Thoughts on Investment Banking

[skeetshooter]

Has anyone here ever been an investment banker? I am looking into this, and although I'm not sure if I will be able to crack in, what other similar careers should I look at as backups, or is this IB just such a bad life that I shouldn't even bother altogether, I enjoy having a good time, and playing my party poker. Thoughts? The bank accounts that come with I-Banking are enticing to any college student.

[midas]

Yes on question 1.

Think of an entry level job in IB like being in a resident program after med school. Tons of work, no sleep and a six figure minimum on your resume after 2 or 3 years.

If you tell me your school, major and GPA - I'll give you the odds of getting a job at an IB /images/graemlins/wink.gif.

[skeetshooter]

Well, a major reason I didn't do premed is the fact that a normal life doesn't come about for a while, so it's probably not really a great direction for me. What other financial jobs would be good to look into that would let me into the "real world" instead of "work all day world" and still offer a path to eventually the nice massive paying bank positions. I am a math major at Davidson.

[RunDownHouse]

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What other financial jobs would be good to look into that would let me into the "real world" instead of "work all day world" and still offer a path to eventually the nice massive paying bank positions.

[/ QUOTE ]
What would lead to the rewards without the hard work?

Try the lottery.

[Pawtucket Pat]

I just graduated from Davidson with econ, I sent you a pm.

-HB

[player24]

[ QUOTE ]
Has anyone here ever been an investment banker? I am looking into this, and although I'm not sure if I will be able to crack in, what other similar careers should I look at as backups, or is this IB just such a bad life that I shouldn't even bother altogether, I enjoy having a good time, and playing my party poker. Thoughts? The bank accounts that come with I-Banking are enticing to any college student.

[/ QUOTE ]

I have two friends (one is my next door neighbor) who have recently retired from careers as investment bankers (approximately age 40). They have accumulated enormous wealth...the kind of money they could never spend in their lifetimes...the kind of money that will make their great grandchildren wealthy. Tens of millions of dollars.

Huge rewards, enormous sacrifiices. The medical school / residency analogy is not a bad one, but top bankers work even harder and longer. And the rewards are back end loaded, you might make six figures early in your career, but it will be several years until you break the buck, let alone make several million.

If you are very smart and well educateed, have a mind for investing and are good at sales, you might have the qualifications. Just keep in mind, bankers are not investors, their job is to win business from companies who are involved in issuing equity or debt securities and to arrange for asset sales, mergers and acquisitions. Most of the time, you will be in sales mode. If you are a top investment bank (Goldman, JPMorgan, Citigroup, UBS, etc...) you will have a large advantage over your competition. Also, the businiess is very cyclical because IPOs and M&A have strong cycles (both are good currently, M&A is on fire).

If you want to make money and want to work hard (but keep your hours to about 60 per week), you might want to go the money management route. Get your college degree, go to work for a couple of years, apply for a top business school, get your MBA, return to work, get your CFA, by this time you should be ready to begin work as an analyst...work your way up the ladder to portfolio manager. Junior analysts on the buy-side earn $200K+... Portfolio managers usually get paid for performance, so income can soar into the seven figures, if you are good. This is the route I took. I did not retire at age 40, but I'll be on the beach before I'm 50, and I didn't sacrifice my entire personal life to get here...

[admo415]

Look into consulting, less pay than IB but better hours.
But you do have to deal with the traveling and stuff.

[Paluka]

[ QUOTE ]
Look into consulting, less pay than IB but better hours.
But you do have to deal with the traveling and stuff.

[/ QUOTE ]

How are consulting and IB at all similar?

[ToneLoc]

[ QUOTE ]
Has anyone here ever been an investment banker? I am looking into this, and although I'm not sure if I will be able to crack in, what other similar careers should I look at as backups, or is this IB just such a bad life that I shouldn't even bother altogether, I enjoy having a good time, and playing my party poker. Thoughts? The bank accounts that come with I-Banking are enticing to any college student.

[/ QUOTE ]

IB can describe a huge variety of jobs: M&A, origination, trading, sales. Frankly i would not advise M&A, HUGE work, and similar payoff to other IB jobs.
Poker is a good school for learning risk/reward, why would you not try trading? OK hours, potential for huge money... sounds like a good idea to me...
I do sales for the moment, OK hours, good money, not always fascinating, really depends on your client basis I'd say.
Good luck.

[admo415]

Both highly prestigious finance jobs, that is what I took from "similar careers should I look at as backups".

