Investment Banking

Parents Forum
1

<p>I am interested in seeing how parents feel about their D or S pursuing a career in investment banking. Obviously the financial benefits are palpable, but there is certainly an opportunity cost: drastic lifestyle sacrifices have to be made. Current college students feel that it's a great field to be in. Disregarding the current economic downturn, I just want to see the general perception regarding this career path. </p>

<p>Oh, and before anybody says something like "investment banks are evil and self-serving," please have at least a fundamental understanding of what an investment bank actually is and its role in our economic system. Thanks!</p>

2

<p>worked in a senior level HR job for a prominent IB for a few years. A job in IB requires an incredible commitment of time and energy. Working till 3am is no big deal. Many burn out after just a couple of years. The people I met worked VERY bright but also very competitive, cut-throat and a bit immature. Very much driven by money and prestige. I have to say that overall, I didn't LIKE these folks very much.
The staff on the "buy" side were a bit more balanced and less frantic. Lots of engineers who decided to give finance a try and found they were quite good at it. Still very much driven by money though. It's pretty wild...these folks would get upset because their total pay only went up a million from the prior year. No perspective at all.<br>
My s attended a round-table at his college hosted by two guys from Goldman Sachs. They provided an account of a typical week at GS. My s called me later that night and said..."Mom...these guys are out of control".
Hey, they're just being honest. Be careful what you wish for...</p>

3

<p>Working in an IB environment, everything gets sacrificed on the altar of MONEY. Money is your god, you spouse, and your friend. This is not a bad thing. This is merely the only way to get ahead in that business.</p>

4

<p>Some students are fully aware of the craziness of the lifestyle, but are looking to IB as a brief interlude during which they will make enough money to pay off their undergrad debts and save before they go on to grad school or their preferred career path.</p>

5

<p>I am surprised that so few people understand the guts of investment banking. Lots of tedious financially oriented work, supplemented by sales efforts that are essentially cold calling. </p>

<p>This is not to say that these financial intermediaries don't perform an important function - the best of them do - but it is a field. like sales, that should attract a bright few that have the personality for it. Too many are attracted by the money.</p>

6

<p>Investment bankers do indeed work very long hours, but the senior guys I know absolutely adore what they do. The hours are in part because they are obsessed with the job--it is their play. Now admittedly, they have all been doing it a long time so others who may not love it so much probably changed careers early on. There is a ton of travel and a ton of entertaining. If you don't like to play golf and go out to breakfast, lunc, and dinner with clients on a routine basis, this is not a good field for you. At a typical conference, our bankers could float through as many as six parties a night. The spreadsheets showing who needed to be where at what time to cover these events was mind boggling. Because a good rain maker banker is on the road 4 out of 5 days, much of the pitch book and financial spreadsheet work is done evenings and week-ends, with heavy support by analysts (junior folk). The young analysts are treated like slaves, so that can't be a lot of fun. You would have to like something about the job to stick it out through that three or four year enslavement period. But the job itself is challenging and, for the right personality, I would say thoroughly enjoyable.</p>

7

<p>For people who love a constant challenge and salivate at constant pressure bearing great returns, I-Banking is for you. Life never stops. If your kid is too frail of mind for this, then I would strongly urge another field because he/she will burn out rather quickly. </p>

<p>Your S or D should have very strong inter-personal skills, charm, ability to bullcrap, and preferably, actual talent. The problem with many I-Bankers is they have the first three but not the fourth, leading the general perception of the field to be filled with brash, arrogant pricks who know little about the actual state of the financial markets (sadly, not entirely off for many of them).</p>

<p>Also, keep in mind that the first 2-3 years will be absolute hell as work is thrown at you any time in the day, and your social life will suffer. If they don't cope well with continuous stress and don't know how to release it in short periods of time (quick video game, working out, running, etc), then it's also probably not the field for them.</p>

8

<p>Those are some of the most accurate things I have read about the topic. Also see some of the books such as Liar's Poker, Barbarians at the Gate, etc.</p>

9

<p>If I get paid the millions like some bankers, I'll move my bed into my office and live there and cut off my social life for a couple of years. I don't see how you can burn out. Millions of people around the world going through worse. It can't be worse that going to jail or suffering in a poor third world country.</p>

10

<p>It's not bad. What it is is addictive. You get used to the adrenaline rush and nothing else afterwards is as sharp for you. People who talk about doing it for just a few years will never make it. They are not the right personality types.</p>

