Q&A: Consulting v. Banking, the age old question. By Former MBB and Bulge Bracket Banker.

Senior Consultant in Consulting

This is the age old question. Here is my quick take on it. Happy to answer any questions about my experience or anything on your mind.

Here it is, Banking vs. Consulting, an overview.

Skills/Training:

Banking:
A slightly narrower but more focused skill set: quantitative and modeling focused. By the end of it, you'll be an expert at valuation and typical models like M&A, LBO, and capital raises.

Consulting:
Broader skillset. By the end of it, you'll get very good at structuring an ambiguous business problem, identifying a path to solve it, figuring out data and information needed for analysis and then executing analyses to get the job done. Also will help you figure out how to draw up an implementation or execution plan.

For banking, think making deals. For consulting, think strategic decision making and execution.
Both are highly valuable. I think having both is great!

Lifestyle

Banking is notorious for longer hours and having more of a 'facetime' culture where you have to be in the office and show face. Like many analysts, I've seen the all nighter in banking, but not in consulting. But, it didn't happen often and it was during a very important deal phase.

Consulting tends to now have the rep of a high flying lifestyle (although who knows in this new world). You get to travel all over, experience different cities, rack up points for personal travel etc. The hours are arguably better as lifestyle is actually part of team conversations. But, that being said, it can still be 70+ hours a week depending on the project, especially in your early days when you're still working on getting more efficient at the job).

Exit options:

It used to be that banking was the sure path to Private Equity. It isn't the case any more. Depending on the PE shop, both bankers and junior consultants can exit into PE. Generally speaking banking experience can make you more competitive for jobs that require deal diligence and deal process as well as modeling. While consulting experience could make you competitive in these areas (if you do diligence projects or finance focused projects), but consulting can also open you up to other strategy and operation focused roles. Consulting arguably offers broader exit options, while banking can make you more competitive for a narrower more focused set of options.

I'd say, both are going to be great training for the first part of your career. Not to sound cliche, but talk to people and see which one gets you more excited. Go with that as it will likely make you happier and lead to better performance and options.

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Comments (14)

Jun 27, 2020

Great insights, another important point I'd add "in favour" of consulting is the people / presentation skills you develop as a consultant.

In consulting, you're given client management responsibilities very early in your tenure. These tend to be not very senior client interfaces, nevertheless having to project-manage a bunch of low/mid-management employees is still a solid learning experience if you're a fresh graduate. Later on, as a second/third year analyst, if you prove to be good enough and you're staffed in a team that is not too hierarchical, you also get the chance to present your work-product in important meetings with the top management of the company. Thanks to this and to the nature itself of the job, I feel like consultants tend to be better at "thinking out loud" and engaging others in structuring an approach to fix a certain business problem.

Not saying consulting is better than banking, but just something to keep in mind.

For context, I'm a former MBB consultant with many friends in banking.

    • 3
Jun 28, 2020

Agree with your points, very helpful!

Most Helpful
Jun 27, 2020

Nice summary, though I'd point out that YMMV.

I also did both, but my hours in consulting were way worse.

Key factors (and a few other comparisons on the skillset):

  • Was in a product group in banking (also BB), so everything OP said is true about an even narrower focus on deals, but product groups also tend to have better hours. The seniors in my group wore the better WLB (vs our M&A colleagues down the hall) as a badge of pride.
  • MBB culture is much more office-dependent than IB culture is, and I was in an office notorious for its psycho approach to "output" (and the hours that come with them). Within that office, I also got shafted by staffing, so yes, the hours were brutal. And I can confirm that hours in consulting are actual hours, vs banking where there's a lot of downtime.
  • Having since (happily) exited the professional services world to a more general management/BD role in a tech startup, I'll say that my consulting skills carry-over on a daily basis, whereas I use my banking skills more on a weekly or monthly basis.
  • That said, I'd say that there's more "competition" in using the more general skills (as in, more people are trying to tackle the same challenges), though one's odds are good in the battleground of ideas. Whereas when a topic comes up where being an ex-banker is valuable, it really might just be you and the Director of Corporate Development who have anything to say at all (and the other dozen people in the roo just listen).

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.

    • 6
Jun 29, 2020

Hello - Thanks for doing this!

Could you please speak on the similarities and differences of Transaction Advisory Service, Private Equity Due Diligence, Deals Advisory and Financial Advisory?

Specifically, how do they different in the function of work in projects, length of projects, scope of work, key technical/soft skillsets developed?

Jun 29, 2020

Hi there,

i'm not as familiar with TAS or FA roles, so it's hard for me to opine. Hope someone else can comment on this.

If you don't get an answer, let me know and I can ask the WSO admin team to help find someone who can provide some thoughts here.

    • 1
Jun 30, 2020

hey - thanks for the reply! I crafted a separate post with the same question, but haven't had any luck yet.

Jun 29, 2020

Does banking involve improving a company's operation or it's only consulting that does? What is the exact difference between consulting and banking? I feel you are helping the companies in both.

Jun 29, 2020

Hi there,

Good question: In my experience for the most part banking does not involve operational improvements. You may do some projections for synergies in an M&A transaction, but the work is primarily focused on setting up and executing the transaction.

Private Equity firms on the other hand, often do focus on operational improvements and they recruit from both banking and consulting.

Consulting firms help companies with a range of problems. The typical overlap with a bank is usually when a consulting firm is helping a company decide on and execute on M&A (acquisition, merger, divestiture) or when a consulting firm is helping decide on a capital project. Consulting firms, however, focus on a range of other projects from: pricing strategy, to operational transformation, organizational design / transformation, multi-year corporate or product strategy, customer segmentation and customer journey mapping - to name a few.

Let me know if this is helpful and if you have any other questions.

    • 2
Jul 1, 2020
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