Although no job is perfect, I cannot think of any other occupation that provides this much learning opportunity / responsibility / exit opps.
No doubt, this is what makes the investment banking analyst position one of the most coveted jobs out of undergrad. You pay your dues, and you're rewarded bountifully. You're well compensated, provided with excellent exit opportunities, and learn more than you ever have in two brief years.
Analyst Compensation in Banking
There's a lot that goes into investment banker salary and bonuses (various bonuses, performance, firm). Bulge brackets and elite boutiques pay their analysts better than boutiques and middle market firms. More detailed compensation information in the later sections.
IB Analyst Hours
There's a lot of wild information out there regarding hours for analysts. The false information probably stems from analysts who wear their hours as a badge of pride. The reality is most analysts put in around 70 to 80 hours a week. Note, this varies a lot depending on the group and the firm. Certain firms, Lazard, for example, are notoriously brutal, and analysts there typically put in 80-90 hours a week.
Investment Banker Lifestyle
If you want to be an investment banker, work will be your life during your stint. Even on the weekends, you'll put in work, and when you do have free time, your body will likely feel the overwhelming need to rest and recover.
Even 9-5 training M-F is exhausting when transitioning from two days of classes a week/sleeping all week. But your body will adjust, and you'll have new limits. You'll learn how your body reacts when you're finishing at 3 am, getting five hours of Blackberry interrupted sleep.
Understanding The Interview for Investment Banking
The investment banking interview - the culmination of months of grinding, networking, and resume drops. It's a lot of pressure for a 20-year-old, which is why practice is essential. If you haven't already, check out our page that explicitly covers the investment banking interview. If you want to get prepared for the interview, you'll have to practice. A lot.
This page would get far too long if we covered the interview in addition to everything you need to know about the investment banking interview, so here's a general overview of the two types of questions you'll get asked:
- Behavioral/Fit Questions: Questions about yourself and how you might fit into the firm's culture. On these questions, it's best to have a few short stories that you can adjust to fit various questions. An example of this type of question is: "Tell me about a time you demonstrated leadership."
- Technical Questions: Questions on financial modeling, discounted cash flow, LBOs, etc. These are the questions that you have to prepare for with an investment banking interview course.
what does an investment banking analyst do?
One word tends to get tossed around a lot when discussing what analysts do: grunt work. It's used a lot because it's accurate. Typically the analyst does all the grunt work on projects, such as valuing companies, creating models, and putting together pitch books.
There will be many lonely nights spent plugging and chugging numbers in Excel or putting the finishing touch on a PowerPoint. It's not a particularly glorious job, but it's not the work that makes the investment banking position sought after.
Some people wonder where all of the analyst's hours go if all they're doing is editing pitch books and creating models. A user explained below.
So to sum it up, the hours you're working are mainly due to the fact that you have so many iterations and nits in a book that you have to fix, and so many people to hear changes from. A lot of the hours stack up because it takes a while to hear back from people, so you gotta sit at your desk waiting to find out what it is you need to do. When things are really busy, though, and deal flow is good, you won't have that problem.
Boutique Investment Bank Lifestyle, Compensation, and More
By the way, a boutique is a firm that doesn't offer as many services and has fewer employees than a bulge bracket. The boutique lifestyle ranges wildly. Some have tiny groups and deal with sub $1bn deals. Others advise on deals north of that and have larger groups. Some are small, regional offices - pretty much family businesses - while some have 200 employees and multiple locations.
Analyst at Boutique Investment Bank Lifestyle
On average, boutiques have less deal flow than bulge brackets and elite boutiques. Because of this, boutique hours are far better than the typical investment banking gig. Instead of the common 80 hours a week, it's more like 60-70 hours a week.
At my firm, lifestyle is a lot better than at a BB or MM bank. I'm averaging probably 60-65 hours a week and rarely have weekend work. These hours are broken over the five days, so there might be times when I'm out the door at 6:30 or times I'm here until 2 am. It's nice to, at least once and a while, have a normal weeknight where you can go to dinner with friends or family. Also, vacation time is not unheard of, even for analysts and associates.
