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What is the outlook for investment banking & finance industry?

theyoungboitheyoungboi 165 replies43 threadsRegistered User Junior Member
edited October 2011 in Investment Banking
Immediate, short term, long term?

I cold called lots of places today asking around for 2012 summer internships and got a lot of the same responses, which were "gee we really don't even need an intern in this economy, especially a paid one"

I'm sure corporations aren't extremely hurt by the economy but a lot of small privates definitely are. I called PWM firms, regular banks, "financial services" firms, small IBs (those are the only ones local).

Of course the job security in this industry is not the greatest to begin with, but its still worth to pursue right?
edited October 2011
23 replies
Post edited by theyoungboi on
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Replies to: What is the outlook for investment banking & finance industry?

  • SSK 91SSK 91 312 replies11 threadsRegistered User Member
    Honestly, things aren't looking up! Even more so for the financials, than for the rest of the economy. Some of us have got ourselves so focused on Ibanking, that I honestly don't believe we would be employable in any other industry than finance. My head gets numb when I think about it, and wonder if there is still some time to squeeze in a Comp Sci minor or get the prereqs done for Med School. We will certainly graduate in interesting times!
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  • theyoungboitheyoungboi 165 replies43 threadsRegistered User Junior Member
    thats the thing - a finance degree is so specialized that it doesnt apply in any other field than it is for. now you can get any type of job with any type of reasonable degree, but i feel like there isnt outside of finance that i would even work in.

    good thing accounting is always steady, but that is definitely a last resort.
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  • avatarmageavatarmage 224 replies8 threadsRegistered User Junior Member
    Immediate- terrible.
    Short term- next 2-3 years terrible.
    Long term- I think things will return to pretty much normal. Credit crises take about 5 years to recover from. 2008-2013? Add another year for the sureness of growth to return. Ibanking may lead to slightly less incomes cause of new regulations. But really the pay per hour sucks and if they lower the salary much they'd lose talented people and overachievers like some people on here lol to other professions.
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  • CollectivSynergyCollectivSynergy 980 replies2 threadsRegistered User Member
    Depends what you view as normal. It's more likely than not compensation and firm size will revert to pre-2000 levels over the next few years, in which case if you're benchmarking against 2004-2006 the answer is it will never recover even in the long term. And honestly, that's a good thing.

    You guys are thinking too narrowly. The majority of college grads don't graduate with any idea of what they're going to do, the fact that you have a specialized skill already puts you in the top 5 percentile. Well, unless your developed skills are "excel guru" or "banker speak".
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  • AstonMartinAstonMartin 361 replies10 threadsRegistered User Member
    bank recruiting this year has been ridiculously bad. Bulge brackets like GS, JPM, Credit Suisse, Barclays aren't recruiting for front office positions at all, even at top targets like Wharton/Harvard.

    However, elite boutiques have done very well in the past few years. Places like Evercore, Centerview, Blackstone M&A, Greenhill, etc. are top choices for lots of students. Even those who have offers at bulge brackets are looking to get into some of the top boutique firms.

    So overall, while the economy isn't great, there are still opportunities out there
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  • wildandyoungwildandyoung 170 replies50 threadsRegistered User Junior Member
    ^^

    But guys that would usually be right in the thick of it for BB hiring (ie Harvard, Wharton, etc.. kids) are having to go down to toe MM/Boutique level, making it even harder for kids from non-targets to break into the industry, correct?


    I don't graduate for a few more years so hopefully things will be a little better than but someone in the industry says it might be a long time before things get better. And obviously things will probably never get to pre-2008 levels, or at least not for a very long time.
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  • DartmouthForeverDartmouthForever 305 replies5 threadsRegistered User Member
    Who the **** is working at an MM or boutique? Maybe the weak target students. Yeah, recruiting is tougher, but a lot of the big dogs are still hiring, especially the elite boutiques, which are as desirable as the top bulge brackets.
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  • AstonMartinAstonMartin 361 replies10 threadsRegistered User Member
    But guys that would usually be right in the thick of it for BB hiring (ie Harvard, Wharton, etc.. kids) are having to go down to toe MM/Boutique level, making it even harder for kids from non-targets to break into the industry, correct?


    I don't graduate for a few more years so hopefully things will be a little better than but someone in the industry says it might be a long time before things get better. And obviously things will probably never get to pre-2008 levels, or at least not for a very long time.