11

<p>You will make good money, but you won't make millions for a very long time, if ever. One of my interns who got an investmenting banking job in NYC after college made $250,000 with bonus in his second year. He also got ulcers and migraines. He was uncertain he could make it through the third year, after which he gets fired anyway along with all the other lucky third years who made it that long, with the expectation they will get an MBA and then come back for several more years of servitude. At his firm about half of the class is washed out after year one and another half after year two, so the one-third left standing are made to feel special as they eat their pizza in the office at 2:00 am. Luckily for him the meltdown in the financial markets actually eased the burden on the analysts recently, but the bonus may be nonexistent as well. </p>

<p>If you come back after getting the MBA, you will be allowed to travel and attend meetings (ie actually see clients), but will still not be paid the big bucks until you are the one who brings in the relationship. That may take ten years or may never happen. For every rain maker banker, there are 6 or 7 other bankers who do most of the work (combining rain maker skills and financial talent are not necessary at a large firm although some guys might happen to have it). </p>

<p>The day to day bankers are not highly paid relative to the rain maker since doing the work is not valued nearly as highly as bringing in the business. (Think movie star versus cameraman.) To be a good day to day banker requires great people skills, a high tolerance for travel, attention to detail, strong writing and quantitative ability, and the talent to creatively problem solve. On pitches, I used to describe my job as figuring out what was wrong with the deal and the banker's job was to fix it. Bankers should find crises exhilerating.</p>

<p>The rain maker, in contrast, basically is paid for his ability to sell. He may be an absolute prick. The problem child rain maker is a well known personality type. Bringing in new business is a highly competitive activity and takes the same personality as a politician. You need to look fantastic and be able to pitch complex messages as if they are extremely simple (think politician again). Once the business is won, the rain maker will only be peripherally involved--typically in the event of a major dispute or crisis--and he may be a bull in a china shop then. A day to day banker will run the document review sessions, quarterback schedules, etc. Many of those meetings will be at the client's offices and many will be via phone from airports, rental cars, and hotel rooms. I have spent hours in rental cars with investment bankers and they do not waste time in idle chatter to co-workers. They go from one client phone call to another.</p>

<p>In terms of a social life, once you are allowed to travel you will have all the social life you can tolerate, but it will always be with clients. You need to be one of those people who love the one you're with. This job is very much a life style choice, not just for one or two years but for an entire career. If you don't have the skills needed (either for rain maker or day to day banker), you probably won't make it through the vetting process. It's not something you can easily fake.</p>

12

<p>Is it a workable field for female if she likes to work under pressure?</p>

13

<p>It can be for the right girl. I knew it girl from Dartmouth who was very athletic, comfortable around men, and could outswear and outdrink most men. She had no problems and enjoyed it but she was pretty unique.</p>

14

<p>I have worked with a few women in the field, and they were successful, but they remain a minority (maybe 2% in my experience--none at my last firm). I believe covering a region in the northeast would be easier to break into for a female than the southeast. There are so many powerful women working in NYC, it is a nonissue there, in my opinion. I found swearing to be more common on the trading floor than with bankers. However, a decent golf game (consistently breaking 100 at minimum and ideally closer to 80) would be important. A lot of business is conducted on the golf course. The rest is over meals, but I know of a couple of tea-totaler bankers. Drinking isn't required anymore.</p>

15

<p>I would like to give another perspective. I would much rather have my child have a career in investment banking than in medicine. In both careers you have to work very hard and make sacrifices. Unfortunately, the majority of the people in this country respect only one thing -- money, and investment banking is where the money is.
I pity the poor student who finishes college then goes to medical school to evenually practice primary care.</p>

16

<p>S was in IB for three years right after college. Despite the long hours, he found the work challenging, exciting and stimulating. He really loved learning about the workings of high finance.
He now works in a hedge fund, recruited by a former boss. Less hours, but more pressure.
He found most people have no time for golf, but lots of drinking, especially at the top.</p>

17

<p>Can anyone describe a typical day for an IB? Like what exactly does a banker do to earn money?</p>

18

<p>I have worked in IB for over 25 years, from the front office (banking, M&A) to deal structuring and now running a few technology groups to support the business. It takes a special kind of people to work in the business, not necessary the most balanced kind of people. I worked very long hours the first 10 years of my career, but I enjoyed my work and made some life long friends at work because of the hours (they were my family, we worked, ate, sometimes slept in the office together). I got to work with some of the smartest people. I have met some very slimy people, but I have also met some people that would give the shirt off their back. I still remember a guy needing money to pay for his wife's experienmental cancer treatment, his boss just out right paid for it (he had the means and also the will). I have colleagues that would delete my files while I wasn't at my desk, but equally I've had colleagues that would stay late with me to help with my presentations.</p>

