pit stop where you're either kicked out or left on your own accord after spending 2-7 years on the buyside (which could/often include having to go get your MBA, the lost earnings, and hope you can get back into PE post-MBA). The path to partner (i.e., where the real money is) is a huge grind and long, and only getting worse as the industry continues to mature. I don't think most people appreciate how long it takes to see meaningful carry distributions. It's not uncommon to take 7-8 years in PE before you see your first carry check, and those early carry distributions aren't particularly life changing since you were allocated that carry as a VP, certainly no where close to fuck you money or even retiring for that matter. There are some reports online that shows average PE comp based on fund size/AUM. You can run also the math on roughly when carry will be distributed and how much. It's fairly reasonable to assume you won't get any carry your first 2-3 years in PE (as an Associate). As a VP (let's say year 4 if you were lucky enough to not go get your MBA), maybe 75-125bps for a $1bn fund (this will vary quite a bit based on fund size and frankly how generous the senior partners want to be), which your first carry check will come 3-5 years after you were first allocated the carry, and majority of the carry takes 4-5 years to be distributed (investments and respectively exits are staggered). I would argue VP is when you first actually start climbing your PE career.

It is true that as the firm continues to fund raise, you'll get carry in the new funds (likely more bps as well since you'd be more senior). So if you finally become a Senior Principal/Partner with carry across multiple funds that are consistently distributing carry every year, that's when the real money starts to hit. But again, that's not an easy path and most people leave before that, and end up giving up unvested carry. Even junior partners are not getting lion share of the economics, that all goes to the senior partners / founders. Why do you think there are so many new funds these days (the old partners don't want to share in the economics, so junior partners leave)? What happens when you start your own fund or lateral to a newer fund (you gave up unvested carry in your old fund, and your new carry is based on a smaller fund with less track record and the carry clock resets again). PE isn't an industry where people are rewarded for moving because of how the economics/vesting of carry work. It's not like IB where you can lateral and be guaranteed a minimum amount of earnings your first year or two while you "ramp". Vast majority of PE professionals that entered the industry the last 10 years are "paper rich", assuming you've even made it for this long, and who knows where capital gains tax rates will eventually move to.

If you want to maximize your earnings on a risk adjusted basis, stay in IB and move up the ranks as quickly as possible before you're burnout/fired and go live a normal life, because most people will leave "high finance" after 2-7 years regardless of sellside/buyside.

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Aug 22, 2018

Agreed with all of this. +SB

Aug 22, 2018

Some people probably stay there for inertia and not to risk a change.

Davide Palmaghini MRICS

Green Stag Asset Management
www.greenstag.am

Aug 22, 2018

Rather the devil you know than the devil you don't know. Buy-side associate could be capped at a ceiling from a promotion perspective, prevented from partaking in carry or worked just as hard as an IBD analyst for a fraction of the salary. YMMV.

Aug 22, 2018

This is a very insightful thread - thanks to OP and the WSO community for sharing their experiences and perspectives.

I'll share some thoughts from my experience that appears to add a new perspective, as I actually left a top MM bank after A3 for a top MM PE ($1.5B+), then left the MM PE shop to join a newly formed PE firm with a niche focus that I am passionate about, then left there to come back to the MM bank that I left.

A few key motifs to highlight at the onset:
1) I cannot stress enough the importance of fit in terms of establishing momentum and building on success in your career. Establishing a tight, cohesive team of colleagues can create significant operating leverage for sourcing and executing deals. You naturally gravitate toward how to complement each other and establish strong efficiencies that are atypical in finance, especially investment banking.

2) The grass is not always greener - people (including myself) are often eager to move on to something bigger and better based on perceptions rather than reality (because you haven't lived it).

3) The buyside does not necessarily have more "power" / "pull" when compared to banks. You would be surprised how much time the top PE shops spend on relationship development with banks. They want to ensure they are kept in the deal flow for the best opportunities that drive returns. Just because you are the "money" at the table, doesn't mean you have access to the assets to put that money to work. PE firms also need debt capital to supercharge equity returns... which they get from banks.

4) Risk adjusted compensation is higher in IB than PE

Onward...

I did three years as an analyst at a top MM firm - worked like a dog and ramped up nicely quickly over my three years. I had the privelege of working with a top group and developed a bit of expertise working exclusively with two MDs. As I progressed through my analyst stent, I was able to establish trust with my team and take on significantly more responsibility than is typically assigned to analysts - which I found extremely rewarding. I was compensated very fairly, and my firm is notorious for treating people the right way - there is a stated "no asshole" policy. While I was an analyst, direct promotions to Associate had not been established at my bank - you had to go get an MBA (which they would pay for) and come back. I had no interest in that, so I decided to pursue PE and landed a gig at a reputable firm with a $1.5B+ fund that has been around for over 50 years.

