Why go into consulting instead of the clearly superior investment banking?
Don't you travel an ungodly amount in consulting?
Bankers make way more money.
Aren't consulting exit opps roughly equal to those of a retail cashier?
Consulting tends to be an afterthought when people are considering a career, simply because it's not banking, but the reality is that consulting is a very solid career choice. Yes, you travel a lot. No, you don't make as much as investment bankers. But you have to ask yourself: are those two factors enough to turn you away from consulting at first glance? They shouldn't be, considering the factors that make consulting appealing: fewer hours, travel (it can be a benefit, especially to recent grads), sponsored MBA, tremendous exit opportunities, solid compensation, and more.
By the end of this page, you'll know whether consulting is for you or not.
Why Consulting - Interview Question
Before we get into consulting as a career choice, we need to indulge those of you who came here looking for an answer to the interview question, "Why consulting?".
First, what not to say in response:
- A desire to travel
- Good exit opportunities
None of the above give the interviewer any substantive reason to hire you. You need to speak to the specific functions of the job and tie that into your strengths. A particularly good answer will show your passion for consulting while tying it into your own story. Here are some good reasons to mention:
- You embrace responsibility and the chance to work with senior clients. You view it as an excellent learning opportunity.
- You enjoy seeing how businesses work and solving complex problems within organizations.
- You want to utilize your analytical skills in the business environment.
Again, you want to tie this into your story. How did you discover you wanted to pursue consulting? Did it happen in class, did a friend introduce you to it, or did you learn about it on a job shadow? Make it clear and cohesive. If you end up rambling you'll only lose points with the interviewer.
Travel in Consulting
Frequently cited as the biggest reason to avoid consulting, the travel in consulting might not be as bad as the world makes it out to be. Put yourself in the shoes of a recent college grad. Would you rather be (1) stuck in an office for 14 hours a day and 6 days a week or (2) traveling and working with senior clients on improving their business? Unless you have some major commitments, scenario two probably sounds far more appealing. Yet, so many people opt for investment banking (scenario 1) because they despise the idea of frequently traveling for consulting.
That's when you look at travel as the lesser of two evils, which it doesn't have to be. Here's @Zzari with more on that.
This is heavily dependent on the person, but travel isn't necessarily bad, especially when you're straight out of college. Yes, it's tiring and gets old, but it's still a chance to live on an expense account four days a week and see a few new cities/countries. As an added bonus, you'll rack up a ton of miles and hotel points, so your vacations will be close to free. With alt/flex travel, it also makes it easy (and nearly free) for you to visit friends on the weekend who live in a different city than you.
Few jobs give you the opportunity to travel and see the country like consulting does. There's no better time than immediately after college to travel and see the diversity of cities/towns the United States has to offer. If you feel obliged to explore them and take advantage of the free airfare, you can opt to return home on Sunday instead of during the week, giving you a full weekend to do as you please.
If you're curious about how travel time fits into the work schedule, here's @abacab on that.
Monday: Leave on a 7AM flight, come back home Thursday around 10PM. Hours might vary by one or two hours depending on location, client, etc. Flights are generally 1 - 2 hours of time in the air, longer if you are going across the continent. Also, include the time to get to airport, TSA, etc.
Work from 8AM - 7PM, eat, go back to hotel, and work more if needed. Hours can be longer depending on firm and type of project.
Repeat this 45-48 weeks a year.
Different Types of Consulting
First things first, we need to clarify the different types of consultants. We hear all these labels being thrown around - management, IT, strategy, operations - but what do they really mean? Are there separate consulting roles defined by these labels?
First, all consulting roles fall under/in between two classifications: management and technical.
There are essentially two poles of consulting - mgmt and technical - and most types can be placed somewhere on the spectrum in between. Mgmt at its most general would be what you're referring to, i.e., I want to know how to grow my company, so then I hire a strategy consultancy. Technical at its most specific would be something like there's a guy who specializes in, let's say, IT, and you need something very specific done (need a better network set up or something), and so you hire them to do it.
Understand that consulting has become so diversified that the paradigm has shifted. It's less about management consulting compared to other types, and more about what exact type of consulting one does. Typical consulting roles are: strategy, HR, IT, operations, M&A, etc. While management consultants exist - the only "true" management consulting positions exist at MBB (McKinsey, Bain, Boston Consulting Group) - these positions are mostly classified as strategy consultants.
So, management (strategy) consulting positions only exist at MBB. What are the differences between these roles and roles like HR, operations, economics, and more? That question is of major significance, but it can be answered by looking at the spectrum we mentioned before. Strategy consultants fall on the management side of things, whereas everything else is more technical.
