<p>With all the discussion about investment banking, it sounds like a great career. However, what are the NEGATIVE aspects of that profession?</p>
<p>you'll die at like 55</p>
<p>Hours, pressure, backstabbing, dealing with jerks, lying, etc etc</p>
<p>It serves no societal purpose.</p>
<p>it is not a service to anybody except yourself</p>
<p>From what I have heard from people who are in it, the hours are extremely long, the stress level is extremely high, and many colleagues are unpleasant.</p>
<p>80-100 hour-weeks, extremely intense environment, generally unpleasant colleagues, although the latter is a bit of a generalization.</p>
<p>Besides the obvious things, which have been stated (the hours, the pressure, friends and family filing a missing persons report on you, working with Gordan Gekko types minus the charm and personality, etc.)</p>
<p>What's "bad" about i-banking is the overall risk and uncertainty. Its not a stable career (no matter how great you think you are). You are at the mercy of many unpredictable variables (business cycles, downturns, etc). </p>
<p>As an example, take a look at the mortgage related products / businesses (CDO market, etc.) - i-banks are slashing those departments like they are bad habits. If you happened to be one of those unfortunate folks, you are literally hitting the streets without a job overnight.</p>
<p>In other words, its not for the meek. You can find yourself working for a manager / boss who will not go to bat for you, you can just be flatout not that good, you can buckle under the pressure, etc. etc. I mean, let's face it, there are much more predictable, stable careers out there.</p>
<p>From a more longer term perspective, its really the "up or out" M.O. of the investment banks that put the "squeeze" from another side, further weeding out people. In other words, its like a corporate "musical chairs" -- except that its at an accelerated pace (vs. a normal corporation) -- the higher you climb, the smaller the number of "chairs" available. If you aren't pushed out / flat out fired by the time you make it to Managing Director, then congratulations. You've made it... For this year anyway (there is always next year to find a reason to get rid of you and another year that you have to prove yourself and justify your existence from a cost perspective). Which brings up another point: office politics. By the time you reach officer level (at most firms this is the VP level and beyond), its really all about office politics. Who do you know? Who goes to bat for you? Who has it out for you? Who is your competition? What are they doing behind your back? Do the TPTB like you? Do you have what it takes to be a member of the club? Again, another element that is really out of your control.</p>
<p>This is why the year-end bonuses can be so outrageous at i-banks. Although they say its for a great job done this year (and it is part of that), but what the i-bank is really saying is that it values you, you and your department had a great year and that they want you to stay on for another year. The easiest way to "push out" a higher level i-banker is simply to underpay him at bonus time. If he feels he is being underpaid vs. his market value (and he is right), then he can just pack up and move across the street at another i-bank and get paid his due. But more often than not, if he is consistently being underpaid, he is probably underperfoming (and its yet another way an i-bank can get rid of you -- after all, why put up with all of the downside, if at the end of the day, you aren't going to get compensated for the upside?). Which brings me back to the point about year-end bonuses. Its really about "SHOW ME THE MONEY" right now. Right here. Because who knows what's going to happen next year? Could be another blow-up in the markets. And what was "hot" one year, could be trashed next year. There is no "loyalty" in this business. You are only as good as your last deal, the last piece of business you brought in. So people want to get paid when the "getting is good".</p>
<p>So why do people even bother you ask? Its like anything else worth doing in life -- there has to be a reasonable "payoff". And I'm not just talking about the money (though of course this is part, if not a large part, of the appeal). There is also the prestige. But its not just about the money and prestige. At a certain point while the i-bank is taking its "pound of flesh" from you, you are certainly in a position to leverage this opportunity -- whether its to get into a top B-school or jump over to a better opportunity (like joining a PE firm, another high paying more stable corp. finance job, etc.)</p>
<p>Finally, having solid experience at an investment bank is a great unofficial qualification / credential that can go a long way both as a stepping stone and as a way to "validate" your ability to make it in a highly stressful, highly competitive work environment. Its just like any other well accepted credential --> graduating from a top school (e.g. Ivy), working at a BB i-bank (e.g. Goldman or Morgan), graduating from a top B-school (e.g. HBS or Wharton), getting an offer to jump over to the buyside (e.g. PE firm / hedge fund) etc., etc...</p>
<p>I know that I got my "money's worth" paid back to me in spades for my "tour of duty" at a BB i-bank.</p>
<p>If quality time with one's spouse and family are important values to someone searching for a career, is investment banking an option, or does the investment banker "owe his soul" to the company?</p>
<p>I would especially agree with some of the_prestige's last points. Going into investment banking is a great way to get a solid background and work your way towards a niche that best fits you in the future. It's not like you need to consider day 1 or year 3 if you want to strive for becoming a managing director.</p>
<p>
[quote]
It serves no societal purpose.