I am actually going into IB. Worked at a bank last summer, starting full time in July. It is bad hours yes, but not as bad as you hear sometimes. People that say average hours of 100+ are crazy; it is more like 85ish on average. You will have crazy weeks, when a project is due, my highest was 115 over the summer, but you gotta do what you gotta do, right. Btw, this all comes from working in New York, the hours and lifestyle are generally better at other locations, but the resume building aspect is the best in New York. Most people are doing IB for a couple of years, then trying to get into Private Equity, which is better hours/better pay than IB, but you generally need good work experience to land one of those.

Adam

[RacersEdge]

I think the other dwonside to IB is the requirement to live in NY city. I think trading is a good option - from what I hear, you can do that in places outside NY.

[lhp]

You've gotten great answers so far, but I'll throw in what I know.
From what I understand, the top banks only recruit from certain school - if you don't go to one of those schools, it's difficult (or impossible).
I went to a college that many of the banks recruit from. One of my good friends from college is now an analyst for Merrill. He works very long hours (he gets one weekend a month off - the rest of the time is spent working), but loves his job because he finds it (or, at least, parts of it) intellectually engaging. And he's making good money.

Good luck, I hope you find something you're happy doing.

[lhp]

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I think the other dwonside to IB is the requirement to live in NY city. I think trading is a good option - from what I hear, you can do that in places outside NY.

[/ QUOTE ]

That's not necessarily true. Many of the big banks have offices in LA, and some of the smaller firms ("botique" is the term, I think) have offices in SF. I believe that location depends on what "sort" of i-banker you want to be.

[Paluka]

I'd rather shoot myself than work 85 hours a week.

[JoeC]

UNC/3.48/Economics-Business Administration

I'm just a freshman and my GPA can still change though... so please answer the question for about a 3.7 as well.

[gvibes]

I'm a Chicago guy, and a lot of my friends are traders. The hours are decent, the stress is high, the pay at the beginning sucks, the potential at the end is stratospheric.

Consulting, as in management consulting, is a tough gig to get. Best route is probably to work in an industry of your choosing for a few years, then get into one of the top B schools (Harvard, Kellogg, Wharton, Stanford, etc.). Bain, BCG, McKinzey are nice places to work, though I don't think the money is comparable (at least at the beginning, probably at the end too) to IB'ing.

[admo415]

If you are really interested in it, contact your career services and ask them if any Banks recruit on campus. It is easier if they do, but no impossible to get a job if they do not. My friend went to USC and got a job at McKinsey even though they dont recruit there. She was the only one to get a job, although her GPA was crazy, so that probably helped. I am coming from an Ivy League prospective here, Princeton, and I got a couple of offers and finally took one with a 3.5 overall GPA and a departmental of like 3.8, just to through out some numbers.

I know some people that got a job with less and some that didn't with more, depending upon different circumstances and stuff like that.

Also, try to get a good summer internship the year before, as that always is a good way to differentiate yourself from your peers.

[phuc]

Investment banking is definitely not limited to NYC. I've just celebrated my first anniversary with my firm in Chicago. I'm not in corporate IB though, but public finance IB. It's similar, but we work with municipalities. Corporates make a lot more money, but I've found my job to be fairly rewarding monetarily as well (as long as you work hard and prove yourself). I work for a smaller "boutique" firm. The hours can be long. The work can be mentally stimulating, but also mundane while learning the ropes.

I know this is different from corporate IB, but I just wanted to add my 2 cents. If you aren't used to working long hours, IB isn't for you. For some, the ultimate goal is to work for the Citigroup, Goldman, UBS, etc., and if you want, a good stepping stone can be a smaller boutique firm (or getting your MBA). I've found that working for a smaller firm is allowing me to obtain a wider range of skills than at a big firm that would most likely keep me cranking out numbers all day.

[JoeC]

Solid advice, thanks a lot Admo. I think I'm going to shoot for about a 3.75 overall and hopefully about a 3.85 departmental. It's tough...but I do have a lot of time to get it up there.

[admo415]

Thanks, best of luck.

[Your Mom]

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I'd rather shoot myself than work 85 hours a week.

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[sprmario]

If you want to work in Investment banking and want to get a few hrs break per week, try and get into a regional office. I worked for 3 years as an analyst at Smith Barney out of school (Stanford) and I probably averaged about 75 hrs a week. I had a very tough stretch when 2 analysts up and quit and I was the only one left and probably averaged 90 or so during those 4 months. My worst week was 109 hrs, which was when I was in New York for a deal. All-nighters are not uncommon, leaving at 2 am and being back at 8:30am is not uncommon.