The better question is what's the difference between MBB and the rest of consulting?
Consulting - Differences Between Firms
First, there are three firms that are clearly the "best" consulting firms. Those firms are McKinsey, Bain, and Boston Consulting Group (MBB). They stand a head above the rest in terms of exit opportunities, compensation, and prestige. But is that difference justified? Are the people at MBB worth the significant difference in exit opps, compensation, and prestige? Here's @a12345 with two points on the matter:
- This starts from the top of the funnel, which is recruiting. MBB and Tier 2 firms recruit from the exact same schools, and the batch of students going through consulting recruiting is largely similar. Of course you are going to have a rock star now and then - but on average, most of them are smart and have prepared adequately for cases. My experience has been that there are many folks qualified for MBB who have an off-day when they are interviewing for whatever reason. Thus, they end up at a non-MBB consulting shop. Something that further validates this point - I have lots of friends who got offers from MBB but not from OW, LEK, etc. due to the point mentioned.
- For this reason, I personally didn't find a material difference between the quality of people I worked with at my MBB and my Tier 2 shop. Granted I was only there for a year, but everyone I worked with was as smart, driven, and capable as the people at MBB. The only difference I noticed was sometimes at the partner level. There were some incredibly bad-ass partners at my MBB that likely would not have been there at the Tier 2 firm. But honestly, the partners do not have a ton of effect on your day-to-day if you are joining post-undergrad, and I felt that those at the manager-level were very comparable.
Essentially, the difference between the folks at MBB and tier 2 consulting firms is like the difference between the top students at Princeton and the top students at University of Illinois. Either way, the students are going to be incredibly driven, smart, and hard working. The exit opps and prestige granted to MBB are the same as the better job prospects granted to Princeton - it's a means of filtration to find those at the top of the totem pole. It's not the most holistic means of finding the best person for the job, but it's much more efficient than combing through every little detail about every single candidate.
Here's @23mich with an excellent analogy between NBA draft prospects and consultants. It illustrates the differences between the two.
It's similar to comparing what happens in the NBA and what the difference is between being a first and second-round draft pick. On one hand, the difference is negligible as it's only a handful of the many thousand of players wishing they even had a chance that end up being drafted. It's a pretty select group. However, it's also true that there is a strong correlation between being a higher round draft pick and going on to become a superstar and a household name. Few second rounders encounter the same level of success.
Same thing for consulting. The truth is only a small percent of candidates in the big scheme of things get a job in the field. There are many more rejections than there are offers. But when things get to an "elite" level (e.g., top b-school admissions, prestigious buy-side roles, etc.), for better or for worse... there is a difference; and it's MBB ones that seem to get better results.
For exit opportunities, MBB and tier two consulting firms have the same general exit opps. It's just much easier to find your footing as a competitive candidate with an MBB on your resume. Here are the most common exit opps @Christie Lindor found when analyzing where her fellow consultants were going.
- Entrepreneurship (37.5%): Starting one's own business/becoming a freelance consultant.
- Graduate Studies (20%): Typically but not limited to business school.
- Lateral into Boutique Firm (15%): Move into a leadership position at a boutique consulting firm. These firms involve significantly less travel.
- Industry (27.5%):
They were all in either mid-management or executive leadership roles in 3 key industry sectors: 3 are in tech companies like Google or Amazon, 4 are employed at a large financial services firm like Goldman Sachs, and 4 colleagues have decided to go into non-profit/social enterprise work.
One particularly popular choice is moving into senior analyst/manager roles at F500 companies, especially from MBB. You can also transition into venture capital, private equity, or banking. The point is, there are plenty of exit opportunities available to consultants. The above four are simply some of the more common routes among consultants.
In general, exit opps for any consulting gig are going to be pretty solid because of the skill set you develop and the network you build with clients and coworkers.
Time to talk about what everyone really cares about: compensation. No, consultants do not make as much as investment bankers. MBB tends to pay around $90-100k, while the average at other firms is anywhere from $60-100k. As you might have noticed, pay varies a ton outside of MBB.
Potential consultants shouldn't look at all-in compensation comparatively and feel discouraged. Certain consulting firms (MBB among them) will pay for a part of your MBA if you return upon getting it. These offers typically involve a contractual commitment to work there for at least two years. In addition to the typical contractual agreement, there are other factors to consider when factoring this into your compensation.
Even the most generous I have heard of and have first-hand knowledge of require that:
1. You still work full time and must take classes at night. This means, if you are in NYC, Stern is your only real option. (CBS does not have part-time, only EMBA, which is for people with 7-10 years experience).