    Yeah like DartmouthForever said, I was referring to elite boutiques, not MM shops. M&A activity is still there, but if you've been following the major deals recently, you'll notice names like Evercore and Qatalyst appearing a lot more often than before.
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  • DueceyDuecey 73 replies0 threadsRegistered User Junior Member
    Most people don't really understand the investment banking vs finance thing.

    Most BB investment banks are in reality large hedge funds, that also do market-making/sales on the side. Overwhelmingly, their profits are derived from trading.

    Most true trading desks don't hire "target school" types. They gun for top comp sci grads, and occasional finance major from wharton. They could care less about the "well-rounded econ major with extracurriculars from Yale."

    Between changing regulation, automation, and competition from hedge funds, most trading positions at BB's will dry up. Hedge funds need people who understand "big picture" financial risk, top network engineers, and comp sci guys. Aside from that, they don't need to hire many people. Hedge Funds do with 20 people what BB's do with 200.

    Investment banking hiring will likely remain for a while. The IPO aspect will likely go away, reducing windfall paydays for some bankers.

    The sales desks of S&T is what most people think of when they say "Investment Banking." Most of these jobs are going away. They provided little value to begin with.

    If you want to make serious money, I would look business consulting, tech consulting, or the tech industry. I've met many people in these industries that likely turn a minimum of 400k per year and 800k+ in good years. Meanwhile, 99.9% of people hired on BB will never see their pay top 500k, even while working nightmarish hours.
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  • beard taxbeard tax 243 replies4 threadsRegistered User Junior Member
    Investment Banking is still a great route to pursue. There's a distinction between Investment Banking in the traditional sense and Sales & Trading. Both parts function as the core profit generating units of the bank.

    1) Traditional investment banking will continue to do well. Companies need access to cash to fund projects and they need the strategic and legal advice for M&A. Certain structures like LBO's will go in and out of vogue but it's important to realize that companies need banks to sell bonds and access cash. Near term and long term, investment banking is a needed service that adds value to a company because it's a function they can't perform.

    2) S&T will perform quite poorly in the near term, and will rebound in the long-term though to lower levels.

    Near term - S&T makes money by taking margins on risky assets. Holding a stock in your inventory that can go up or down 10% a day is much riskier than holding 3 month US debt. However, what are people buying right now? People are buying US debt and other non-risky assets. The margins on these businesses are terrible when compared to riskier assets so banks are not making much in commissions.

    Long-term - The outlook is not so rosy. Basel III is slowly being implemented. Banks will need to hold more capital in less risky assets. It's like a company that sells furniture being asked to hold 10% of inventory in cash, because regulators think that the value of furniture will plummet and bankrupt the company. Hence, banks will not be able to run as lean as they used to, which means that they will become less efficient with their capital and their cost of funding increases. This hurts their margins because it costs them more to borrow and they can't pursue as many high-risk (but profitable) business areas as they used to.
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  • AstonMartinAstonMartin 361 replies10 threadsRegistered User Member
    Most people don't really understand the investment banking vs finance thing.

    Most BB investment banks are in reality large hedge funds, that also do market-making/sales on the side. Overwhelmingly, their profits are derived from trading.

    Most true trading desks don't hire "target school" types. They gun for top comp sci grads, and occasional finance major from wharton. They could care less about the "well-rounded econ major with extracurriculars from Yale."

    Between changing regulation, automation, and competition from hedge funds, most trading positions at BB's will dry up. Hedge funds need people who understand "big picture" financial risk, top network engineers, and comp sci guys. Aside from that, they don't need to hire many people. Hedge Funds do with 20 people what BB's do with 200.

    Investment banking hiring will likely remain for a while. The IPO aspect will likely go away, reducing windfall paydays for some bankers.

    I think you're a bit confused. This thread/forum is about investment banking, as in the investment banking division of bulge brackets. Not sales and trading.

    wait...you think IPOs are going away? ha ha ha
    The sales desks of S&T is what most people think of when they say "Investment Banking." Most of these jobs are going away. They provided little value to begin with.

    If you want to make serious money, I would look business consulting, tech consulting, or the tech industry.

    Err no...IBD is what most people think of when they say investment banking.

    Also, qualified applicants from top schools either go into IBD or trading, not sales
    I've met many people in these industries that likely turn a minimum of 400k per year and 800k+ in good years. Meanwhile, 99.9% of people hired on BB will never see their pay top 500k, even while working nightmarish hours.

