If You're Stuck Choosing b/w Consulting and Banking, DO BANKING

Banking

  • You're gonna learn an insane amount about not just financial modeling but also how companies are structured inside-and-out. Bankers are basically real estate agents for companies and just like how real estate agents know everything about a house they sell, bankers become extremely well-informed about the companies and industries in which they operate. 

  • Better pay: nothing else to say here, just the truth 

  • More hours: Sure it sucks to work more, but, guess what? You're young, you have the energy to work. Learn as much as you can now, cash out on your knowledge from banking to find a less-stressful job later in life. You're in for a rough ride if you do it the other way around.

Consulting

  • You don't learn anything; you're just taught to use the same frameworks a firm has been using for generations and apply it to different cases

  • You'll leave consulting without any new skillsets; the soft-skills you do gain in business know-how and strategic analysis are the same you'd get in banking

  • No exits short-term: seriously, what are the exits after a 2 year stint in consulting? Working at a random corporate job as an associate? Getting an MBA? Consulting is just a way to prolong making a decision on what you actually want to do in life.

Thoughts? 

Comments (38)

 
Most Helpful
Oct 6, 2020 - 2:12am

It depends what you want to do with your life. Everyone I know in banking is miserable, especially IB. Everyone I know in consulting is really happy. Your whole post is "sacrifice short term happiness to be richer later on" but not everyone wants to be miserable for a couple years just so you can exit to PE

If your only goal in life is to get to the next place, then sure, do IB. But I want to be happy too and doing work that genuinely interests me. Consulting appeals much more to me for that reason. I never liked banking and I don't care about staring at Excel sheets. My major is CS anyways, which means if I ever decide I have the deep and untameable urge to do modeling (said nobody... ever), I have more than the requisite skill set to do so. 

It's kind of weird you'd come onto the MC forum just to tell us we're all wasting our life, you know. Consulting builds really good skillsets, far beyond "applying frameworks" (seriously: you build strong analytical skills, people skills, and find unique ways to think about problems), and there's a reason ex-MBB are found literally everywhere. McK is especially famous for being a career accelerator - you can basically do whatever you want after it. It builds important skills needed to be a C-Suite exec. 

Not to mention, consulting is WAY nicer to women than banking, and it's not even close. Not exactly interested in having to deal with a boys' club for the rest of my 20s. 

Overall: your post assumes that everyone cares about the same things you do, which is your fatal flaw. If all you care about is squeezing every last dollar out of your life, then do banking, sure. You'll fit in perfectly. But if you want to be happy, to travel, to get to blend quant and qual skills... well, consulting is a plenty respected industry in its own right, and you'll have plenty of things to do afterwards. 

 
  • Prospect in IB-M&A
Oct 6, 2020 - 2:17pm

LOL, you literally created a thread last week asking about Evercore vs McKinsey offers and now you suddenly have enough experience/expertise to definitely say consulting is the worse choice...what a clown

 
Oct 6, 2020 - 4:02pm

Banking: 

  • You're gonna learn an insane amount about not just financial modeling but also how companies are structured inside-and-out. Bankers are basically real estate agents for companies and just like how real estate agents know everything about a house they sell, bankers become extremely well-informed about the companies and industries in which they operate. 

I work in said "companies and industries" and have a lot of banker friends, some of whom cover my industry.  This is just plain wrong.  Bankers learn about the superficial aspects of a company - basically the information you can glean from a 10Q.  Saying bankers become "extremely well-informed" about the company is like arguing that because I know the specs of Michael Schumacher's car I'd make a great F1 driver.  

  • 5
 
Oct 6, 2020 - 4:40pm

Okay but could you say anything different about a consultant? I feel the correlation between MBB alumni and success is like the correlation between Ivy grads and success. It doesn't have much to do with the firm itself but the fact that selecting good people is inevitably going to give you successful alumni in the future. 

Most MBB alumni I know personally do something in corporate for a year or two then get an MBA. Bankers on the other hand learn an insane amount and exit into Private equity, venture capital, or hedge funds, literally shifting the financial markets at the turn of a finger. And once they exit, they'll be unstoppable. Most of the startup founders I know have backgrounds in finance not consulting. 

 
Funniest
  • Analyst 3+ in IB-M&A
Oct 6, 2020 - 5:32pm

Bankers on the other hand learn an insane amount and exit into Private equity, venture capital, or hedge funds, literally shifting the financial markets at the turn of a finger. And once they exit, they'll be unstoppable. Most of the startup founders I know have backgrounds in finance not consulting. 

