Investment Banking - is it really THAT bad?

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rayankh

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So I have been in correspondence with a professor of mine from a couple of years ago and he is reaching out to me because he has an acquaintance who is looking for an analyst role to be filled at a smaller (10-50 people it says on LinkedIn) newer (2006) boutique firm and he wants to refer me. I am currently working in the finance department of a major corporation so the move into ibanking would be a huge change, but it would be a step in the direction of doing the type of finance I enjoy most (investment finance) instead of the accounting heavy financial planning & analysis we do at my current job.
Is it really that bad though? I have read and heard nothing but terrible things and from what I can tell, the only reason people put up with it is because of the paycheck. Are there other reasons to enjoy investment banking?According to my once professor the new position is likely to offer a little under double what I am making now. I hear 80ish hours in banking positions are common - will it be less with it being a smaller boutique firm? There is no way I could work 80 hours a week consistently… maybe 60-65, but not 80. If I’m working double the amount I’m working now, is less than double the salary even worth it? Or can you make an argument that it will be worth it in the long-run with a starting salary that high?
How do I even begin to weigh the pro’s and cons? I would have to move about 6 hours away driving distance. Company I work for now has fantastic benefits, super cheap insurance (all sorts of kinds), great retirement (401k and direct benefit pension), and I honestly probably average 40 hours (sometimes less) a week. I get 4 weeks vacation and 2 weeks holidays. My take home pay at my current salary is likely to match that of the ibanking’s salary in about 10 years. I guess I just don’t know… how do I begin to think about whether it’s worth going for?
 
@rayankh
“ If I’m working double the amount I’m working now, is less than double the salary even worth it?…”
Depends on your long term goals and current priorities. As a L2 candidate looking to remain and prosper in finance, the job specs and field of work is more important than the either of salary or working hours depending on whether one wants to remain analyst or is looking for ibanking roles.
Your statement that “it would be a step in the direction of doing the type of finance I enjoy most (investment finance) instead of the accounting heavy financial planning & analysis we do at my current job..” in fact clearly underlines the fact that it may be better for you to go for this change for short term as well as long term career goals and your preferences. Just remember that in the tight employment market situation, opportunities don’t come knocking everyday.
“ There is no way I could work 80 hours a week consistently… maybe 60-65, but not 80…..”
80 hours in general may be a bit of exaggeration and is more of exception than rule. But 60-65 hours figure is more common requirement to grow in the field and prosper , at least in initial years. But at your point of career the hours needed should not put you off as this may be an investment worth doing for long term gains and prospertity..
“…My take home pay at my current salary is likely to match that of the ibanking’s salary in about 10 years. …”
10 years NOT 10 days or weeks. Just list your needs and responsibilities in 10 years and you will know why it matters to get it today what you would (strictly a probability!) get after 10 years in terms of status, salary and opportunities. For most people in career future growth-opportunities matter more than current comfort or salary level. It may help you to take note of the fact that, the ‘fantastic benefits’ and perks you have listed are not that uncommon in good IB positions (though you may not get matching benefits immediately when you are ‘new’ but later on for sure). 6-hour drive is not a big issues as long as you keep option of relocating open as that is often a need for career growth unless you have severe personal and family issues restricting your relocation. So you can begin your weighing of pros and cons from here.
Whatever you may chose, Good Luck.
 
I wouldn’t do it. From all these doubts you have it doesn’t sound like its for you.
 
People don’t do banking because of the compensation you earn from day one, although that certainly doesn’t help, since working at any of the the upper echelon banks means you’ll still clear $100K in your first after bonuses anyway. What you get out of it is the exit opportunities and the NPV that come with it. But yes, the hours are bad. It just comes down to whether you want to grin and bear it for a couple years before jumping ship to private equity, hedge funds or something else. You don’t get those exit opportunities coming from working internal finance at a major corporation, unless you’re actually working on deals all the time (i.e. corp dev at Danaher, Google, or something like that).
And yes, the hours in banking are as terrible as they sound. If they were so easy, everyone would be doing them. Banking analyst roles are one of the most sought-after roles in your early career and you develop training in accounting, valuation, corporate finance, and general dealmaking in banking that you don’t typically get elsewhere.
 