2. Tuition reimbursements are taxed very heavily (basically 40%).
Basically, I don't think you should decide where you want to be based on the possibility of getting 60% of your NYU Stern MBA paid for while you bust your hump at work and try to go to school.
Different firms may offer different deals depending on the situation. These are just some of the general factors that go into those deals.
MBB carries a prestige that other consulting firms lack. These three firms consistently feed their analysts into top business schools, management positions at F500 companies, and more.
That said, MBB aren't the only consulting firms with a degree of prestige. Plenty of tier two firms like Accenture, Booz Allen, and Deloitte will garner respect on your resume and make you a competitive candidate for business schools.
What Do Consultants Do?
There is no universal day-to-day for consultants because their days vary so much. That's a part of what makes consulting so appealing to many, the variability in day-to-day functions. As has been discussed before, a typical consultant's week consists of travel on Monday and Friday and work in between. Here's what a typical week looks like for a consultant who travels often, courtesy of @cvsdjs.
Mondays are obviously rough due to early morning travel. Tuesdays and Wednesdays are longer hours. Thursday flights home are around 5 pm, but you usually have work to do on the plane. Fridays are easy. Consulting firms have a lot of networking events and training, and you usually only have a few client-related calls. I rarely work on a weekend, but if I do, it's because I need to get something done for a Monday morning meeting. The travel takes a toll on some, while others really love it. I don't mind it, as I find it's actually sometimes more difficult to work on a local project in NYC (where I live) because it's difficult to balance personal life and work throughout the week, whereas when I travel, I get stuff done Mon-Thurs without distractions and then I get to enjoy Fri-Sun. Projects are typically pretty interesting, though you do have a few brutally lame projects along the way.
Of course, not every consultant is going to be traveling on a weekly basis. But most junior-level employees will be traveling quite often; that's how it gets its reputation.
Consultants help businesses solve their problems. Different types of consultants specialize in different types of businesses/problems, and then there's the management consultant who helps with strategy.
Consulting vs. Investment Banking - Why Consulting?
Investment banking tends to get all of the buzz while consulting tends to be an afterthought among aspiring students. Investment banking is placed on an illusory pedestal, far above consulting, for reasons not grounded in reality. All of the quotes in this section are attributed to @aspiringchimp, who spent time in both consulting and investment banking.
Note: @aspiringchimp is speaking to his experience at McKinsey. As such, his consulting experience will not be representative of consulting as a whole but still provides both an accurate and broad perspective on the industry.
Culture at consulting firms is multiple times better than IB, as far as it can be quantified. You're treated much more like an employee, rather than a resource. You get 6+ hours a night of sleep because crap isn't being dumped on you at midnight. It's less bro-ish (can be good or bad, depending on who you are). In general, IB is much much more hierarchical, so when you're an analyst, you're generally treated as they see you: bottom of the pile.
Don't underestimate the importance of culture. It plays a massive role in job satisfaction. The fact that consulting firms have a significantly better culture than investment banks is the difference between being able to enjoy/tolerate your job and being miserable.
Variety of Work
IB is interesting for the first few months, and then the work generally gets dull and repetitive. The first time you built a model or a new chart, it's cool. The 1000th? Not so much. In consulting, you're on a different project every few weeks or months, probably in a different industry, so you have a much wider variety of work.
The only potential caveat here is if you absolutely despise travel. Even then, we're reluctant to put a point in investment banking's favor.
If you want to work in PE/HF/AM/anything else in the finance world, your best bet is still IB. If you want just about anything else, MBB has better exit opportunities. Even jobs like VC, which are more about networking and startup/operating experience, MBB provides better opportunities.
For finance roles, there's no doubt that investment banking offers superior exit opps. Additionally, investment banking exit opps are generally better than consulting exit opps outside of MBB. Outside of finance, however, consulting takes the cake for exit opps.
Point: Investment Banking
I don't mind working long hours, so slightly down my list, but generally your average at MBB is 60-70, 50-60 at other firms. My time in IB (I was in a busy group, so probably skewed up) was 90-100 on average. The tough part about MBB comes from the travel. It's easier when you're younger to deal with being on the road 4 days a week, but can be tough if you have a SO or kids. Some partners manage this by focusing on more local clients, and some don't manage this at all (see: McKinsey CEO Dominic Barton's recent divorce). Long term, definitely more sustainable than IB, however.
Investment banking hours are, on average, roughly 80 hours per week. Consulting, without a doubt, has better hours.
IB wins out here overall, but it's not much of a cut. MBB promotes faster (8 years to partner if you're amazing vs. 12 years to MD at an investment bank), and I'm being paid more than I thought I would be; the additional perks (points, expensed meals, etc.) allow for a much higher disposable income.
