<p>Hello. I was just talking with one of my friends who works with Goldman Sachs, who graduated from Harvard three years ago. She told me that despite IB being already competitive and cut throat, it is a profession where after a number of years, you will have to quit it because it is so difficult. And after you quit the job, the pay goes down in most cases if you decide to go into the corporate world where most people do go. IB looks for fresh blood... those who graduate from good colleges go there and then by their 30's have to find another job, that may not pay as well. I need some advice as to whether this is completely true...is she trying to scare me about IB? What do u guys think?</p>
<p>See the thing about IB is that most people in the industry go in fresh from undergrad and then exit after their 2-3 years as an analyst either because they are sick of the job or couldn't cut it. IBs are a pyramid structure thus the higher you move up the less positions available...the ones who cut it stay, if they want, until they don't cut it or become career bankers. The majority though exit after analyst role or associate role. These people normally go into PE,VC,Hedge funds where they might have a comparable compensation. If they decide to go into the corporate world they will take a pay cut but will most likely be in a great position. For example, I am currently interning at a Hollywood studio in their corporate development department. The positions are structured as follows:
-Analyst
-Sr. Analyst
-Manager
-Director
-Executive Director
-VP
-SVP
-EVP</p>
<p>If I were to graduate and come here for full-time directly from UG I'd start off as a Sr. Analyst (just because i'd have some summer experience with the firm) and it would probably take me about 6-7 years to reach the Executive Director position. However if I graduate, go do IB/management consulting for 2-3 years and then come back to work at the studio I'd be in an Executive Director role...I'd take a pay cut but I would have saved myself a lot of years of climbing the ladder...then in the next 10 years I could possibly rise to EVP where the BIG bucks roll in (on average the EVPs here make a few million per year). I'd reach that role 3-4 earlier by going into banking.</p>
<p>To me,
IB is a great challenge because you are exposed to a lot of different industries and are given tons of responsibility early on. In other places, it would take years to get the sort of opportunities available to IB analysts, associates, and VPs. Particularly in the area of Corporate Finance and M&A where your skills are transferable to any industry. </p>
<p>That's a very big trade off. The long hours wouldn't bother me as long as the work is challenging and interesting. Heck, I'd be willing to go in as an analyst for less than what others are getting as long as I'm given the opportunities to learn about their clients needs.</p>
<p>If I manage to get into IB at a top firm, I'd challenge myself to reach as high as the rank of Vice President. Of course, that depends on how well I perform as an IB analyst for 2 years before I leave for either Strategy Consulting or simply get my MBA at a top business school. After that, it'll depend on which IB wants to hire me as an associate.</p>
<p>Well that's my take on it. I'm just an undergraduate hoping to transfer to Columbia's GS program. So for now, that's my priority. </p>
<p>By the way Psid06, what IB division is your friend working in? This would really help to determine whether it'll be a long term option for you or not. Regardless, look at IB as a finishing school for business administration. Depending on what interests you, the experience will be better than what you'll ever get at school, undergrad or grad. Top grades are a must. It's better to get a 3.8 GPA in something that you have a passion for than a 2.8 GPA in a major that you don't like.</p>
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And after you quit the job, the pay goes down in most cases if you decide to go into the corporate world where most people do go.
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<p>You DO realize that when you work in the corporate side of things you're usually working LESS hours. It's natural to be paid less for working less. A banker may be doing 80-120 hours a week but someone in a corporate dev position will only be working 40-50 hours a week. Many people actually enjoy being able to work less to have more time to devote with the families. Also they're able to have more of an impact on how the company operates, their opinions matter and can change the direction the business is going in.</p>
<p>Bern makes great points about corporate career advancement also.</p>
<p>This "bad news" shouldn't be bad news. It should be known by everyone going in. Corporate jobs are just one exit opportunity. If you're able to be ranked high in your analyst class/at a great group with in a bank you have a good shot of being able to switch to Private Equity, a hedge fund, or a venture capital. Pay is usually comparable or better.</p>
<p>yes-- i do realize that the pay is less... in fact that is what i am commenting on. In many cases u r let go by these ib firms when u get older or u choose to quit because its too much to handle... so then u have to find another job... and if u have not done incredibly well as an analyst... then u go into the corporate world not by choice-- but bec that is the only alternative.</p>
<p>The reason I was asking for commentary is because i am at a difficult point in my life- trying to choose between medicine and business. I like them both about the same- not solely because of the compensation, but because they are challenging and meaningful professions.</p>
<p>Private Equity, a hedge fund, or a venture capital</p>
<p>what are these?</p>
<p>I'd like to know more about hedge funds, and I have heard that hedge fund managers make large amounts of money. Is that true?</p>
<p>ok, everyone, what exactly does an Investmant Banker do? Figure out ways for wealthy people to invest their money ? Work with the stock market ? (Is it related to accounting in any way?) Why is it such a "tough job", is it becuase people work on commission and they need to hustle as many clients as they can ?</p>
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Yes-- i do realize that the pay is less... in fact that is what i am commenting on.
