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Think twice before committing to investment banking

idkmybffjilidkmybffjil 15 replies15 threadsRegistered User New Member
Normally I'd post something like this on Wall St. Oasis but I'd thought provide some of my own experiences to those just starting out college and thinking about going into I-banking.

Like pretty much every student who majored in finance or economics, I also considered I-banking, and was even dead set on it for a while. I networked and made several friends in the industry but the more I learned about it from their experiences, the more I was turned off by it. It's still a very competitive type of job but it's steadily becoming less and less popular, and for good reasons, as I learned for myself. The benefits that come with this job might look good on paper, but the reality isn't what it seems like.

To start, here are probably the biggest reasons why one would like to go into I-banking, and why they may not be as pleasant as they sound.

Large compensations. Compensations vary a lot based on the bank, the group, overall deal flow, and of course, your own performance. Today, compensation would probably be: salary at $70-85k, signing bonus at $20-30k, and annual bonus $70-90k. Yes this is all at the analyst level (the position taken by recent college grads). That's a lot of money but don't forget that that you'll be losing probably 60-70% to income taxes and housing, which are ridiculously high in NYC; for this reason other cities like Chicago or Houston are being more popular due to their lower costs of living but you'll also probably get paid less so it kinda evens of. The rest you'll likely spend on frivolous gifts and other things to keep yourself from going insane while working 80-100 hours a week. Although you could save money by simply not renting an apartment and just living in your office which happens actually more often than you think, given that you spend so much of your time at work anyways. Also this compensation is on an annual basis, but many get burned out and have decided they had enough after only about 6-10 months even without another job in mind or even waiting around for their bonuses.

2. The exit opportunities. Investment banking usually operates on a social contact where basically you promise to give the back 2-3 years of your life (sacrificing socialprife and well-being in the process) and you'll get any job you want afterwards. Whether that was actually true at some point is beyond me but it's certainly not the case today. About 80% of folks after banking go into private equity or hedge funds, where the work is different and possibly more interesting but still with a similar culture and lengthy hours. The second most popular choice is to go to business school only to end up doing PE/HF as well or even going back to banking as an associate. Startups are also becoming a popular choice but it's a far riskier choice than PE/HF. Only about 1% do something really original afterwards. But you're not necessarily limited to these options as having I-banking on your resume still looks really good. However, that's also assuming you don't get burned out. Having a prestigious job on your resume won't matter of you quit after 6 months. I had a friend who [miraculously] stayed at UBS for over 3 years before getting burned out and it still took him over a year to get a new job. Good luck getting one if you quit after 6 months.

There's probably more pros but these are just the ones that I think are most talked about. And I haven't even gotten to the cons listed below:

1) Long hours. 80-100 per week on average. If there's a live deal, expect 120+ per week. To put that into perspective, oneweek (including weekends) is 168 hours. This is exacerbated by the the amount of drinking, smoking, and other drugs you'll be doing to keep yourself sane.

2) Office politics. It's expected that you stay for those hours even if you have nothing to do. You'll often have work to do but sometimes you'll just be sitting by playing solitaire until your seniors leave first. Generally, you don't leave before dinnertime and getting home by 9 pm is considered early.

3) The people. Investment banks like to pride themselves on recruiting the smartest/hardest working/most elitist of candidates, but I've seen plenty of evidence to the contrary. I went to a non-target school, so for us, we'd have to try extra hard to land an I-banking gig. We still send a decent number of students to I-banking every year, but the vast majority of them are the super-fratty kind who party all the time, don't study, and struggle just to catch an 11 am clhours yet banks pay these people to work 80-100 hours a week. I recall one person who fits this description perfectly and he also interned every summer at his uncle's property leasing company and graduated with a 2.6 GPA, and he still got a job at Piper Jaffray. I initially thought it was just me but my same friend at UBS said himself joining I-banking is like rushing a fraternity. This is further supported by the fact that I-banking is comprised about 90% guys.

It also still shocks me that banks don't hire students who actually work hard and go to class, are productive of their mornings, and willing to put work ahead of friends and family.


I'm not trying to deter anyone. These are just aspects of banking that I think anyone coslnsidering it should first acknowledge. So many people go into the industry without realizing what they're getting themselves into or thinking it won't be that exhausting. But it is actually quite exhausting and more so than probably anyone could imagine. At least 90% of recent college grads in banking hate it and almost all of them are looking for a new job on the first day. It's a job filled with benefits and prestige but that doesn't compensate for what you have to put up with on the job.

in the end, it's a tough job where only the strongest (and possibly craziest) could enjoy.