A lot of the analysts burned out. One quit 3 weeks after starting in LA w/ me. I saw more than one analyst break down crying after being yelled at.

I left the business when I realized that even Directors in their early 40s were still putting in 65 to 70 hour weeks regularly.

I'm now doing real estate finance in Miami.

[njchino371]

Wow, investment banking does sound intimidating. Are the hours really 90+ a week? I might be able to handle 70-85 hrs, but 90+ seems totally insane. I'm in high school right now but am going to attend Wharton this fall. I have been thinking about becoming an investment banker, but the stuff I've heard about this field of work is very discouraging. Is this line of work really as bad as people seem to make it out to be?

Also, if you're an investment banker, I'd like to know what was your major in undergrad? I'm deciding between finance and economics right now. Is one more ideal for ibanking?

[admo415]

As was said before, it depends upon where you decide to work. New York is the best place (in terms of it looks the best on a resume) but it demands more hours. I also think the bonuses are a little higher in NY, but I am not sure on that. 85 hours is the average I would say, but yes sometimes you easily break that because a deal needs to get done.

In terms of major, I don't think there it matters to much. Just make sure that your perform well in school and get some interesting job experiences over the summers before the summer before your senior year, where hopefully you will be working for a bank. I am an economics major with a certificate in finance, but there are some English majors, engineers, and other types of majors from my school that are going into banking. It is during this summer that you get an idea of what working there full time would be like. It is not like a regular summer job where you spend all day doing nothing and getting coffee. You pretty much are a member of the deal team and regular demands are put on you that are also put on analysts. I think that if anyone is interested in the field they should try and get a summer position at one of the firms, since it is better to spend a summer doing it and figuring out if you like it or not than spending a couple of years.

There are some good perks, such as the high pay. In addition, at least at my firm, they give you $30 to order in dinner if you are there later than 7 pm and after 9 pm you can take a car home. Some people stay even when they do not have to in order to get the free food, as food in NYC is expensive. Also, if you have to come in on the weekends, you have the same dinner subsidy along with a lunch subsidy of $20ish dollars. Again, some people come in for a couple of hours, order food, get ready for the next week and leave (they count this towards their 85 hours a week).

Let me know if you have any specific questions.

Adam

[lhp]

[ QUOTE ]
Wow, investment banking does sound intimidating. Are the hours really 90+ a week? I might be able to handle 70-85 hrs, but 90+ seems totally insane. I'm in high school right now but am going to attend Wharton this fall. I have been thinking about becoming an investment banker, but the stuff I've heard about this field of work is very discouraging. Is this line of work really as bad as people seem to make it out to be?

Also, if you're an investment banker, I'd like to know what was your major in undergrad? I'm deciding between finance and economics right now. Is one more ideal for ibanking?

[/ QUOTE ]

If you enjoy what you're doing, you probably won't find it to be that bad. My friend who's an analyst for Merrill finds the actual financial work he does intellectually stimulating, so he enjoys it (and is able to tolerate all the stupid stuff he has to do and the long hours).
My college didn't have a "Finance" degree, so if one was interested, the only choice was Economics. Really, you should wait to make any decisions about possible majors until your get to Wharton (congratualtions on that, by the way) and then talk to your advisor, they'll be able to give you course advice better than anyone else.

[Robk]

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I'd rather shoot myself than work 85 hours a week.

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[J_V]

If you want an Ibanking job bad enough, you'll get it. I have friends w/ 3.0 GPA's that are working for bear stearns, UBS, Morgan Stanley. But you have to network hard.

[Paluka]

[ QUOTE ]
If you want to work in Investment banking and want to get a few hrs break per week, try and get into a regional office. I worked for 3 years as an analyst at Smith Barney out of school (Stanford) and I probably averaged about 75 hrs a week.

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I've seen what this lifestyle did to sprmario. You don't want to end up looking like this guy.