Oh boy, who's gonna tell him? You're either extremely naive or very uninformed. Godspeed and hope you re-read this and can laugh about it in a few years

 
  • Analyst 2 in Consulting
Oct 6, 2020 - 8:44pm

Around 3% of all unicorn startups were founded by McKinsey alum, and no other company's alumni have an even close to equal probability of becoming CEO's of a Fortune 500 company. No bank, even Goldman, JPM, Morgan Stanley, Citi (last two have CEO's from McKinsey), etc, comes even close. Yeah Goldman has a few people in the Fed over history, great, McKinsey alumni have been elected as presidents of countries. And that's just one consulting firm.

I don't know what you're talking about when you claim bankers go into more startups and move entire markets with a finger. This post seems super confused.

 
Oct 7, 2020 - 12:53am

I'd argue very strongly that unless you're deadset on PE, consulting at an MBB firm is a much much better option. The skillset you learn in banking is actually pretty narrow - sure you become a process expert but that doesn't necessarily translate into understanding how to run a business. 

However it's much easier to break into banking vs top-tier consulting firms. Outside of MBB, the experience can be very varied for consulting. 

 
Oct 7, 2020 - 1:05am

Yes, you definitely learn how to run a business in MBB. You totally don't make a few frameworks with some fudged numbers that you send to a CEO in exchange for a fat commission. And that CEO surely doesn't use the MBB stamp to justify their proposed strategy to the board rather than actually use any of the research they've done. 

 
Oct 7, 2020 - 7:32am

Bankers learn about the financing of companies (actually at a fairly low level - they don't dig deep like the FDD / Valuation folks do that are hired by essentially all parties involved in M&A to make sure the numbers are valid). Great for PE - deal side, not operating portfolio companies as you won't learn how to operate anything.

Consultants learn about the operations and strategy of companies. If you want to lead or run a company, consulting is a far better path as you get tons of exposure to how companies work AND their C-Suite.  Typical exits are: recruited to industry by client in strategy / operations capacity (lots of firms have internal consulting groups that work on corp strategy and implementation of plans - great path to leadership), M7 MBA->Back to consulting firm and partner path OR -> recruited to industry at a much higher level than without consulting background.  Anecdotal but not uncommon - brother was MBA to MBB to corp position at a fairly high level. Within 2 yrs he was President of a startup within a conglomerate and reported to the CEO of F50 company. Was all in an industry he worked in at MBB

 

 
Oct 8, 2020 - 1:28pm

I agree with this premise to an extent, but not completely, because "banking" and "consulting" are huge buckets in which many types of companies exist.

  • If you're talking about GS FIG / MS TMT, etc. versus MBB, then, as others have said, I think both are equally as valuable and the choice more comes down to what you want to do for a career. I actually don't agree with comp being higher in IB. At each level, meaning GS Analyst = McK BA, GS Associate = McK Associate, GS VP = McK EM, etc., they pay is higher in IB. However, you're much more likely to be on an accelerated path at MBB (if you can cut it) versus the very structured org of an IB where you're at each level for at least 2-3 years. At MBB, it's not incredibly uncommon to make Partner in 6-9 years, while making MD in IB tends to take much longer than that. The exception is if you exit IB to PE/HF opps where career acceleration is more common and exits to PE are more likely from top banking (where unless you mess it up you'll get a slot) than MBB (where not everyone will get looks) and HF recruiting is basically totally skewed towards IB.
  • If you're talking about T2 Strategy (e.g., OW, LEK, Big 4 Strategy Arms, etc.) versus T2 banking (e.g., lower-end of the BB), then I think this is similar to the previous bullet but I would skew the line in comp more towards banking given A) MBB pays a significant premium at each level versus the T2's, more so than top BB groups pay over the other BB's (e.g., BAML) and B) career acceleration is slower at SOME of the T2's (e.g., S&, Deloitte S&A, etc.) than MBB, negating this advantage. It's also extremely difficult to jump from SOME T2's to PE while the jump is still very doable from a lower BB. Work-wise, same thoughts apply as bullet #1.
  • If you're talking about non-Strategy (e.g., Big 4 Advisory, Accenture, IBM, etc.) versus lower-end banking (e.g., Baird, KeyBanc, etc.), then I think lower-end banking wins. Pay is way better and at that point the work is more interesting than the dull stuff you do in non-strategy consulting but, hey, that's just my opinion. Exit opps also tend to be pretty crappy from non-Strategy (at least for the types of folks on this forum) while if you work at a lower-end IB in a mid-tier city, you can still find an interesting PE job for a small shop there (e.g., Charlotte, Atlanta, etc.). 