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<p>You were commenting on that but you never bothered to mention important factors, such as the fact that you'd probably be working nearly half the hours a banker works and that your role within the company may be more prominent in terms of making decisions.</p>
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Private Equity, a hedge fund, or a venture capital
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</p>
<p>All pretty much tough careers to break into.</p>
<p>Private Equity is working on the buyside. Your firm takes pools of capital contributed by investors and chooses to invest it in private businesses or to take businesses private. The pay is comparable to IB pay and sometimes it can get much higher because of carry, you're able to participate in the investment. Work's more interesting also because you're actually investing money, you're not advising on a transaction like you do in IB.</p>
<p>Google KKR, Bain Capital, or The Carlyle Group for more info.</p>
<p>Hedge funds involve pools of capital too, but this time it's used to invest in equities,fixed income, currencies, commodities, etc. There are a number of strategies that are employed by hedge funds. Some are long/short, some are event driven, and so on. Hedge fund profits come from a 2 and 20 system where 2% of total assets managed are used to maintain the fund and then 20% is taken from the profits they make from the managed assets. This is very good because it motivates the fund managers to work hard and bring in good returns, unlike mutual funds where you're paid no matter what. Flipside is that if a strategy isn't hot for the year you can be paid poorly. Good example is the fact that Convertible Arbitrage strategies did horrible in 2005. Goldman Sachs has the biggest hedge fund right now with $21 Billion dollars under management. Yes HFs can pay a lot, the top two managers of 2005 took home something like 1 billion dollars.</p>
<p>Google SAC Capital or Citadel Investments for some more info.</p>
<p>Venture Capital involves taking pools of capital and investing it in start ups. Usually they find individuals with good business ideas (mostly in tech, biotech) and they provide them with capital and advising to help their business start up and thrive, later the money is paid back with things such as board seats or preferred stock. Facebook for example is venture backed, Vonage is also. You may say that Vonage is a failure but even at the most expensive stage in investment the VCs were able to make about 50% returns. Recently Vinod Khosla reported how much he made when he personally invested less than 1 million dollars or had a board seat with the companies, typically he made 197x his investment.</p>
<p>Google Sequoia Capital, Elevation Partners (Bono of U2 is part of their team), or Khosla Ventures for more info.</p>
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[quote]
ok, everyone, what exactly does an Investmant Banker do? Figure out ways for wealthy people to invest their money ? Work with the stock market ? (Is it related to accounting in any way?) Why is it such a "tough job", is it becuase people work on commission and they need to hustle as many clients as they can ?
[/quote]
</p>
<p>Investment banks assist public and private corporations in raising funds in the capital markets (both equity and debt), as well as in providing strategic advisory services for mergers, acquisitions and other types of financial transactions. Many banks have sales and trading sides which work directly with the market. IB is working on the sell-side which means you're trying to sell your services to businesses. That's why bankers try to break into the buy side. It's a hard job because the hours are long, think 80-120 hours a week. It's true, it's not a lie. Around deal time it can be normal for someone to pull a double or all nighter to get work done/revisions made.
<a href="http://en.wikipedia.org/wiki/Investment_bank%5B/url%5D">http://en.wikipedia.org/wiki/Investment_bank</a></p>
<p>they all sound really boring. management consulting would be a lot more interesting.</p>
<p>Heh you will be shipped off to some plant in Idaho to look at every nook and give suggestions which many times are not even implemented by the management. Oh yea very exciting. </p>
<p>You can make something as boring and exciting as you want. Poker is said to be exciting for the laymen but for pros its a day to day grind as they stick with a system with positive expectancy.</p>
<p>why someone would be more interested to be on the sell-side than the buyside just baffles me.</p>
<p>How much work would it take, and how long would it take to become one of those top hedge fund managers? What would I have to do?</p>
<p>When you are on the line its less about minimum hours than about skill. No one will care if you worked 8 hours a day, 12 hours a day or 24 hours a day. If you post good returns investors will come to you.</p>
<p>Its basically skill all over again. People can't just make it through by doing "homework" and doing work assigned. Some are geniuses who started off a fund during college while others started one in their mid 40s-50. And of course most money managers and market participants do fail to beat the benchmark index and eventually close shop.</p>