The Interview Process for Investment Banking Analysts
Getting to the interview with a smaller boutique is very much the same process with any other investment bank. Establish connections within a firm, resume drop, on-campus interviews, superdays, you know the drill.
Unlike the technical focus of a bigger bank with more deal flow, the focus at boutiques is on fit once you get to the interview. You'll be asked more behavioral questions. As always, make sure you have a few good stories that you can mold to fit common behavioral questions like the following:
- What characteristics do you possess that would make you a successful IB analyst/SA? (@IBchimp)
- Give an example of when you've been required to pay particular attention to detail. (@IBchimp)
- Tell me about a time you displayed leadership. (@consultant09)
In addition, make sure you can answer common behavioral questions like why investment banking, what are your interests, and what do you do in your free time?
Compensation for IBD Analyst
Less deal flow typically means lower compensation, but not by much at all. There's also the very important factor of hours to consider. You may be making slightly less but you put in fewer hours per week. For some, trading hours for prestige makes sense. Generally, compensation at a boutique is 10% less than the street average.
Exit Opportunities for Analysts at Investment Banks
Having quality deal experience (in addition to the obvious: prestige) on your resume is one of the greater appeals of working for bulge bracket or elite boutique. Boutique exit opps aren't as good. It'll be tougher to break into private equity, hedge funds, or stand out as an MBA candidate because you're competing with people who worked on bigger deals at more prestigious firms.
Don't be mistaken; exit opps are still good coming out of boutique investment banks. It's possible to land a position at a private equity firm, for example, but you'll have to really work for it to separate yourself from the crop.
The most notable difference is that boutiques hire analysts with the goal of promotion from within. Boutiques focus a lot on fit during the interview and the lifestyle isn't as demanding, so the culture is less churn and burn.
Exit opps vary greatly. A lot of the analysts (probably the majority) stay with the firm and are promoted directly to associates. The hours are not nearly as bad as BBs, so it is a lot more appealing.
I've also seen people leave and move over to another bank or PE firm during and after their two years. I haven't seen anyone go to an HF.
Because my firm focuses on a specific industry, you also see a ton of people leave finance all together to work in that industry.
Elite Boutique Bank Experience
Elite boutiques are similar to boutiques in that they don't offer full financial services, but they work on bigger deals and have stronger deals like bulge brackets. Unlike bulge brackets (in addition to not offering full financial services), elite boutiques aren't global and have fewer employees. Think of elite boutiques as just that: boutiques that are elite. They have reputations that lead to better exit opportunities, better compensation, and more hours.
What is an Elite Boutique Bank?
Classifying elite boutiques is a bit tricky as it's a changing platform, and there are no absolute boundaries. However, these are the generally accepted elite boutiques:
- Perella Weinberg Partners (PWP)
Culture of Boutique Investment Banks
A firm's culture is something identified by word-of-mouth. Below are the reputations of elite boutiques classified generally by word-of-mouth.
Culture varies by firm, big time.
Dished some quality wisdom on the cultures of elite boutiques. Lazard and Moelis are known for having the worst culture with reputations of working their analysts to a pulp. Centerview, Greenhill, Evercore, and PWP are known for having the "best" cultures (hours, respect for analysts).
Exit Opportunities from Boutique Banks
Elite boutiques, as a whole, will have better exit opps than a boutique. But among elite boutiques, there are certain firms who place slightly better into top private equity firms. The difference, however, isn't of utmost significance. It's more like the difference between Goldman Sachs, Morgan Stanley, and JP Morgan. There will be no shortage of exit opportunities coming out of any elite boutique.
Hours of Elite Boutique Junior Bankers
Elite boutique analysts definitely put in more hours than the typical boutique analyst does, but certain elite boutiques have reputations far worse than others. Lazard, in particular, is known to be pretty merciless with brutal hours. 80-95 hours a week. Moelis is in a similar vein. The two firms with the best reputations and known to work their analysts the fewest hours are Greenhill and PWP.
Elite Boutique Compensation
Compared to a boutique, elite boutiques have higher compensation without a doubt. Elite boutique compensation is slightly higher than bulge bracket compensation.
You can read more about IB compensation on Wall Street Oasis.