I had a great experience in private equity, closing four deals in my first year and being the top comped Associate in my class. However, I discovered that the structure at my shop was very rigid - which gave me angst given I was accustomed to working up the chain in banking. Roles and responsibilities were pretty defined, and Associates were really treated as analysts - lowest guy in the stack. Despite the firm treating Associates well, there was no long-term opportunity (do 2-3 years then out). So, I decided to pursue an opportunity where I could have more vertical flexibility, opportunity to move up and take on more responsibility. At the end of my first year, I decided to leave and go to a "start-up" PE fund with an industry specialized merchant banking firm that was transitioning to private equity.

This move was a great learning experience, as I was running entire deals by myself (smaller deals ~$5m EBITDA), but still executing. There was also huge upside in terms of carry and co-investment opportunities in deals closed - but the base pay was way less. I was managing diligence, running the lender process, meeting with the CEOs and other top leaders of targets and spending weeks at a time performing on-site diligence and single-handily drafting investment committee presentations. At the end of the day, there was too much risk in terms of my compensation structure and if the entrepreneur owner managing partner decided not to do a deal, all of my work was for nothing. The risk was a bit too much for me, and I was starting to think about moving on. Serendipitously, my prior MM banking firm gave me a call one evening... this was a little over two years after I left - "[Name], are you ready to come back?" Indeed, I was.

I came back as an experienced Associate and hit the ground running - my group has continued to gain tremendous momentum and build the long track record of successful M&A outcomes in the niche that I had become so passionate about (same niche as my smaller PE role). Given my prior experience with the group, I hit the ground running from an execution standpoint and it was great to have support at the analyst level. My MDs have also expressed significant gratitude for my return, and I have established a strong personal brand in my group and in our investment banking division overall.

I've been back for a year now, and I am incredibly happy with my decision. We are absolutely crushed from a work perspective, but the group of guys I work with are all awesome - we have a ton of fun, even at 3am when were are all still grinding. Given the strong fit and established rapport, I have established strong trust with my MDs and have taken on even more responsibility - they allow me to run with as much rope as I can take and manage. This environment allows me to be proactive and consistently pursue professional development. The grind is paying off, and I have been given the nod for VP promotion at the end of the year. Not bad for a kid from a state school.

Overall, the work you do in PE and IB is very similar - PowerPoint presentations, modeling, industry research, managing diligence / third-parties, etc. - just applied to opposite ends of the transactions. From a pay perspective, the risk weighted return in IB is much higher than PE. You are unlikely to be that outlier partner that is worth $100m+, but there is a clear path to progressing your career and wealth creation while still performing exciting (at least to me) work and working in an environment that you love and can prosper in. Always respect the grind - she's a beautiful and rewarding enchantress.

"There and Back Again... a Banker's Tale by THE_PsYcHoLoGy"

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Aug 22, 2018

Great story and insights - thanks for sharing.

Aug 22, 2018

Thanks. My pleasure.

Aug 23, 2018

Incredible story. Thank you very much for posting on here, and I think when some young monkey finds this post in the future, this provides a great picture of why IB. At least for me, this really helped in understanding why IB in the long run.

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Sep 3, 2018

As a BB A2A myself, I left 2 weeks after my promotion so I guess I don't count as staying on but I do absolutely see why some would stay while others dont

Isn't it a matter of priorities? These priorities can change over time and they likely will do so. You may find your banking internship dull etc and I'm sorry to hear that since it is meant to be a rigorous but rewarding experience (from what I heard from our last batch)

To answer your question, I left because at this stage in my life, I feel that banking does not provide me enough to satisfy my curiosity. The trouble with a sector team is that you become a specialist (great if you like the space) and if you are not attuned to the space, you will struggle eventually unless your priority is the comp. I'm curious about what else is out there, that's why I joined growth equity

Hope that adds some color to what my fellow members have already said

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Aug 23, 2018

I stayed in IB because I figured out that the people at the very top of almost any profession tend to do well financially and generally have more fun on the job than those who are not at the top. So rather than saying one field is better than another, it's more about which field will you make it to the top of. I think in IB you get more control over that, plus you always have a head start (i.e. if you're the Analyst making this decision, you've already built goodwill at your bank). #WhyIStayed

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Aug 27, 2018

This is absolutely the truth.

Aug 27, 2018

I don't hate the job. I've carved out a niche for myself, enjoy the work a lot of the time, have long hours but also have a life at this stage, and see a clearer path within banking than on the buyside for myself.

Aug 30, 2018

not every place is that bad. you can find pockets of good stuff, if you don't have insane boss.

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Sep 13, 2018

-

Sep 17, 2018

but your profile says ur investment operations. how is that IB, and how do you ever need to use models in your line of work?

IB and AM are 2 different things - while both share similarity, the depth of things that analysts looks at are totally different. this is even more so in an ops role

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Sep 17, 2018
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Sep 18, 2018
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