[/quote]
</p>
<p>Disagree, tsdad</p>
<p>No societal purpose in what sense?</p>
<p>While it is a profit-seeking business, its existence is beneficial to the business community and the public. </p>
<p>Investment banks help businesses, which provide services and products to society, raise money in the equity and debt capital markets; this essentially provides companies with the necessary capital to expand their business which in turns benefits YOU, the consumer.</p>
<p>On the M&A front, the investment bank seeks the best deal for its client -- essentially on a sell-side deal, the best price for the client; on a buy-side deal, determining the most appropriate valuation for w/e asset.</p>
<p>Rarely (I would say never) is anyone in investment banking with the purpose of serving society. I sure as hell am not, but it DOES serve a purpose.</p>
<p>
[quote]
Investment banks help businesses, which provide services and products to society, raise money in the equity and debt capital markets; this essentially provides companies with the necessary capital to expand their business which in turns benefits YOU, the consumer.</p>
<p>On the M&A front, the investment bank seeks the best deal for its client -- essentially on a sell-side deal, the best price for the client; on a buy-side deal, determining the most appropriate valuation for w/e asset.
[/quote]
</p>
<p>Fully agree with Majayiduke09.</p>
<p>The ability to access the capital markets (both debt and equity) have helped countless of firms expand their businesses. I'd say that the breadth and depth of the US capital markets is one of our nation's greatest strengths / assets. </p>
<p>It helps to spur innovation, helps firms stay competitive (and healthy competition is a net positive for the end consumer), etc. The market's "invisible hand" also helps to weed out the weak firms (and conversely helps identify the strong ones). Think about other countries that implement limited free market practices --> state run companies (often very inefficient and wasteful) continue to operate unchecked for years (read: former Soviet Union, North Korea, etc.) In this sense, investment banks represent an integral "cog" in keeping the markets functioning.</p>
<p>I-banks aren't charities. Yes they are out to make money. But so is every other non-for-profit business -- and rightfully so. That is the job of any business. That is why shareholders, stakeholders, debtors hand over their capital to any particular firm. If they wanted to give to charity, they'd do it in the most efficient manner: they'd hand over a check directly to said charity.</p>
<p>Oh, which brings me to another point. Investment banks (and many investment bankers) contribute large sums of money to charity. So, in effect, they do serve a beneficial societal purpose. I'd say that your average investment banker contributes more to charity than your average worker in your average industry, so who is to say who is being more beneficial?</p>
<p>It serves a purpose, but is it positive purpose? I believe it has been shown that the majority of buyouts and mergers do not meet anywhere near the expectations that they were sold on and many are worse off than before.
Yes, they are needed to actually raise new capital for companies through debt and equity and they could do that well for much less if there were some actual fee competition.</p>
<p>the worst years of i-banking are ages 22-24 before any family ties.</p>
<p>The reality of I-banking: it destroys functioning companies and puts people out of work all so a bunch of useless firms and their employees who contribute nothing to society can get rich.</p>
<p>
[quote]
The reality of I-banking: it destroys functioning companies and puts people out of work all so a bunch of useless firms and their employees who contribute nothing to society can get rich.
[/quote]
</p>
<p>You're right. What were we thinking? Free markets and capitalism was an interesting experiment. We should embrace Communism, right?</p>
<p>Beside spouting some old shibboleths, can you provide any facts that show there was a material benefit to society from most of the mergers and acquisitions initiated by the Ibanks? I can think of lots of disasters from the Mortgage Mess to Worldcom back to Ling Temco Vaught.</p>
<p>
[quote]
can you provide any facts that show there was a material benefit to society from most of the mergers and acquisitions initiated by the Ibanks?
[/quote]
</p>
<p>I didn't realize that investment banks' mandates were to "materially benefit society". I'd suggest you write a Manifesto and shoot it right over to those wayward Wall Street firms.</p>
<p>I want to second most of the<em>prestige's comments and ask others to think directly about the impact that these work environments have on women. Wall Street has long had a difficult time attracting and retaining talented women. Many firms are trying to adjust this, but the reality on the ground (and in the office) is often much different than the publicity that the firms spin. Just take a look around the Street. How many women do you see in senior roles? Certainly more than a decade ago, but pitifully few compared to the men. Investment banking as a career is not particularly family friendly (for men or women) and the office politics that the</em>prestige mentions usually plays out better for the men with the sports and colleges connections. The old boy network of Wall Street hasn't got a lot of women in it.</p>
<p>Actually the secret plan is to do it politically.</p>