You can probably think of 101 reasons to go into investment banking but most of those reasons do not hold up once you’ve made into investment banking and have experience the lifestyle and hours long enough to tell about it. Below is a list of why you really might want to consider going into investment banking and, yes, they are in order of the most pressing reasons to the least pressing reason.
1. Great way to enter Private Equity & Hedge Funds
I’ll let you in on a little secret… Investment banking pays peanuts compared to Private Equity and Hedge Funds, full stop! However, to get into Private Equity or Hedge funds you need experience and previous investment banking experience is the best type of experience for PE roles and Merger Arbitrage Hedge Fund roles. In fact, some PE fund and Hedge funds recruit exclusively from ex-investment bankers.
2. Great pay
Since you’ll be working most hours of the day you won’t have time to spent it and it becomes very easy to save.
3. Quickly pay off student loans
For those who borrowed money to peruse higher education then paying back your debt will eventually be an issue. With a high salary and bonuses every 6 months, you can quickly pay it all back in a fraction of the time it would take others to do so.
4. Get the best business education possible
It’s true! You will learn a lot about the inner workings of the business world (real world business.) In 1 year of investment banking you will learn more than you could have spending 10 years in business school. You will interact with large multination institutions to sometimes even new cutting-edge start-ups, you’ll even get to listen in on conversation that will influence markets, industries and sometimes even see your deal being discussed on the news. Now these are rare, but it does happen. If you enjoy learning about business, then this is definitely an area for you because you will never stop learning and every new client will surprise you with something interesting in one way or another.
5. Your oyster into any field of finance & business
Personally, if you were to ask me what life is like after investment banking I would say “freedom” because you’re no longer working insane hours and you can pretty much apply to any job in the finance field and because of the skills you’ve obtain you will be shortlisted for a first round interview automatically… well usually. After banking, I manage to land roles in Audit, Accounting, Tax, Treasury, Risk & Compliance and management consulting.
6. It really is different every day
You’ve probably heard this all the time. “my job is different every day” and from my experience being in investment banking and having spent time in other finance filed, Investment banking takes this to a whole different level. One day you could be going through legal documents, the next chasing down your MD in an airport to give them an updated presentation, and the next day your browsing amazon for 2 hours while arranging a time for 6 PE vice-presidents to meet on a virtual call to discuss a potential deal.
7. Your work matters
Contrary to popular belief but some investment banking roles such as Debt Capital markets are essential to an economy and actually impact lives on a day-to-day basis. This is where some bankers are helping governments raise money to build new infrastructure, hospitals, roads or even disaster relief programs such as the Haiti Earthquake which was made possible because of investment banks (at first then donations came). Now, I know what you’re thinking, and yes banks do not provide their services for free and yes, there are some bad actors as we have seen by the famous Malaysian sovereign wealth fund scandal where Goldman Sachs bankers took advantage of the Malaysian Government. Moreover, sometimes when a company has borrowed too much and get in financial distress to the point where they will have to close up shop and fire 12,000 people, have no other choice but to approach an investment bank to restructure their debt. As a result, the company or a profitable part of the company will remain and instead of 12,000 people losing their livelihood only 3,000 might be let go.
8. Make lifelong friends or even find your partner
With the amount of hours, you’ll be working, you will eventually drift apart from your old friends who do not understand the investment banking lifestyle. Don’t worry you will make new friends that are in the same position as you and some will even end up being your best man or brides maid. Speaking of wedding, it’s no surprise that couples start to form specially with the amount of late nights spent in the office.
9. Learn how not to sleep and get work done
I really don’t need to say more.
10. Career pathway
Investment banking is not a job, a job is something which you can get anywhere and its usually a 9 -5 type of gig with very little upward mobility and you are easily replaceable. Investment banking a is career which means you are on a corporate ladder with a lot of upward mobility and this provides stability and security. You will develop a skill which is in need and you can go to another bank relatively easy and still demand the same or a higher salary. However, that stability does come at a cost of working long hours. But again, every career profile from Doctors, lawyers … all require their junior staff to put in heavy working hours.