There was never any doubt here, investment bankers get paid more than consultants. However, factor in travel points, expensed meals, and more, and your compensation becomes far more appealing due to a larger disposable income. Furthermore, consider the opportunity cost of the far greater hours in investment banking.
Point: Investment Banking
We've just compared the culture, variety of work, exit opportunities, hours, and compensation of consulting firms opposed to investment banks. Consulting edged out with a 3-2 victory. While that scoreline looks close, keep in mind the decisive victories consulting had for culture, variety of work, and hours.
We aren't trying to tell you that pursuing investment banking over consulting is a fool's errand; it's far from it. But understand that investment banking isn't quite as great as it's made out to be, and consulting is probably a far better fit for you than it's made out to be.
Is Consulting for You?
Now you know about the culture, hours, compensation, exit opps, etc. of consulting. You know what consultants do, and you know a little bit about their various roles, particularly on the junior level. But how do you know you'd enjoy the job? Here are some indications that consulting might be a good career fit, at least out of undergrad, for you.
- You enjoy collaboration.
- You want the prestige and career versatility that investment banking grants without the cons.
- You enjoy traveling.
- You want a career that blends analysis and communication.
- You're unsure/don't want to pigeonhole yourself.
If you enjoy being and working with people, then consulting just might be your cup of tea. As a consultant, you'll be working with your fellow consultants and senior clients on improving their business.
You will work with a lot of really smart, ambitious people on project teams and all types of people on your client sites. Your goal on a consulting team is to learn how to be humble, influence people, and make friends. Be a team player while bringing your voice to the table. While strong written and verbal communication skills are a must in this business, having manners and general respect for people will take you far.
Maybe everything about investment banking appeals to you. It comes with undeniably great career versatility, but it comes at a cost. Notably, brutal hours and mundane work are two of the biggest turnoffs of investment banking. Consulting provides an alternative and avoids both of those cons. It has rough hours, but it's not nearly as bad as investment banking and it's work is much less monotonous.
This one is quite obvious but think about the last time you first walked in a new city. Even walking in a new city can be an awe-inspiring and surreal experience. If you feel this way, then what better job than consulting? Of course, you tend to get desensitized to the wonders of a modern city, but the joys of traveling and visiting new places are worth considering.
Don't be mistaken, for most, the traveling aspect of consulting loses its appeal very quickly and becomes arguably the worst aspect of the job. But certain personalities feel deeply satisfied when visiting new cities and towns. If you're one of those individuals, consulting could be the perfect fit for you.
Really, this applies to a lot of careers - investment banking is one of them - but it's just another way to identify if consulting is a proper fit for you. Consulting is a field hinged on both of these abilities.
Few people actually know what they want to do leaving college, and even fewer actually pursue what they focused on as a career. One of the many things that make consulting so great is that it offers a wide arrangement of career choices upon leaving. It's truly the perfect job for those who aren't entirely sure what they want to pursue. Few jobs offer as much versatility as consulting do once you've worked in the industry.
Investment banking offers similar versatility, but it's various exit opps pretty much end at finance. Not so for consulting, whose exit opps apply far and wide beyond finance.
Original Thread - Why Management Consulting?
Why is management consulting such a sought after position?
The consulting industry isn't as important to the economy as financial institutions, pharmaceutical companies, or gas companies yet recruits from the very top schools across the country. The pay isn't great (nowhere at all near finance/medicine/big law) and people need to travel a ton to mostly undesirable areas in order to provide "advice," such as balancing an institution's budget by increasing revenue and cutting spending (what a novel idea!).
There's an article on M&I that discusses and extrapolates on this further. Going the MC route will not turn you into some great entrepreneur (as some of my friends believe) and will diminish opportunities for real innovation/creativity on a personal level by working you crazy hours doing pointless tasks through the prime of your life. At least kids who do IBD will be able to go the HF/PE route in 2 years while the MC kids will just be transitioning to IBD or boutique PE.
Given all of this downside in terms of loss of income potential, why is MBB still considered more prestigious for undergrads at top schools? (Other than for the kids liking the work, of course.)
Interested in Consulting - Breaking In
Consulting is one of the most exclusive industries in the world, particularly management consulting. It's one of the best career choices for building a lucrative career because of the versatility it offers. But the simplest of mistakes during the interview will get you dinged; that's how competitive these positions are. Less than 1% of applicants get a top consulting job, which is why preparation is absolutely critical. The WSO Consulting Case Interview Guide is the only crowdsourced guide available, perfected by countless professionals to give you the edge you need.