Why the hype over I-banking?

Graduate School Business School - MBA
21

<p>It's not the starting pay that really sways people. It's the potential for absolutely huge pay later on. In short, the pay ceiling of Ibanking is far far higher than it is for almost any other profession. For example, even if you're one of the best doctors or a lawyer, it's extremely rare to make more than a million a year. However, the best investment bankers can make far far more than that. </p>

<p>Now, obviously most people who enter Ibanking will never make the really big money. In many ways, Ibanking is like the Hollywood star system or the system of professional sports. Only a tiny fraction of aspiring actors will become movie stars, only a tiny fraction of aspiring professional athletes will become stars. But being a star will obviously give you a dream life. That's what continues to draw people into all of these industries. People want to take that chance to see if they can become a star.</p>

22

<p>The peak income is absolutely high, the base is pretty high as well. It's just built upon the bodies of everyone who isn't working in IBanking anymore.</p>

23

<p>i do think that a lot of people go into investment banking just because of the money. you really do have to love your job. you will be travelling a lot, working 20hr days, staring at a computer screen a lot of the time, and have to truly understand it. it takes a certain personality to be successful in investment banking.</p>

24

<p>salary + everyone else wants to do it</p>

25

<p>for me it was very much a symbiotic relationship.</p>

<p>they got their pound(s) of flesh from me and i got what i wanted.</p>

<p>"not personal, strictly business" in the words of Michael Corleone...</p>

<p>can't say that i miss those late hours</p>

26

<p>100K after college. (with EYB) -- if you're above average</p>

<p>After MBA (Wharton for example): -- unless you're stupid and mess up everything... $100K without the bonus--- and around $160K with EYB (End of Year Bonus), or even more.</p>

<p>The range on the Upenn MBA website states range of 40K - 450K</p>

<p>$150-160K average</p>

<p>The 40K kid probably failed classes and ended up managing mcdonalds (or is not working full time)</p>

<p>highly lucrative career</p>

27

<p>
[quote]
So, in my roundabout way, what I mean to ask is whether an investment banker out there, or anyone who has experience that ties into investment banking in some way, could tell me, preferrably in layman's terms, what investment banking really involves, and why a previous poster in this forum (sorry, I can't remember who) said that a high school student would run away if he/she were to find out what the profession consisted of. As well, why do investment bankers make so much? Is the job really that difficult/the hours that gruelling/the job environment that stressful that investment bankers have to have a high salary so that they don't quit their jobs, or is it just because investment bankers are working with very wealthy corporations that can afford to pay? A high salary is desirable to me, but not at the cost of my sanity and some family time.

[/quote]
</p>

<p>That sounds very familiar. Put me down as having those very same sentiments.</p>

<p>Investment Banking is probably the only profession out there where someone can START at 6 Figures WITHOUT a graduate degree of any kind. The price is right, baby.</p>

<p>But the money comes with a cost. Namely, the one you mentioned. Looooong hours. My best friend from college double-majored in EE and Finance, and was hired by a major Financial Institution in NYC. His starting salary is 10s of Thousands of dollars more than mine, but I have to work considerably less hours than him. Investment banking isn't for everyone. I personally would never want to pull a 90 hour work week (which, from what I hear, can happen in investment banking). Investment banking is CERTAINLY not for me.</p>

<p>The hours are rediculous, but the money is great. If you don't mind the hours, and you want the money, than this may be the right move for you.</p>

28

<p>
[quote]
Investment banking isn't for everyone. I personally would never want to pull a 90 hour work week (which, from what I hear, can happen in investment banking).

[/quote]
</p>

<p>Uh, 'can' happen? I would actually say that it's rare when a 90 hour week in Ibanking ** doesn't ** happen. I've had people say that they would consider 90 hours to be a light week for them.</p>

29

<p>Yes, 80-90 is the absolute lowest it gets. Though during the really flat times (Post-second week December, apparently), it can dip as low as 80.</p>

30

<p>
[quote]

Ibankers out of undergraduate make about 55k base and 30-60k bonus, depending on performance and firm's revenue.

[/quote]

The dollar return per hour of Ibanking incomes is pretty low for undergraduates.
If you are after money, Ibanking is way too competitive to be worth your time over the long run.
I would just get a PharmD and work for a pharmaceutical company. With a Doctorate degree, your base salary is probably anywhere from 70-100k. You work regular hours and have the option of having a life. If you are a real go-getter, get into a Master's for Chemical Engineering or Electrical Engineering program that offers night classes. In 3 years time after graduating with PharmD, you would have had good work experience and another graduate degree to broaden your opporunities (now you can work for more than just biotechs and pharmas).</p>

<p>What you do from there is up to you...</p>

31

<p>Well, obviously, again, the idea behind Ibanking is that you are giving up your life for a few years in order to advance your career. Ibanking experience is extremely useful for future lucrative finance jobs later on in life.</p>

<p>Besides, look at it this way. True, Ibanking analysts right out of undergrad don't make a lot from a per-hour basis. But at least they're making money. The PharmD students are still in school and actually PAYING money (unless they are on scholarship).</p>