11. Deal making can be exciting
What differentiate investment banking from other finance fields, is simply deal making. Investment banking is all about client relationships and making deals at the end of the day. Some people are natural attracted to deal making and really enjoys the challenge of influencing people and putting a deal together when all the odds are against them. If you are this type of person then great, you are a perfect fit for investment banking.
12. Playing on excel and Financial modelling
For those that are very technical centric and enjoy the financial modelling aspect of this role then there is good news and bad news. The good news is you will get to play around with numbers and excel all day. The bad news is, although you are building financial models it’s usually under the strict guidelines of your client’s specifications. Its only when you move into buy side roles e.g. Private equity, that’s when you really have the freedom to go crazy on excel and add 101 assumptions on how revenue is going to perform in the next 5 years.
13. Get a skill in financial modelling and valuation
Again, because working crazy hours building and grinding out financial models one after another will strengthen your financial modelling skills. This skill is valuable not just in investment banking but also in Private Equity, Hedge Funds, Corporate development, Management consulting… and the list goes on. So, if you get fired… don’t worry you can still get another decent paying job which will require the skills you have developed.
14. Surrounded by very smart and talent individuals
The very first thing you will realise on your first day of training or even on the job is that everyone else around you is highly motivated, extremely intelligent and savvy. You are no longer the smart one in the group, if anything this is humbling. When you’re surrounded by other high achievers it also pushes you to perform even more. You will often exchange horror stories with one another about working 36 hours straight or how your MD is completely incompetent. The good news is, because everyone is in the lion’s den, there is a strange sense of comradery that starts to build up and when you need something done and you’re not in the office (because you overslept) you can always call on one of your fellow friends to help out.
15. Credibility in the start-up world
This is a strange one and something I have just been informed by a VC friend. I always suspected it but because investment bankers understand how to communicate with investors and know what metrics they look for in investments. It becomes slightly easier to raise capital for a start up when you have that advantage.
16. Confidence & ego
One of the biggest surprises that I have ever seen in investment banking was with an intern I used to work with back in 2014. He was a shy and reserved candidate and from my conversations with him, he was from a modest background. After 3 months of investment banking, and after getting a few pennies in his back pocket he became a completely different person. He was more confident, outspoken and even started to dress better than our MD. Now, this is not necessarily a common phenomenon, but this is usually referred to as money confidence. Even though it was only an internship, but this experience completely changed his life and his outlook on life. I’m not saying that everyone is going to experience what he went through, but it is something to take into consideration. Now, there are also stories of how people become egotistical asshole as well, but they are common and less memorable.
17. Learn to work with difficult personalities
You will worth with a lot of personalities in investment banking. You will learn to quickly size up someone and know exactly how to deal with them. They can be a high-powered finance rock stars to a super sceptical PE associates that wants to discredit your work. Working with a range of people, you will develop the skill set, patience and persistence to communicate with anyone and even learn to stand up for yourself.
18. Developing amazing work ethic
When you are working on a deal in the millions, hundreds of million and even billions, every little detail counts and that means the marketing material which bankers prepare has to be error free. Any error no matter how small will reflect poorly on the bank and could cast doubt on the junior banker’s ability to even work on future deals. That level of pressure further reinforces junior bankers’ paranoia to triple checking everything they do before they hand it in. This level of constantly checking your work ensures deliverables are near perfect and build a solid work ethic.
19. Networking
After spending some time working in a specific product or industry division within investment banking you become accustom to the industries norms and develop a pretty good relationship with the management team of large companies (clients) with an appetite for M&A deals. Some will try and monetise their network by either becoming a consultant or starting their own boutique bank servicing a handle for clients. Alternatively, your network is a great way to jump from the sell side (investment banking) to the buy side.