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Replies to: Think twice before committing to investment banking

  • cbreezecbreeze 4682 replies88 threadsRegistered User Senior Member
    About 80% of folks after banking go into private equity or hedge funds

    80% WISH they could go to PE or HF. Majority doesn't make it, they go for a MBA degree and hope for another chance at on campus recruitment.
    I recall one person who fits this description perfectly and he also interned every summer at his uncle's property leasing company and graduated with a 2.6 GPA, and he still got a job at Piper Jaffray.
    This is not typical. At target schools, students do resumes drop and interested banks notify them for interviews. On every resume, there is a stated GPA. At Wharton, the GPA cutoff is around 3.4-3.5.
    It also still shocks me that banks don't hire students who actually work hard and go to class, are productive of their mornings, and willing to put work ahead of friends and family.
    Your example is an outlier. Work itself is very competitive, you are constantly graded on your performance and your bonus depends on your review.
    At least 90% of recent college grads in banking hate it and almost all of them are looking for a new job on the first day.
    This is ridiculous.
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  • LordJeanPierreLordJeanPierre 28 replies14 threadsRegistered User Junior Member
    @idkmybffjil You said you went to a non-target school, would you mind saying what school? and how difficult was it to get a front office job? thanks
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  • oldfortoldfort 22957 replies290 threadsRegistered User Senior Member
    I know it is not as lucrative as it used to be, but how many people in their 20s make top 1% income?
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  • desie1desie1 895 replies17 threadsRegistered User Member
    So tragic.
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  • lofty12345lofty12345 52 replies31 threadsRegistered User Junior Member
    so what are some jobs that have a good work/life balance with a good salary?
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  • morrismmmorrismm 3382 replies181 threadsRegistered User Senior Member
    D is in trading. She works five days a week mostly not past 6:00 and never on weekends. Yes she has to arrive early. Sometimes, depending on the market and other things happening she needs to get up in the middle of the night to get on her Bloomberg. But basically she has good hours for finance. She makes a very good income for a 27 yr old. She is in contract for buying her first place in Manhatten.

    So although this is a high stress job, to be expected given the income, it requires lower time commitment.
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  • panpacificpanpacific 1289 replies13 threadsRegistered User Senior Member
    @morrismm: Is this your daughter's first job out of college? Has she got an advanced degree eg MBA or is she planning to? Did she get a promotion to be able to enjoy the current work life balance (relatively speaking)? Is this typical in trading companies or is her company an outline in the industry? Thanks
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  • morrismmmorrismm 3382 replies181 threadsRegistered User Senior Member
    ^Yes it was her first job out of college after a summer internship after her junior year. No, she does not have an advanced degree. It does not appear to be needed in trading. It is in the banking side of IB. Her former roommate just started Harvard business school this fall.

    She has advanced and been promoted. This seems to make her more relaxed about taking time off, etc. She is also no longer the newest hire, as new analysts have been hired since she was hired 5 years ago. She no longer has to work the American holidays where trading is still happening in the rest of the world.

    As stated above, trading has better hours.

    One thing I want to make clear, these are not easy jobs. Whether IB or S & T, these jobs are stressful and require a great deal of knowledge and ability to analyze, and make decisions on the spot( especially trading for spot decisions) And if you do not do well, you are out!
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  • panpacificpanpacific 1289 replies13 threadsRegistered User Senior Member
    Is there any survey data out there to indicate just how many of those going into IB can/cannot survive the 2 year tenure before moving on to a different career track? 80/20, 60/40, 50/50?
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  • Polo08816Polo08816 910 replies6 threadsRegistered User Member
    edited January 2016
    @lofty12345 "so what are some jobs that have a good work/life balance with a good salary?"

    'Good work/life balance' depends on if a person likes/enjoys his career/job.

    With that being said, I can comment on people who are in similar career fields as myself. I know many commissioned officers in the military reserves that are also federal criminal investigators/special agents. They are probably making anywhere between 160k-180k total combined income per year mid-career. They'll be able to retire from both before age 50 and move on to a 3rd career. It's not uncommon to see many of them hired into defense contractors as VPs with mid 6 figure to low 7 figure compensation. Their combined federal pension will be anywhere from 120-160k/year and this does not even include their Federal Thrift Savings Plan (Government 401k). Their health/medical benefits are among the best in the business. If they haven't even used their Post 9/11 GI-Bill for college/graduate school, they can transfer that to their children which can be worth up to 160k.

    You also have to consider that most mid-career individuals will not have to live in a high cost of living metro area like NYC, SF, etc. When you don't need to live in these places, your same salary feels almost double.
    edited January 2016
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