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Investment banking pay- and other jobs.

A photo of Business1234 Business1234
so assume that you make 100k after grad..

but since investment banking is a stressful job, often working up to 70 hours a week,

by math, it is $35.7 an hour minus with days of vacation...

does anyone know if salary will increase?

thoughts?
opinions?
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A photo of Thatguy Thatguy
It is not just a flat hourly wage though, they are often paid a high salary plus a fairly substantial bonus.
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A photo of immaculatedx immaculatedx
You can make more than 100K, but yes the hourly pay is actually not that great for iBanking.
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A photo of speedy48 speedy48
ya that's the sucky thing about it:( you really need to consider what you value more; a life (having a girlfriend seeing your family often) or work.
It's not uncommon to work 100 hours a week when big projects come up. I know my brother and his friends would go to work sometimes at 8 am go home the next day at 7am, shower and then go back again.

Some people can deal with it some people can't. You just need to know yourself really well.
Oh and another problem is you get taxed like crazy:( you pretty much lose your bonus.
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A photo of speedy48 speedy48
Just out of curiosity, how many of you guys are considering investment banking?
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A photo of QCman QCman
you guys should think about more then just pay when it comes to a job, and the fact of the matter is most of you thinking you will go into IB to make big bucks probably wont even make it or will realize that you dont want to do IB. Because IB and Consulting are the 2 big areas people want to go ill post this great piece from the managmentconsulted blog.

This is an important question for prospective applicants (in particular, undergrad/MBA students) looking for summer internships and fulltime jobs alike.

The decision was easier for me than for most people. The cons of investment banking – the long hours, the repetitive and unengaging nature of the work, the lack of non-finance exit opportunities – mattered far more to me than a 6-figure salary. I seriously considered sales & trading (in fact, I spent a summer at Credit Suisse First Boston in NY), and was tempted to continue in that line of work post-graduation.

Instead of defining the basic characteristics of each job (there are plenty of resources out there for that, including the Vault and Wetfeet Guides), I will address a laundry list of defining differences between the two professions.

Let me caveat by saying THESE ARE NOT YOUR ONLY OPTIONS. People get carried away into thinking that’s all there is.

#1 SALARY

This is the biggest superficial difference. That’s not to imply that salary doesn’t matter. Banking salaries average 50-100% higher than consulting salaries, with the difference increasingly significant as your seniority increases. Consulting compensates with perks that banking does not offer – from better travel allowances to more generous health and retirement packages.

Consultants always like to say this:

“I know investment bankers make more money. But from a cashflow perspective, it’s exactly the same!”

This simply means that consultants and bankers make comparable base salaries, and at the end of the year, bankers are awarded a bonus which can comprise more than 50% of their total annual compensation. Cashflow or not, the extra money is substantial and a defining driver of why many people do investment banking. This is also a difficult issue for consulting firms with respect to employee retention. In my time at McKinsey, easily half the people who left the firm went into the financial world (from hedge funds to PE), and salary was undoubtedly a major factor in the decision.

My advice is this – if after considering all 5 factors I’ve listed here, you still think the pay difference (for 1st yr analysts, averaging between $30-60K/year) would mean a substantial difference in your personal and professional job satisfaction, choose banking.

Further reading: Consulting salaries from analyst to partner

#2 LIFESTYLE

The key differences here are:

-Hours. Bankers work brutal hours, no surprise. They can average 14-16 hours/day but it can get FAR WORSE.

My roommates in New York (both investment bankers at Goldman Sachs) would sometimes go several weeks before we’d even exchange a word. Which meant not only were they getting in after I went to sleep (around 2am), but going back to the office before I woke up (around 7am).

Your second year as an investment banker gets better – in the 10-14 hours/day range but also with unpredictably tough periods.

Consultants average 12 hours/day, with the typical variations depending on client, team goals, etc

-Travel. Bankers do some for roadshows, due diligence, etc but spend 90% of their time in one office until you’re partner-level (this is investment banking; you can expect more travel in private equity and investment management). Consultants – depending on firm – travel anywhere from 25-75% of their time. At the Big 3 (Bain, Boston Consulting Group, McKinsey), you can expect travel 50-75% of the time. I’ve heard of boutiques

-Relationship with coworkers, managers, and firm. This is less discussed but equally important. Consulting firms have a very collegial atmosphere, where the focus is on getting the work done but also ensuring your professional success. This attitude permeates all interactions. Managers rarely yell, coworkers try to help each other out whenever possible, and companies are organized to provide consultants support with training, expertise, etc. Finally, networking is important at consulting firms, and social events are focused on helping consultants build contacts and relationships throughout the firm.