    I have no idea where you're getting your numbers, but 400k is laughably low for banking. In this industry, if you're not making 7 figures by your mid/late thirties you're doing something very wrong.
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  • nebraskamannebraskaman 17 replies5 threadsRegistered User New Member
    I've met many people in these industries that likely turn a minimum of 400k per year and 800k+ in good years. Meanwhile, 99.9% of people hired on BB will never see their pay top 500k, even while working nightmarish hours.
    I have no idea where you're getting your numbers, but 400k is laughably low for banking. In this industry, if you're not making 7 figures by your mid/late thirties you're doing something very wrong.

    Thats what i was going to say, mid-level PE/HF guys are making 4-500K easy, Which is where most people go after analyst/MBA stints
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  • Sean518xSean518x 198 replies19 threadsRegistered User Junior Member
    Yeah duecy most of what wrote is just wrong..

    Consultants salaries all in are pretty embarrassing compared to bankers. The only upside is a better work life balance.

    Finance is a great field whether your doing M&A at GS or corporate dev. At a f500 or any number of positions in between. Since it is so lucrative you do need to compete against top talent for any position your interested in so networking is always key.

    Finance is also a very cyclical industry and fluctuates with the economy more than most other industries which is what were facing right now. Just keep in mind that jobs are always going to exist since markets will always exist and were all just here to bring liquidity to the capital markets right?

    But seriously keep your head down and be satisfied that if you land a job out of college you'll be in the top 1% of wage earners in the world at 22 with unlimited upside. So consultants can take their work life balance and suck it.

    Sent from my DROIDX using CC App
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  • englishjwenglishjw 382 replies23 threadsRegistered User Member
    Prospects don't look so great at UBS at the moment. Another rogue trader has seen to that (estimated loss is at $2 billion).
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  • BiudBiud 106 replies0 threadsRegistered User Junior Member
    Do not make career decisions based on short term economic conditions. People get rejected every year. It's tough every year. In the last couple of years, the economy has been a good excuse to put down on rejection letters or hang up the phone.

    I'm not saying it's not more competitive that it was in 2007... but all industries have ups and downs. Just stick to what truly interests you. And don't make that call based on greed...

    The UBS rogue trader are the types of events that should definitely NOT influence your decision.
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  • supsup 1098 replies224 threadsRegistered User Senior Member
    hahah man the amount of misinformation on this forum...
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  • avatarmageavatarmage 224 replies8 threadsRegistered User Junior Member
    Um wars your information then "sup"? I got mine from someone actually working in the field.
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  • CollectivSynergyCollectivSynergy 980 replies2 threadsRegistered User Member
    I don't think I've ever seen anyone as poorly informed yet self-confident like Duecey...
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  • DueceyDuecey 73 replies0 threadsRegistered User Junior Member
    I find it amusing that people who will never see >500k/yr, dismiss it as chump change. Even better if they (likely still in college) use decade-old salary stats and Liar's Poker as points of reference.

    To answer the original question: the tide is going out on Wall Street. The job-hemorrhaging and smaller analyst classes should be wake up calls. As should the announcement that HBS/top b-schools, themselves luddite institutions, started rejecting top finance applicants this year.

    For fresh-minted undergrads in early 2000's, GS analyst positions were the pinnacle for compensation. Top dogs are now tech firms in Silicon Valley. Compare the number of young millionaires in tech vs finance. It's not even close any more. Add pre-IPO stock or startup buyouts for a tech entrepreneur, and the lifetime earnings make Wall St payouts look small.

    Pretty much every sign points to fewer jobs and an overall smaller pie on Wall Street. And it's very likely that smaller pie will be consolidated into the hands of fewer people. Henry Paulson spoke a great truth: 15% of bankers and traders are responsible for 80% of the profits. In ten years, that 15% will likely still have jobs. The other 85% will be replaced by computers and server racks.
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  • jgersonjgerson 18 replies0 threadsRegistered User New Member
    prospects are horrible in the short term. mid term and long term who know? interesting dynamic though is happening this year - it seems that amidst all the cuts - UBS laid off 30k, more to come from other banks, on campus recruiting is actually up. also, while MD bnouses are down big this year, analyst comp isnt going to get as hurt.
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