[That guy]

for what life is like at an investment bank, read this book (link below)...

http://www.amazon.com/exec/obidos/ASIN/0446676950/qid=1110834565/sr=2-1/ref=pd_bbs_b_2_1/104-6482411-2607140

I did it for 3 years... you learn a ton and its a great job for your resume... burnout is a serious problem in this industry but some people are just born to work 70-90 hours/week for their entire careers and others just can't do it and burn out...

at first, it is quite interesting to learn the world of investment banking and how the financial world works... but after a few years of going from transaction to transaction (earning monstrous fees for the firm), it just started to become less and less interesting.

this book is similar to what I experienced. the fact is that the job is often stimulating but also quite often terrible...

my advice would be to do it though if you can. it will be a worthwhile experience career-wise and sucking it up for a few years is good for a kid right out of school...

[GuruCane]

Kid, I don't mean to be a prick, but you can't handle 85 hrs a week of work on a consistent basis. Not many human beings can. Yes, the hours are that bad in I-banking. Try working just a few 60 hour weeks and you will understand my comment.

[njchino371]

Dude, believe me, I've handled, maybe not that much work, but pretty heavy amount of work in high school. This has been a typical day for me until the recent month of my senior year:

-Wake up at 5 AM to work out
-School starts at 7:30
-at 2:30, I had soccer in the fall, basketball in the winter, and track in the spring(I was Varsity for all three sports all four years, was all-state for track and soccer) sorry if I sound like I'm bragging
-at 6:00 I go to work till 9, then I come back and do hw till anywhere between 10-12
-on weekends I work 5 hours each day when I don't have sports meets

Over the summers I've worked at internships at Brown, Howard Hughes Medical Institute, volunteered in various organizations, and worked as well.

Look, I know what u mean about ibanking being physically and mentally taxing. But I think I just might have the stamina to handle that kind of work. Plus, I just love challenges, lol. My friends often make fun of me for being such a machine, saying I'm not human. But I love keeping myself busy and tackling obstacles. This is the reason ibanking interested me. Granted, 80+ hrs a week does sound very intimidating to me.

[Paluka]

What makes you think you would like ibanking?

[njchino371]

If I didn't make it clear in my other post, I enjoy things that are challenging and "intellectually stimulating" like poker(which I have just picked up), chess, and backgammon. High school was such a bore for me; nothing provided any challenge and most of the teachers, the materials I learned, were full of bullsh*t. I seriously think that I could of learned everything in HS by myself in a year. I felt like HS was such a waste of time. Anyway, I know I sound arrogant and cocky, but that's how I honestly feel. Now I can't wait till college, and ibanking seems like a worthy challenge for me when I get out.

[That guy]

didn't read that closely, you are only in high school?

dude, ease up on the chess and poker and drink some beer... college is about friendships and finding girls ready to breakout of their square high school image...

and don't worry about investment banking just yet.

[RunDownHouse]

Seriously. I only went to maybe half of my classes (at a top 20 school, so its not like I was blowing off basket weaving at State U), joined a fraternity, played intramurals, went out 3 times a week most weeks... and still feel I worked too hard in school. I know you didn't start a "College Advice" thread, but don't worry about your career until its a necessity. Just worry about who's going to buy you cheap beer until you're old enough to buy it on your own.

Keep a decent ( > 3.3) GPA and don't worry about anything else until your junior year at the earliest. Just have a blast. Oh, and I'd definitely take finance classes. My school had a heavy focus on econ theory, and I had a complete lack of practical finance and accounting. Not fun to learn on your own.

[Paluka]

[ QUOTE ]
If I didn't make it clear in my other post, I enjoy things that are challenging and "intellectually stimulating" like poker(which I have just picked up), chess, and backgammon. High school was such a bore for me; nothing provided any challenge and most of the teachers, the materials I learned, were full of bullsh*t. I seriously think that I could of learned everything in HS by myself in a year. I felt like HS was such a waste of time. Anyway, I know I sound arrogant and cocky, but that's how I honestly feel. Now I can't wait till college, and ibanking seems like a worthy challenge for me when I get out.

[/ QUOTE ]

You don't sound cocky. Plenty of the people on this board found high school easy and unchallenging. Most smart kids do.
I understand you like a challenge, but I really suggest you try to figure out what interests you, and find something to do in that field which is challenging. Don't just pick some field that is supposedly "challenging" in general. You can challenge yourself no matter what direction your life goes. I personally think investment banking sounds boring as hell. The only thing challenging about it is working all the hours.

[admo415]

It actually is pretty interesting. Get to see the behind the scenes view of how large deals and IPOs get done. Plus you deal with some very important and well connected people that can help you out in the future if you do a good job.