Bulge Brackets Banks Overview
Bulge bracket banks are global banks that advise on the largest deals with the largest companies. Along with elite boutiques, bulge brackets are the firms that everyone wants to work for. They're the cream of the crop. Here's the key difference between bulge brackets and elite boutiques.
Historically, a bulge had to provide not just advisory and financing services, but sales and research across numerous asset classes. The boutiques aren't really gunning to join the list of full-service firms. The 'EBs' of the world pride themselves on not having conflicts of interest and on winning mandates based on their advisory expertise.
The bigger the deal, the more likely it goes to a bulge bracket. The more specialized and niche a deal is, the more likely it goes to an elite boutique.
Bulge bracket banks:
- Goldman Sachs
- Morgan Stanley
- JP Morgan
- Bank of America Merill Lynch
- Credit Suisse
- Deutsche Bank
Bulge Bracket Bank Analyst Compensation
Compensation at bulge brackets is slightly higher, albeit not by much, than at boutique investment banks. The difference sits at around 10%, but that changes depending on the specific firm. Bulge bracket compensation is comparable to elite boutique compensation, although slightly lower.
You can read more about IB compensation on Wall Street Oasis.
Exit Opportunities from Big Banks
Bulge bracket exit opps are the best exit opps overall, plain and simple. Sure, analysts from a specific elite boutique might fare better for specific private equity firms. But, in the big picture, when we're talking about hedge fund opportunities, private equity opportunities, business school opportunities, etc., bulge bracket banks offer top class exit opps for all of them.
Even then, there are certain bulge bracket groups that are a tier above the rest. GS TMT, MS M&A, MS FIG, JPM leveraged finance, and CS sponsors are a few of them. Analysts from these groups consistently place into top firms and business schools.
Hours and Lifestyle for BB Analysts
Hours vary by group. Some bulge bracket analysts might work 65 hours a week while some might work 85 hours a week. If you know the type of group, you can predict with reasonable accuracy their hours per week. For example, M&A and Leveraged Finance groups typically put in 80+ hours a week. Healthcare groups are also known for putting in their fair share of hours. ECM groups, on the other hand, put in a more moderate amount. Don't let that fool you into thinking ECM groups are superior, however.
Elite Boutique vs Bulge Bracket vs Boutique
In terms of prestige, exit opps, and compensation, there's no doubt - bulge brackets and elite boutiques reign as kings of the land. However, one facet of the conversation rings above all else: lifestyle. There is hardly any life or style to the EB/BB investment banking life, which is a deal breaker for some. Certain boutiques offer the perks of investment banking - prestige, exit opps, and compensation - to a lesser extent than EBs and BBs. But they offer a far more comfortable lifestyle. So, it becomes a question of what you value most in your work.
Tips for Investment Bank Analysts
Think about the long road to investment banking: the networking, the superdays, the rejections. Think about the persistence it takes to reach analyst - and then understand that there are thousands just like you who are just as hungry for the next opportunity. Everything you do during your stint as an investment banking analyst matters. It's a quick two years, and even the slightest of mistakes could prevent you from getting that sweet private equity gig.
Positioning Yourself for PE and Other Exit Opps
The best way to position yourself for PE recruiting will be to develop strong relationships with the senior bankers, particularly the MDs. During PE recruiting, if your MD is not the one who sets up the interview, they will still most certainly be called as a reference. In the PE world, your reference is extremely important. A luke-warm reference is instant grounds for dismissal, even if you've successfully navigated the entire interview process.
How do you make the MD like you? The most important thing is attitude. NEVER, EVER complain about the work or how much sleep you didn't get the night before.
Attention to Detail in IBanking
You need to be sure that everything you put forward is right. Presentations, pitch books, and the models you create will be under the scrutiny of your bosses and, in some cases, important clients.
Whatever work they give you initially, check it in triplicate for the first two to three months. During that stage, nobody is going to expect you to be building LBOs or operating models from scratch; most work will be PIBs/profiles/industry slides, etc. All of it is a bit mindless, but whenever that 'easy' work comes along, make sure it is perfect.