Yes, it is simply terrible. I don’t have a single friend who actually is happy or enjoys it. everyone is literally using it as a springboard into something else. For those who end up working on pitches that go nowhere, many find themselves actually stuck in banking, and miserable.
Once you stay into the associate level and beyond, you start to find yourself stuck
 
@mygos - your post seems most reassuring of all so far. I guess when I get that call I’ll just have to ask about all the details and see what they expect and what they’re offering.
@numi - that’s what I figured the NPV of taking the step into ibanking is probably very attractive. I wonder though if you adjusted the cashflow to reflect some monetary value to qualitative life-factors (health, family, happines), would it be worth it?
@itera - lol, you and your blunt pessimism. Is there nothing to like about ibanking in your opinion, besides pay?
In your guys’s opinion, do you think the fact that this is a smaller boutique firm will mean more favorable work environment (less crazy hours, more sanity, etc)?
 
In many cases boutique can have a more favorable environment in that people are less neurotic since deals are smaller, but it’s really luck of the draw. Working at a boutique with some lame managers will ruin your life. The fact is that a deal process is pretty similar whether you’re working on a $100mm deal or a $1 billion dollar deal; the same amount of work goes into putting things together, it’s just that the billion dollar deal means that the deal fees you get are an order of magnitude higher.
I don’t know how you would “adjust the cashflow to reflect some monetary value to qualitative life-factors.” I don’t put a price on stuff like health, family and happiness. I guess for a time I did. I worked in equity research at a bulge bracket bank for several years and because I was an early promote and was also in a hot sector, we were constantly vetting potential banking transactions and launching coverage on IPO’s as soon as our quiet period ended. This was before the credit crunch and the money was great, though the quality of life was pretty bad.
I interned in IB and also spent time working in private equity which is not as rough as banking but the hours can be pretty rough there too. However, people in PE tend to be slightly more sane than bankers and have better work-life balance, mostly because we’re not on the services side and so we offload a lot of the tactical stuff we don’t want to do to the banking analysts. They’re on the service side so I always saw it as their job to help me out. Not trying to sound condescending but that’s what the deal fees were for.
I will say though that you will probably have a different career trajectory after spending some time in IB than you will now. As for myself, I’m a senior analyst at a hedge fund now and I feel like oftentimes people will go easier on me in my interviews because I have that “stamp of approval” – i.e. top performer at a bulge, know a lot of people, etc., but that all comes with having had to spend three or four years working my tail off on the sell-side. Maybe the hours and stress aren’t worth it to some people and at times I questioned whether it was. I’m happy where I am now but I wouldn’t go back to the sell-side in a million years.
 
@numi
Well thought out and convincing response. To be in a boutique with positive environment is indeed a ‘luck of the draw’ and in IB ‘the hours and stress aren’t worth it to some people’ specially when one has to be fully occupied and sacrifice most hours of present life for the sake of a few $s more and living a better life sometime later.
However, despite the fact that for a $100mm deal or a $1 billion dollar deal the ‘ deal process is pretty similar’ and also ‘the same amount of work goes into putting things together’ , I always felt that the amount of rigour and thoroughness appears to be much more in the later case (even if only psychologically). Consequently the stress and uncertainties preceding the final outcome always seem to be of higher magnitude in the later case (and so is the gratification on successful completion).
 
Mygos, that’s a good point. I will definitely say the quality of the work from a BB on average is better than a mid tier bank. That said, it’s not like the GS analysts are working 110 hours week in and week out and some boutique bank tops out at 55 hours a week. On average a banking week is about 75-80 hours without exaggeration and gets worse when you’re at pivotal points in the deal process. I think that everyone tries to be rigorous and thorough, but believe that the people that get the bulge bracket offers are typically at a higher standard so in that sense I agree with you. Everyone works hard but the bulge bracket banks just generate better results because the employees on balance tend to be of better caliber. Or maybe they are all just petrified of doing a crappy job and getting fired.
 