<p>Someone asked if it's possible for women to be in this business. It is not easy, but it is possible. I am an an Asian woman. I have worked with head of sales, research, technology that are women. Most of them have families with children. They do it by having a large household staff - multiple nannies, housekeeper, cleaners, drivers... But many of them also bake cookies themselves for their kids' bake sales and take a few hours off for their kids' field trips or performances. These women, aside from being very smart, are very intuitive and social. They are good at "manipulating"(for the lack of better word) situations to get what they want. Most senior women I have worked with do not need to out swear or out drink "the boys."</p>

<p>I have taken time off and changed my role in the business because of my personal and family priorities. I have also tried to go into commercial bank or the buy side - to get out of the rat race. I found I was happiest working in the IB environment (whether it's front or back office) because of the pace. I am not one of the most successful women in IB (if you measure by money), but I think I have my work/life pretty well balanced. I just came back from a week long trip to Europe (having a hard time sleeping due to the time difference), but is very excited about driving up to Ithaca to see my daughter for the parents' weekend. </p>

<p>My work has given me a lot of personal satisfaction, and it has also provided well for my family. With all the good, bad and ugly my kids have seen in my career, my older daughter is considering going into IB. I think she has the smart, social skill and the drive to do it. At the same time, it is not something I would consider for my younger daughter. </p>

<p>It is not an easy route. You can't do it just for money. Money can buy a lot of things, but it can't buy your sense of fulfilment, self worth or ultimately your time in this life. You should go into IB because you enjoy the pace, challenge, and the people. </p>

<p>Now I have to wake up the family for our drive up to Ithaca.</p>

19

<p>How about being a quant jock, a financial engineer? How is it different? What about hours, nature of work, pressures and pay? Can someone enlighten me since my son is planning to go into this field? Thanks.</p>

20

<p>I can try to answer the typical day question in one little corner of the world. Most of my career has involved unrated muni project finance deals, although I have also spent some time with corporates and rated muni deals. Note that the life of an investment banker on the corporate side and even for rated munis it is an entirely different process, which is one of the reasons for the disparate responses. Asking about what an investment banker does is kind of like asking what a doctor does. It depends.</p>

<p>Anyway, for this sector, to bring in business, a banker (also known as a calling officer) calls on as many potential clients, existing clients (for repeat business), and people who refer clients (consultants) as possible. For my two former firms (I am now retired), this absolutely includes a lot of entertaining (golf, NASCAR, Masters tournament attendance, concerts, skiing, meals, as well as quick in-office meetings). These activities are necessary for relationship building. The primary goal is to be selected for business in a noncompetitive situation, meaning xyz has a financing need and hires our firm because they know us, trust us, and like us better than they know, trust, like the competition.</p>

<p>In other cases, however, bankers are hired through a competitive request for proposal (RFP) process. About 90% of the RFP pitch book is boiler plate info about the firm, put together by support staff, but there will be a few questions on the proposed plan of finance or client's credit that require the banker's thought and attention. He will have to review audits, run various financing scenarios, consider derivatives options, etc. If selected for orals the banker will also oversee the production of a shorter pitch book. Before orals, time would be spent talking to everybody involved in the decision to get a read of the political landscape--could anybody exert pull with the board, who was the key decision-maker and what are his/her quirks, which way were the consultants pulling, what was the crux of the pitch, who would come on the pitch, etc. The pitch itself would be only 15-20 minutes. All of the above is what a banker does to win new business. </p>

<p>At the time the business was won, the banker might not know whether or not the project was feasible. Some projects might not ever happen, so a good banker doesn't go after every deal. Spending a year on a deal that can't be financed is a huge time sink, with zero financial return. Anyway, assuming the deal is relatively sound, it would take 4-6 months to bring it to market. On weekly calls, time would be spent on legal document review, feasibility study review, getting needed approvals from regulatory bodies, etc. (Lots of lawyers involved: bond counsel, underwriter's counsel, issuer's counsel, borrower's counsel...) Once the deal is ready to sell, the banker oversees pricing, sales, and closing (a whole book could be written on that). A successful banker might only close one to three deals a year and the pipeline for new deals could extend for several years, i.e. extremely long lead times. </p>

<p>Personally, I liked the structuring and problem solving, but didn't like the politicking and entertaining. I will never go out to eat with the family as a form of entertainment because it reeks of business and negative connotations.</p>