Investment Banking - What am I getting myself into?

Career Opportunities & Internships
1

<p>Hello all,</p>

<p>I am an undergrad student that goes to a small business-focused college right outside of Boston. My concentration is in finance, and going into i-banking has been on my mind for quite some time. However, it really became a topic of interest when a couple of friends, who are about to graduate from one of the Ivies, accepted job offers with Merrill Lynch and Black Rock back in the fall semester. Each of their total compensation for the first year came to about $140,000 - this includes base salary ($65,000 approx) + guaranteed bonuses ($75,000 approx). Simply put, the money looks really good in investment banking. </p>

<p>Because of this, I would like to get all of your input so I can make sure I know what I am getting myself into if I do decide on a career in i-banking. I hope this thread can be of use to others as well. So here it goes...</p>

<p>It seems there are 3 major divisions of an investment bank:
1. corporate finance (i think this includes M&A and such)
2. sales & trading
3. research</p>

<p>From all the research I have done about i-banking, there seem to be generalizations that</p>

<p>a. corporate finance entails extensive financial modeling and Excel-ing, working 80-120 hours a week, getting 4-5 hours of sleep a night, almost no social life for at least the first 2 years as an analyst
b. trading/sales people work on the weekdays because trading is closed for the weekends, much more drama and tension-filled e.g. testerone-infused men yelling and throwing phones, in other words very crazy
c. research is researching and recommending buys/sells</p>

<p>Given these generalizations, which I assume for the most part are facts, why is it that besides the really good money, so many college grads are inclined to go into the corporate finance division of i-banking? It seems that a lot of it is pure grunt work, and you would be stuck at the analyst position for a couple of years before most people either burn out or go back to get their MBAs.</p>

<p>I find the trading/sales division to be the most exciting, and I would love to get into that. How hard is it to break into being just a college grad? I understand that being an Ivy Leaguer is a major advantage, but unfortunately I did not study enough in high school to get into one! But I do plan on graduating with good grades (above 3.7), an internship, and a degree from a decent business college that has its own trading room.</p>

<p>Like I said, the real reason why I am posting this is to clear up my understanding of i-banking. I want to know what I am getting myself into before I take the plunge, and I hope all of you who have experience in this field can help me. Right now, I want to do it because a lot of my friends are going into it and will be living in NYC this fall, it seems fast-paced and exciting, i-bankers have this sort of prestige about them, they make a lot of money with potential for more in bonuses, I do like following the financial markets, I get to surround myself with very intelligent people, and once again, the prospect of living in NYC is exciting.</p>

<p>Sure, some of my reasons are obviosuly selfish, but I guess it can be somewhat justified. Along with answering some of my questions, I hope people who read this can perhaps elaborate more on the lifestyle of the investment banker, and what a student can expect. Thanks everyone!</p>

<p>(a similar thread is in the college majors section, but I believe it is also relevant here as well)</p>

2

<p>Good post. It’s nice to see that someone has actually researched and knows about ibanking before coming and asking questions. Usually it’s just, “what is ibanking? What major should I choose? …etc.” anyway enough ranting. Here’s some jambled information…</p>

<p>There is no guaranteed bonus of 75K, at least not for analysts, and probably not even for associates. Most analysts at a bulge bracket (top 6 firms or so) can make around 100-120k after bonuses. I’ve never heard of a first year making 140k, even at goldman which usually pays the highest. Also, last year was a phenomenal year, so last year’s figures are higher than average. If you look into per hour wages, analyst wages aren’t extremely high. Most people do go into ibanking for the money. I think a company did a survey and found that 90% of people in banking would find another job if not for the money. I don't know what blackrock (asset management) pays, but I highly doubt its 140k either, since asset management firms usually pay less than ibanks.</p>

<p>Corpfin, s&t, research are the 3 major components of ibanking, although there are other divisions such as operations or IT. When most people say ibanking, they usually refer to corpfin (ibd division) as opposed to s&t or research, so when most people (who know what theyre talking about) say I’m going into banking, you can usually assume corpfin.</p>

<p>Corpfin is usually associated to be the most white shoe/white collar lifestyle. S&T on the other hand requires more of a personality. You definitely need sales experience and good communication skills, and you need to have extremely good instincts to do well. Corpfin is rather inefficient for analysts, since you get a majority of your work at night and are expected ot complete it in the morning. There is however overall pressure at an analyst position rather than s&t. There are a lot of reasons why people choose corpfin over s&t, less pressure is one of them. Another reason is that you get more experience overall in the corpfin department. An analogy would be corpfin is like the jack of all trades, whereas trading you are a specialist and know mostly about that. Also, sales and trading are different, so make sure you know what you want to do although they do work hand in hand (and with conflicting interests). There are more exit opportunities with corpfin. If you go into M&A for example, that prepares you especially well for private equity, which is a very very elite field in which few ibankers can even break into. Research is also important, but I just find that kinda boring hehe.</p>

<p>If you want to be a trader, you’re going to have to do really well as well to become a prop trader, someone who is able to tap into the resources of the bank and make trades on their own accounts. If you don’t do well, you may end up just as a normal trader who simply executes commands. Most traders don’t want to do that, but most of them end up doing it. Thus, in my opinion trading is a bit more risky than corpfin, with less promotions and less exit opportunities. However you do work much less with approximately the same compensation.</p>

<p>It’s not too difficult to break into ibanking from a non-ivy or target. Do you go to Bentley or Babson? Either of those schools are amazing at business, and I know some people personally (and some from these boards) who got into ibanking from there as well. Make sure you express an interest during the summer and try to get some internships, and try to contact some alum who will help you get a position.</p>

<p>I also recommend the vault and wetfeet guides, so check to see if your school has a subscription to the sites. I’m not sure buying them would be worth the money though, as there are tons of resources online.</p>

3

<p>Research is s#!t you cant make over 100k if you are thrown into research...that kind of money is only there in the IBD or maybe at S&T depending on your peroformance...</p>

<p>"It’s not too difficult to break into ibanking from a non-ivy or target"
I have to seriously laugh at that......</p>

4

<p>There is the most money in S&T if your good at it.</p>

5

<p>How competitive is it to get into S&T relative to say corporate finance?</p>

6

<p>Still very competitive</p>

7

<p>dpa38d2u, Goldman does pay the highest but thats mainly for the higher up people. When your starting out at the analyst level Goldman actually pays less (relative to other top BBs) because people are willing to there for less just for the name.
Total compensation can also reach 140k and I can pretty much guarantee that if you are an associate you wil get much more than a 75k bonus....</p>

8

<p>It's important that you don't do i-banking just for the money - you will probably be miserable. Some people really have a strong interest in Wall Street/i-banking and it works out well for them. If that sounds like you, try it because you will at least be spending ~100 hrs/wk doing something that you like. If you don't know for sure that i-banking is for you, there are other options where you can be successful. </p>

<p>Just because it might be 100K/year, you can't compare that to other jobs since you're working so much more.</p>

9

<p>
[quote]
Just because it might be 100K/year, you can't compare that to other jobs since you're working so much more.

[/quote]

Well thats just for entry-level. IB also has some of the best growth, income-wise, of any job. Sure, starting off you'll make like 100K+, but you could potentially make millions later on.</p>