I used to think I wanted to go into IB, but then I couldn’t get in and wound up in a much better role and I wouldn’t trade it. I get over 5 weeks of PTO, don’t work more than 40 hrs a week, etc.
Also now that I’m further in my career than when I was in school and job hunting, nobody I know in sell side or IB seems to really enjoy it. They’re just counting the days to the buy side or something else. From what I hear, formatting pitch slide decks for 70 hrs a week gets old.
Last year I worked out of an office in Chicago that also held a bulge bracket investment bank. In the morning at breakfast I’d see dead looking analysts wonder in the cafeteria, put their heads down and put a folder over their head and sleep. One day I also saw an insanely hyper and potentially high prob associate or VP storming around on his BB at 6:45 pissed off that breakfast wasn’t open yet. No thanks. I’d like to make it to 30 without any serious life issues.
As for the smaller boutique firm… that can work out 2 ways. One is that since its smaller you may get a better experience and learn more. Flip side is if you don’t have a well known name on your resume, you may in the future not get full credit (so to speak) from your years there. That was my thought process when I picked my first job. I had job offers from a big 4 acct firm and a mid market firm. I made the decision that since I wouldn’t be there long (hopefully) I’d rather be a number and a cog in the wheel and have big 4 on my resume, as opposed to maybe learning a bit more and working in a smaller firm. That stamp of approval from a company that people immediately know and recognize is worth a lot.
 
Do you think it’s reasonable to expect the work life balance to be noticeably better at a boutique firm, though? but not to the point where you say 55 hours tops…
And yes kanuck, I know what you mean.. I’m struggling with that fact myself. The thing us, I do think I’ll learn a lot at this boutique firm. The company is full of smart guys and all the directors have decades of experiences working at the major institutions.. Morgan Stanley, Lazard, Lehman, Barclays, etc.
Another big reason I’m considering the move is because of the actual job itself. The current job I have is boring in my opinion. It’s challenging, sure, but in the wrong ways… With little intellectual challenge/growth. Is the work in i banking not enjoyable?
 
The work depends. some IB folks spend all their time doing free pitches to companies that never materialize. Some folks only work on deals that have materialized. Some boutiques are known to be more lax, some not. etc..
You got to try to find out through someone.
 
numi wrote:
But yes, the hours are bad. It just comes down to whether you want to grin and bear it for a couple years before jumping ship to private equity, hedge funds or something else. You don’t get those exit opportunities coming from working internal finance at a major corporation, unless you’re actually working on deals all the time (i.e. corp dev at Danaher, Google, or something like that).
Click to expand...
What’s the work life balance/hours like once you jump ship into PE or buy side in general?
 
rayankh wrote:
numi wrote:
But yes, the hours are bad. It just comes down to whether you want to grin and bear it for a couple years before jumping ship to private equity, hedge funds or something else. You don’t get those exit opportunities coming from working internal finance at a major corporation, unless you’re actually working on deals all the time (i.e. corp dev at Danaher, Google, or something like that).
Click to expand...
What’s the work life balance/hours like once you jump ship into PE or buy side in general?
Click to expand...
Heaven compared to IB
 
It can’t hurt to go on the interview and get a sense of what the job is like on a day to day basis and who you would be working with. That kind of jump is salary might be worth it if you can do that for a couple of years and then springboard to something else.
 
Jeez, is there anything positive about investment banking work? Tell me you at least learn a lot.
From what I gather, you either hate your job or…. you really hate it which is super reassuring. Woking at a boutique firm can offer a lot as far as a learning experience goes and can be much more accommodating to your well being/sanity, but you might not get as much leverage as you would coming from a well known firm.
If I talk to them and they say to expect to be putting in about 60-65 hours a week, I think I’m going to take it assuming pay is indeed double and benefits are reasonable. I only can function at my very best (exceptionally well) if I get 9 hours of sleep. I perform average/reasonably well with at least 7 hours of sleep. Less than that, I’m really hurtin… and I should stick to transactional tasks (anything that doesn’t require heavy problem solving). That’s why I’m really concerned about hours.
I want more the investment finance and I think this opportunity could be pretty good for my long term career. I have a girlfriend and likely soon to be fiancée that I don’t want things to go badly with, but she is pretty understanding. In the job I have now, I am able to visit her every weekend while she finishes up school for the next year and a half (3 hrs away). With the I banking role, my visits will probably be limited (also now 6 hrs away). Also I’m pretty worried the CFA will never materialize seeing that I may not have the time to study (given my sleep needs and girlfriend). With this experience, maybe the CFA becomes unnecessary though.
I don’t know… I have a lot to think about. Not to mention, the team has an analyst that played MLB for my home team…. that makes things even harder!
 
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