Investment banks, on the other hand, have a more competitive, hierarchical setup. You can expect more tense relationships with your bosses, you’ll probably be yelled at from time to time for mistakes, and coworkers are much less willing to help each other out (they’ve got enough on their plates, and your success means theres more competition for the biggest bonuses). In addition, you’ll have limited exposure across the company to other groups, departments, etc – less ability to network across the company.

Further reading: Consulting travel; Day in the life of a consultant

#3 SKILL DEVELOPMENT

Call me biased, but I received the best years of business training possible in my time at McKinsey. Thorough and at times intense exposure to textbook business principles and practices. In addition, the project team model leads to mentorship opportunities with managers, partners, and coworkers. Finally, you have constant client interaction which develops “client skills” – from managing client teams to running meetings to learning how to navigate different corporate environments.

That being said, here’s a quick list of what you can expect to learn in both fields:

By “hard skills”, I mostly mean software (ie Microsoft Office Suite), analytics (ie financial valuation). By “soft skills”, I mean the interpersonal, qualitative interactions that you have with coworkers, the broader firm, clients, etc

Manage your money with a personal checking account from a trusted bank.

CONSULTING

Hard skills:
1) Microsoft Powerpoint – you will (and have to) become a master at this, and will eventually have the ability to produce presentations quickly, concisely, and meaningfully
2) Microsoft Excel – less exposure than investment banking. Still, “modeling” is a meaningful component of a consultant’s work, and something every consultant is expected to have significant exposure to. Note -firmsodeling” done in case work may not be directly comparable to the financial modeling more common at investment banks
3) Business knowledge – typically broad exposure across different topics like strategy, operations, organization and several areas where you’ll have expertise. This expertise may be as broad as “operations turnaround” and as specific as “benchmarking for insurance companies”.

Soft skills:
1) Client interaction (explained above)
2) Heavy team interaction
3) Presentation skills – this is a cornerstone of consulting work. After all, findings don’t mean anything if you can’t convince the client to believe in and adopt them
4) Project/workflow planning and execution – this is subtle but important. Much of the time at investment banks, you are given incremental work – eg, add these updated numbers to the model, bind these presentations, insert a graph on chart 11. Consulting is focused on you OWNING a piece of the entire project, setting your own deliverables and timeline, and executing against that framework. This helps you develop the ability to be “standalone” in consulting lingo.

INVESTMENT BANKING

Hard skills:
1) Microsoft Excel – clearly you will become a master at this, and is a mandatory for success. You’ll know the ins-and-outs, every keyboard shortcut known to man (and then some), and so forth
2) Microsoft Powerpoint – much less exposure here depending on the focus of your work (for instance, more in Corporate Finance, less in Mergers & Acquisitions). Very little experience in building a presentation from scratch.
3) Financial valuation – self-explanatory. Differs based on group/focus, but at the very least you’ll understand financial statements inside and out, and have strong knowledge of how companies are financed

Soft skills:
1) Work endurance – this is the upside to those 100+ hour weeks, which is the ability to work incredibly long and incredibly hard. Basically, every job you take post investment banking will feel somewhat like a vacation. It’s a great trait to have
2) Seeing deals get done – investment bankers have, at times, better access to the leading business leaders of the day. As a junior banker, you may not have direct interaction but will be exposed through countless meetings, conference calls, etc to these people and see how deals are done and groundbreaking changes in business emerge day-to-day.

Further reading: 5 big mistakes that will get you fired

The last 2 points in this post are shorter, because I plan to write separate entries on each of them in the future

#4 NETWORKING

Less discussed but important. Consultants move on to a vast array of fields – from industry to academia, government to non-profit. Investment bankers do so less – most continue within the financial world. Your professional network and future career opportunities will be heavily influenced by your colleagues and your firm alumni.

