Product vs Coverage for Career Investment Bankers

Most of the threads on this subject focus on exit opportunities, but what if you want to stay in IB long-term? This is obviously both group and bank-dependent, so we'll need to speak in generalities. What types of people and skillsets tend to work best in each group? 

The reason for the post is that I am an incoming Associate and will start as a Generalist before being placed in a Product or Coverage group. I am less concerned about hours/pay and more concerned with fit.

Comments (27)

  • Incoming Analyst in IB - Gen
Dec 2, 2021 - 10:05am

From my understanding, those with a more quantitative skill set succeed in product groups. If you have a more qualitative skill set, you're better off in industry groups. Once you get to the senior level it is more just about being an expert in a certain field. I think the most important piece really is what you find most interesting, because you will do your best work in a space you actually want to be in.

  • Intern in Consulting
Dec 2, 2021 - 7:10pm

What really defines a "quantitative" skillset though within banking? Most of the math is high school level stuff, it seems as if the main substance behind the models is just assumptions, which seem more dependant on sector understanding, no? 

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  • Analyst 1 in IB - Cov
Dec 2, 2021 - 3:43pm

I've worked in ECM and now coverage. 
 

overall, coverage is undoubtedly much better for truly understanding clients and owning the client relationship. In a way, the coverage banker works for the client and the product banker works for the bank. 
 

That said, I've seen many coverage MDs who started in product and vice versa. 
 

in product groups you can get promoted faster, mid-level retention is worse in product groups so if you stick around and are hungry it's common to be fast tracked each step of the way with a chance to become MD much younger than coverage. 
 

you should also think strategically about the peers you'll be fighting against for promotions and clients. I say this because the generalization is that coverage bankers are more driven / intense than product bankers, but (assuming the generalization has some merit) you can use this to your advantage and choose the path of least resistance. 

  • Analyst 2 in IB - Gen
Dec 2, 2021 - 6:17pm

Worked in a product group, good chunk of EDs struggle moving away from a pure execution role into a fee generating role.
 

Appeared easier for people on the coverage side as due to the work you do you are more likely to build relationships, thus having a smoother transition. 
 

other points above are very valid as well. 

Dec 2, 2021 - 6:47pm

In my experience product calling officers (and juniors) tend to have much more balanced lives and better work life balance. There's probably some trade off in comp at the senior levels but not enough IMO to justify WLB trade-off and coverage officers are literally bringing you business (yeah yeah product pitches too but it's the same half-assed spiel every time). The downside is product guys tend to have less job security when the capital markets tighten up and when there's a economic downturn. All things considered, if I were to go career banking route I would personally probably choose product over coverage. 

  • Associate 3 in IB-M&A
Dec 2, 2021 - 9:17pm

I've heard slightly differently (though I'm at a MM) and my info is from someone about to make Md:

-Coverage bankers make more money long term (the revenue is attributable to them)

-The coverage banker works for the client and the product banker's client is the coverage banker

-Coverage bankers have better WLB (harder to take vaca during execution)

-the work becomes more interesting at the senior level (stategic, rather than process oriented). Though it's less interesting at the junior levels because you're doing idea books and maintaining comps

-as someone said, more job safety assuming you can hold onto relationships

  • VP in IB - Gen
Dec 3, 2021 - 12:45pm

If you're talking about banks that strictly segregate industry coverage vs a stand-alone M&A group, it's definitely better to be a senior in industry coverage.  He/She who brings the deals in gets paid the most, end of story.  Also, in downcycles, execution bankers get cut first because they're not taking client relationships with them like if you cut a coverage rainmaker.

  • Associate 1 in IB - Cov
Dec 3, 2021 - 3:00pm

Product MDs eventually specialize in an industry and get the coverage exposure it just comes kind of later in your development as a banker. This is especially true for the BBs because a lot of them have industry clients on retainer and do repeat deals with them. You should go coverage if you really love a specific industry but generally M&A is the better choice for understanding the deal execution

Dec 3, 2021 - 4:23pm

A lot of commenters talking about product in the context of ECM and a few are talking about M&A. The two are very different in terms of how interesting / strategic / intense the work is so probably not the best to bucket both under "product" for purposes of comparison to coverage. 

If you're deciding between coverage and product at MS you're probably thinking of M&A vs coverage. ECM is not pooled with the other two. 

In my opinion, at the junior level M&A>>Coverage just in terms of the type of work you get to do and the learning experience (modeling, M&A process work, diligence analysis vs comps, CIM writing, pitching, IPOs) 

Can't really speak to the MD level but it seems like M&A MDs end up very similar to coverage MDs in terms of holding relationships with clients 

Array
  • 1
Dec 4, 2021 - 9:11am

I think everyone will unanimously agree that if you find managing a due diligence tracker, uploading files into a data room or analyzing how many buyers have clicked on x or y link in Intralinks more interesting than writing the positioning section of a CIM, you're much better off in a product group vs a coverage group.

Array
  • 1
Dec 4, 2021 - 4:41am

Frankly, coverage bankers are the ones who see the most success as it relates to long-term banking careers. Being a driver of revenue and having your own book of clients is invaluable. As a coverage banker, you'll lean on product teams to execute on various opportunities you present to your clients vs being a lifelong product banker, you're relegated to being an execution guy in most situations who isn't really driving business. That being said, the best product guys I've seen at the senior level are those who are inseparably tied to the coverage guys given their commercial abilities and make themselves integral in the process of selling the firm to potential clients along with coverage bankers.

  • 5
Jan 8, 2022 - 4:40pm

Totally agree - only caveat to that is that the M&A team is generally seen as a product partner who are bought in after a relationship has already been made with a coverage banker. Of course, a good M&A pitch from a bank will often include the M&A team in the dialogue from the first meeting, but it is the coverage banker who will get most of the credit for any deal which takes place. 

It's difficult for budding M&A MDs sometimes given there may not be room for multiple product specialists at the senior level. But if an M&A MD is strictly attached to a specific industry group (ie. Managing Director of Healthcare M&A or the likes), then you'll have much more luck making a career specifically in M&A IB. Feel free to provide thoughts

  • 3
Dec 8, 2021 - 11:46am

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  • Intern in IB - Gen
Jan 8, 2022 - 5:39pm

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