There are also some overarching observations that span all three of these bullets:

  • In terms of lifestyle, they both suck, but IB sucks more, especially at more elite firms and particularly the elite boutiques.
  • Agree with others that you learn more about how to run a company in MBB than in IB... I have friends in IB who can only talk about macroeconomic / financial events through the lens of the group they work in (e.g., a friend in LevFin can only explain why companies do what they do based on the cost of debt) versus consultants who are generally much sharper here.
  • The people are more hardo at banks, consultants are generally less "cool" (just my opinion...). Example: you're way more likely to get people who play Settlers of Catan on the weekends in consulting, you're way more likely to get bros who want to show off shiny watches and hit on chicks at Manhattan clubs in banking. Also, way more ex-athletes in banking, but is tempered by the loser kids from HS/college who entered IB and immediately thought it made them cool and therefore have a chip on their shoulder. There are TONS of these people in banking and they can be insufferable.
  • People tend to be nicer in consulting (again, just my opinion....) but at MBB are more elitist about intellect and the godawful "where'd you get your MBA?" question.
  • As you move up in banking, you travel more, but never to the extent consultants do. In consulting (pre-COVID, at least... will see if this WFH thing has lasting impacts), you travel a lot at every level. This can be tough if you have a family.... even in IB when working crazy hours you can at least sleep in your bed and give you kid a kiss on the cheek before you leave for the day. Can't do that from a hotel across the country.

So, in terms of what's better, I think it's the classic consulting answer.... "it depends."

 
  • Analyst 2 in IB - Gen
Oct 8, 2020 - 2:06pm

My anectodatal experience (and for full disclaimer I don't agree with the trainwreck of the original post) is that at MBB there seems to be a bit of a (outside of work) face-timey pressure (showing up to socials, dinners, etc. "networking"), while in banking (obviously team dependent), I don't have to deal with as much outside-of-work face time, so can have a better split b/w my work friends and my real friends, if that makes sense. 

 

Also even at Partner, doesn't your comp depend on how senior you are across the ranks? In EMEA banking comfortably trumps MBB in pay (esp with the accelerated 2-2.5 years Analyst programmes now). Even if you're 7 years in - a VP in Banking should rake in more in total comp versus a senior EM / AP?

 
Oct 8, 2020 - 2:17pm

Agree with the social piece, although I work in consulting and don't do any of that :) I'm probably the exception though.

My point on pay is that, at a given level, banking pays more than consulting. For example, a VP @ MS on a good desk will make more than a EM at McKinsey by a long shot. However, for two individuals of the same age seven years in their career, they may be a VP1 or maybe VP2 @ MS but either a Partner or close to it at McK (maybe from AP1 on the low end to P2 on the high end), so the pay gap closes dramatically if you're on that path. MBB implemented this acceleration specifically to better compete with Banking / Tech, so it's no uncommon to see people make AP in 4-5 years and Partner in 6-8. That said, not everyone can cut this, and even those who survive the up-or-out policy (which isn't as difficult as it sounds... I know some morons pretty high up at MBB), Partner in 6-8 years is not the norm and that path can be closer to 8-10 years if you ignore a quickly-becoming B-Year sabbatical (2 years BA, 2 Years Associate, 2 Years EM, 2-3 Years AP).

Full disclaimer: I'm not at MBB, but my T2 is similarly structured and I have a ton of friends in MBB and IB and we end up talking about this stuff quite a bit....

 
  • Intern in IB - Ind
Oct 25, 2020 - 12:30am

I think there are some incorrect things about comp here. Usually the top groups in BBs including at GS and MS usually pay at a discount so the gap is pretty low there when comparing with mbb. I also don't think you can compare some place like Citi with Oliver wyman. I think most people would want go with Citi if they had an equal interest in both career fields. Also regarding comp generally all BBs pay the same with GS, MS at a slight discount so pay isn't really close between tier 2 consulting and the lower BBs in fact the gap gets wider compared to your tier 1. I also think it is hard to label Baird as a tier 3 place and compare it with big 4 advisory. I don't really think that comparison is close and places like Baird, Blair pay even more than the lower tier bulges. I don't believe with op as well but just wanted to add this

 
Oct 11, 2020 - 4:58pm

For what it's worth I think consulting is mostly interesting from the perspective of exit ops. Not necessarily from a compensation perspective because I'm sure the higher-ups do just fine but in terms of actual value added. In strat you are essentially trying to draw more blood from the stones of companies that have run out of ideas and in ops/tech you are mostly part of the whole SAP/Oracle/'generic CRM company' grift.

 
Oct 12, 2020 - 6:30pm

I've done both (BB and MBB).

There is tons of great material out there comparing banking and consulting.

The OP isn't it.

 

 

 

The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be the shepherd.
  • 2
 
Oct 14, 2020 - 4:29am

Quite biased post. Tried recruiting for consulting (dinged last round at 2 MBB firms). After going through this process, I ultimately decided that banking/finance is what I enjoy more. Consulting is very broad but I only enjoyed M&A and profitability/growth cases. But that's me and only me, consulting might makes sense for other people.

 
Oct 25, 2020 - 8:11am

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

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