In addition – my perspective is that consulting firms (similar to point #2) facilitate more interactions between alumni and current employees as well as future networking between alumni than investment banks. However, bulge-bracket investment banks have a much larger alumni base, and it certainly isn’t impossible for you to build strong connections provided you are proactive and innovative enough.

Further reading: How to get a consulting job in a tough economy; Networking 101

#5 EXIT OPPORTUNITIES

Corollary to point #4, this is influenced by your firm’s alumni and also the following:

-the different recruiters/headhunters that reach out to you
-the different paths your “hiring class” takes and the knowledge and opportunities you share with each other
-the relationships you’ve built with more senior colleagues and the doors they can open for you

When it comes down to it, the conclusion is similar: if you want maximum career flexibility, consulting provides that in spades. If you want maximum career flexibility WITHIN finance (and corporate financial roles), investment banking provides that.
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A photo of axiom2true axiom2true

@QCman wrote
you guys should think about more then just pay when it comes to a job, and the fact of the matter is most of you thinking you will go into IB to make big bucks probably wont even make it or will realize that you dont want to do IB. Because IB and Consulting are the 2 big areas people want to go ill post this great piece from the managmentconsulted blog.





Great contribution QCman, a solid read.
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A photo of AZK AZK
The only reason I want to get into IB is because I want to go into asset management, and Hedge Funds afterward.
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A photo of Anonymous Anonymous
Thank you very much for sharing that, QCman :)
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A photo of QCman QCman
If you're interested in Trading this is a good read http://managementconsulted.com/business-consulting/decks-vs-derivatives-6-differences-between-consulting-and-sales-trading/

and if you want to know more of the salary specifics of consulting this is good too. http://managementconsulted.com/consulting-jobs/the-truth-behind-consulting-salaries-from-analyst-thru-partner/
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A photo of axiom2true axiom2true

@QCman wrote
If you're interested in Trading this is a good read http://managementconsulted.com/business-consulting/decks-vs-derivatives-6-differences-between-consulting-and-sales-trading/

and if you want to know more of the salary specifics of consulting this is good too. http://managementconsulted.com/consulting-jobs/the-truth-behind-consulting-salaries-from-analyst-thru-partner





QCman with more good links. Do you know how consulting recruiting is at QC? What is the BCG, Bain, McKinsey, etc. presence? You've got me liking management consulting over investment banking now!

On that note, I thought I'd add a link of my own. This is a site made by the same guys as managementconsulted, but with an investment banking slant: http://www.mergersandinquisitions.com/on-the-job/
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A photo of Business1234 Business1234
very good read, thanks
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A photo of QCman QCman

@axiom2true wrote


QCman with more good links. Do you know how consulting recruiting is at QC? What is the BCG, Bain, McKinsey, etc. presence? You've got me liking management consulting over investment banking now!





Haha, yeah im more of a consulting fan too. But in regards to your question all the big firms (MBB) come to Queen's. We have the Queens consulting association (QCA)which helps with interviews sets up recruiter nights and lets you have Q&A with alumni in consulting. I hope to get on the committee for next year so if your interested in consulting you'll be seeing more of me. There is also Q3C which is a case competition you can take part in, in second year, all the big consulting firms come and sponsor it, McKinsey didnt come this year but hopefully we can get that to change. if you want to check out more on the competition the like is below:
http://comsoc.queensu.ca/q3c/
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A photo of axiom2true axiom2true

@QCman wrote

@axiom2true wrote


QCman with more good links. Do you know how consulting recruiting is at QC? What is the BCG, Bain, McKinsey, etc. presence? You've got me liking management consulting over investment banking now!





Haha, yeah im more of a consulting fan too. But in regards to your question all the big firms (MBB) come to Queen's. We have the Queens consulting association (QCA)which helps with interviews sets up recruiter nights and lets you have Q&A with alumni in consulting. I hope to get on the committee for next year so if your interested in consulting you'll be seeing more of me. There is also Q3C which is a case competition you can take part in, in second year, all the big consulting firms come and sponsor it, McKinsey didnt come this year but hopefully we can get that to change. if you want to check out more on the competition the like is below:
http://comsoc.queensu.ca/q3c/




Looks great, thanks! Looking forward to Q3C already.
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A photo of Thatguy Thatguy
Thought evoking read. Thank you for the post.
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