Stay Healthy However You Can During Your Analysts Years
The caffeine and eating out takes its toll on the body. Don't let it get out of control. Work out when you can, and opt for the healthy choice more often. Sleep is also hugely important. Avoid electronics an hour before bed (not always possible but do your best), avoid caffeine in the evening, and avoid late-night tomfoolery on weekdays.
A Day in the Life of an Investment Banking Analyst
The work of the investment banker varies from day-to-day. Some days you'll be preparing a pitch book the entire day; others you'll be plugging away at a financial model. The following is not one of those days. Instead, it's a rather satirical take on the typical investment banker's day.
9:30 am - Arrive to work and head straight to the break room in order to pick up a couple breakfast burritos and an OJ. Hang up my suit jacket and proceed to fist-bump my favorite analysts.
10:00 am - Check my email, listen to endless voicemails, and log on to Bloomberg Terminal to check the news and performance of my clients.
11:25 am - Associate slams me on a couple pitches, but being a true vet of the game, I learn to delegate as much as possible to interns/analysts/even associates at other locations, i.e. Texas, Chicago, etc. AND my loyal customer support over at Dealogic, FactSet, and Bloomberg.
12:00 pm - Favorite time of the day, leave the building without making much commotion and head to Bryant Park in order to meet a Tinder date. She looked much better in her pictures, and I leave disappointed.
1:00 pm - Get back into the office and head towards my desk. Associate meets me half way, glances at his Rolex GMT, and frowns. Informs me that we have a meeting with an Industry group and to prepare for battle.
1:20 pm - Gather in the meeting room with ties on as if meeting a client. Industry group complains about pitch book and how we might be overstepping what was agreed upon by the client.
1:45 pm - "Bloody relationship bankers!!" remarks my Vice President as he storms off to his desk. I pick up a foam football and launch it at the equity Capital Markets Group. I occasionally work with those former frat boys from the HYP trinity, clueless to the world of LBOs and Firepower analysis, but nonetheless, a great group of guys. "Are you kidding me (my name), you messed up my fantasy lacrosse selections!!"
3:45 pm - MD calls me from Texas and asks a couple of questions behind my models for an Oil & Gas company we are helping in a Buy-side acquisition. I hand the phone to Steve, "Take it away, buddy. I'll grab us some bagels." I whistle on the way to the break room, and my eyes latch onto a cute girl who works in treasury services (middle-office). I remind myself that I completed the harassment training course earlier and that I would be forever mocked if I broke code (talking to middle/back office).
5:00 pm - Receive all the company profiles, company information, stock ownership information, and so on from the work I delegated. As a modern day warrior, I lift my shield MS PowerPoint and wield my sword Microsoft Excel and push forward in order to piece together a Fortune 500 merger.
7:00 pm - My model is balancing, and everything is looking good. My fellow analysts are chugging on espressos and texting their promoters at clubs, such as The Gilded Lily and The Marquee. But I know the importance of health and proper time management in Investment Banking. I pull out my shake weight and shake it violently for a good five minutes. When the coast is clear, I grab a handful of Beast Creapure and let it sift through my fingers into my Woodford reserve. After a Ninja swig, I'm good to go for another hour.
8:00 pm - My favorite banker in the outfit (an industry banker, so be it) pops up from a lower floor and rounds up our gang in order to take advantage of expensed dinner. We walk over to JP Morgan to meet some buddies from university and head over to Chipotle to nourish our Adonis physiques and earn Chiptopia points.
10:00 pm - Well, it looks like I'm not going to make it into the gym today. I glance over my shoulder and see the Capital Markets Group returning from their workout at Equinox. I let my associate know the model is ready and that I've saved and exited out.
1:00 am - I contact the Investment Banking Data Resource Group and ask them to have a few things ready in my inbox tomorrow morning. I put on my suit, head to the bathroom to comb my hair, phone my buddies to meet at a local bar, and exit the building in style.
Interested in Investment Banking - Breaking In
The fact of the matter is you won't improve unless you practice. To have any chance at the technical questions, you need to prepare yourself with legitimate questions. The WallStreetOasis investment banking interview course is designed by countless professionals with real world experience, tailored to help you break into investment banking by acing the technical questions.