From IB SA to Consulting FT (potential downsides)
Realized during my investment banking internship, that I can't really cope with the hours that well, and that I NEED WEEKENDS OFF. Since I have a few interviews scheduled I wanted to inform myself about the potential downsides of Consulting compared to IB. Here are the ones I know.
- Pay, I heard from friends at my target that consulting pay is ~30% lower than M&A
- Exit opps, so that's interesting. I know that I don't want to join the corporate world. The only exit I'm interested in is the buy-side (PE/growth equity/private debt). However, only because I heard I could make more money than in m&a for fewer hours. Is this true?
- How is the long term consulting life vs e.g. IB MD? One of the firms I have an interview with is crazy with keeping their consultants until they make partner. Furthermore, due to their small size, the consultants do a lot of international travel? I didn't get to travel a lot, so this sounds like a big perk. But, I imagine this can be stressful with a family
Yes, pay is lower in consulting. Yes, PE and HF exit opps are better in banking but some firms (like MBBs, PEY or LEK) can also lead to PE exits which isn't bad. Consulting life can be tough (getting 6am flights or Sunday flights for long-haul engagements) but at least you can pick up hotel points and miles with that. Another potential downside of consulting can be getting stuck in a project you really don't like. Variety and project diversity is a key selling point of consulting but it can be a double edge sword. In IB you may be on a shitty deal but if you're in M&A, it'll still be M&A. In consulting you could be doing transformative operational stuff for a F100 one month and end up doing marketing for a Malaysian baby food company the next. You'll have to suck up the really shitty projects. But consulting has plenty of upside too so making the switch isn't a crazy idea
Just a few things to point out:
1) Pay - base pay is similar for the first few years but there's a massive difference in bonus pay in favour of IB. For reference, bonuses at top consulting firms range from 5 - 20% for first year analysts.
2) Travel as a perk - I think this really depends...it can certainly sound glamorous to recruits, but I think you'd agree that being in suburban Ohio for 3 months for a chemicals client, flying back and forth each week in economy isn't too sexy. That's closer to reality.
3) Long-term quality of life - From what I can tell, your quality of life generally gets better as you move up in IB (i.e. fewer hours). I'm not sure if I'd say the same is true for senior people in consulting because the travel actually gets worse (since partners are often splitting time between different clients during the week, so they're flying even MORE often). I guess it really depends on how you view travel.
If you know you don't want to join corporate and want to be in PE, I feel lie sticking it out in IB for 2 years is the better route. PE is definitely an exit option from top consulting firms but your odds are definitely lower.
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