However, I do agree that the "goal" of college should not be just to get a good GPA and get a job, because you are missing out on most of what college is really for. Also, I, like everyone else on this forum, play online poker, however I do not make it my JOB, as some do at my school (Just take a look at the New York Times article for a great example). Join a frat, meet people, get drunk, have fun; dont spend all your time in your room studing or playing poker /images/graemlins/smile.gif.

[JoeC]

So what you're hinting at is... this would be a good job to take for a few years, then hopefully parlay into an acceptance into a top B-school?

BTW I'll definitely check out this book. I'm reading Rich Dad, Poor Dad now but I'll put this one next on my list.

[Paluka]

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BTW I'll definitely check out this book. I'm reading Rich Dad, Poor Dad now but I'll put this one next on my list.

[/ QUOTE ]

I think books like Rich Dad, Poor Dad and The Millionaire Next Door are handbooks to making yourself miserable They should be called "How to Live a Miserly Life But Die With Money In the Bank"

[GuruCane]

I mean HOW did I know this was the response that I would get? HOW?!? I love children.

Look kid, alll of the crap that you outlined working so hard on differs in one REALLY big way from I-banking (and big time law firms and big consulting firms). A lot of that stuff is FUN. What it is not is a 90 hour week working some godawful pitchbook for some scumbag MD who will tear you a new one if there is one single typo in the balance sheet data (I am not going to define the lingo for you--you seem to like challenges so figure them out). Then when you are done, you work on another deal for 90 hours and it NEVER ENDS! I am sorry if it seems like I am overreacting but I see your kind on message boards every single day. FWIW, you sound like the typical successful i-banker type--althletic, smart, probably a good looking guy, probably personable, etc. etc. This is great for you. But hear me now and believe me later, you will understand the soul-suck that the profession is only when you live it. Write it down son.

[njchino371]

Thanks for all the advice guys. I'll definitely relax more in college(Penn is supposedly the party Ivy), get tanked, smoke trees, get laid, and not remember who the hell is sleepin next to me in the mornin, all the usual college fun, lol. Seems like GuruCane really wants to steer me away from ibanking. I'll see; I've got like 4 years to find out what I wanna do. For now, I just can't wait to get the hell outa rural NJ, and let the good times roll.

[JoeC]

I don't really look at it this way, though I see where you're coming from.

My thoughts are, if you can live by the principles in Rich Dad, Poor Dad, you will eventually reach a point where you have enough money to retire off of, and spend as much money as you desire without doing much damage to your nest egg.

It probably helps that I have NO interest in living the typical suburban, $100,000 a year life down the line... to me, having to work long hours to make payments on the mortgage and the Lexus just sucks. If I have to live like a miser for awhile to avoid this, so be it.

[GuruCane]

I actually don't want to dissuade you from i-banking at all. You'll just come to find that folks that actually work lots of 80+/hr weeks tend to take offense at neophytes that say they can handle it. Such newbies will often try to explain that 80 hrs is just five 14-hr days and a little weekend work or some such nonsense like that. I see this attitude time and time again: "If I just work hard during the week and get in at 7am and work through lunch, I can still get home at decent hour and only work on Saturday. BAM! 80 hrs." Wrong. Do you see why? You will. I will let others elaborate.

I-banking is a fantastic career in terms of sacrifice/reward/security. Job security isn't great (but relative to starting one's own business it's pretty good), but the sacrifices, while terrible in the short term (first 5-7 years), equate to incredible rewards at the back end (millions). Only job I know of where you can retire at 38 and NEVER lift a finger again (well, maybe winning this year's WSOP Main Event, hitting the lottery or starting a company).

Now, as far as college goes, I disagree and agree with the other posters. On the fun part--I agree 1000000% If you sit in your room and study for 4 years, you will regret it forever. BUT, don't be getting no 3.2 either (no matter what anyone tells you). Get excellent grades and party as much as possible--you are young and your body can handle it. Remember, b-school and potential employers look at those grades. This is the approach I took and college represents the best 4 years of my time on this planet. Good luck to you.

[sprmario]

So cold... so cold.

[ QUOTE ]
[ QUOTE ]
If you want to work in Investment banking and want to get a few hrs break per week, try and get into a regional office. I worked for 3 years as an analyst at Smith Barney out of school (Stanford) and I probably averaged about 75 hrs a week.

[/ QUOTE ]

I've seen what this lifestyle did to sprmario. You don't want to end up looking like this guy.

[/ QUOTE ]

[midas]

Spr

When were you at Smith Barney? Did you work for any group in particular?