32

<p>The opportunity cost of going to PharmD as opposed to Ibanking is 400K+. If it was any more it'd be 'real money'.</p>

33

<p>How is the opportunity cost of going to PharmD as opposed to IBanking 400k+?</p>

<p>For a PharmD, all you need to do is go to a large state university which would only cost 10k a year in tuition over 6 years = 60k. Since Ibanking takes into account where you went for undergrand, the Ivys would cost you about 40k a year = 160k.</p>

<p>Right off the bat, you've saved 100k just by doing a PharmD. That's a conservative estimate since at most state schools you get substantial merit scholarship. Ivys are not as liberal in offering merit scholarship.</p>

<p>This is just based on my current situation and such. Obviously, it is not the same for everyone. I'm just saying that it is possible that Ibanking and the process in order to become an Ibanker may not offer the highest bang for the buck as commonly thought.</p>

34

<p>"10k a year in tuition over 6 years = 60k"</p>

<p>Plus living costs and other expenses that would likely double, if not close to triple, that amount. You know, people usually eat and like to buy things. In addition, having a roof over one's head is kind of nice.</p>

<p>Are you going to be taking out loans? If you are, well, add interests as well.</p>

35

<p>Well, can I posit that the students family makes less than 60K/year and therefore they don't have to pay any money for an Ivy education?</p>

36

<p>i'm at penn State and i pay about 22k yearly.</p>

37

<p>
[quote]
For a PharmD, all you need to do is go to a large state university which would only cost 10k a year in tuition over 6 years = 60k. Since Ibanking takes into account where you went for undergrand, the Ivys would cost you about 40k a year = 160k

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</p>

<p>Is that "all" you need to do? Just because you go to a state university doesn't mean that you will get admitted to your state PharmD program. </p>

<p>You are also presuming that you will be able to get your PharmD after 6 years (2 years of undergrad, 4 years of PharmD). That's a fairly dubious assumption. That assumes that everything works out well. Not everybody who does 2 years of undergrad will get admitted to a PharmD program. In fact, many of the top PharmD programs are next to impossible to get admitted to without a a full bachelor's degree, simpy because of the competition. For example, the best PharmD program is arguably the one at UCSF, and something like 99% of all admitted students to that program have bachelor's degrees. </p>

<p>Furthermore, you don't have to have an Ivy education to get into investment banking. Plenty of people get in from the top state schools like Berkeley. Furthermore, some of the top schools give out merit scholarships. For example, my brother went to Caltech on a full merit scholarship + stipend. Hence, he GOT PAID to go to college. </p>

<p>Furthermore, as has been stated above, a lot of the Ivies are extremely generous when it comes to need-based financial aid, such that the Ivies are actually the CHEAPEST option for some people. I know 2 guys who were California state residents who got into Berkeley and Harvard, and then found out that, because of financial aid, it was actually cheaper for them to go to Harvard than to Berkeley. I will always remember one of them mordantly joking that he had always dreamed of going to Berkeley, but he couldn't afford it, so he had "no choice" but to go to Harvard. </p>

<p>Look, nobody is saying that 100k for first-year Ibanking analyst work is a great deal. I agree with you that on a per-hour and "per-stress-level" standpoint, it probably isn't such a good deal. But that's not the point. The point is that Ibanking offers tremendous future potential, especially if you become a star. True, most people will never become stars, but at least there's the chance. Ibanking is one of the few professions where some people really do make 8 or 9 figure annual compensation packages. This happens in very few industries in the world. In almost all jobs, there is a maximum cap of how much money you can make a year, and it's usually somewhere in the 6 figures. For example, it's almost impossible to find a pharmacist who is making millions (unless it's perhaps an instance of entrepreneurship where he has started his own pharmacy chain). But there really are quite a few bankers who are making millions, or more.</p>

38

<p>
[quote]

You are also presuming that you will be able to get your PharmD after 6 years (2 years of undergrad, 4 years of PharmD). That's a fairly dubious assumption. That assumes that everything works out well. Not everybody who does 2 years of undergrad will get admitted to a PharmD program. In fact, many of the top PharmD programs are next to impossible to get admitted to without a a full bachelor's degree, simpy because of the competition. For example, the best PharmD program is arguably the one at UCSF, and something like 99% of all admitted students to that program have bachelor's degrees.

[/quote]

Some large state universities have PharmD programs that you apply to directly out of HS. UCSF is ranked very high in terms of pharmacy schools, but location is also important. If you wanted to work in the pharmaceutical industry, you may find it beneficial to look for something close to or in New Jersey.</p>

<p>
[quote]

I agree with you that on a per-hour and "per-stress-level" standpoint, it probably isn't such a good deal. But that's not the point. The point is that Ibanking offers tremendous future potential, especially if you become a star.

[/quote]

Agreed. The training that Ibanking offers one is not easily matched by any other industry. But I was wondering...do most people who do Ibanking end up working for someone else their entire lives? If they left the finance/banking industry to work in a more manufacturing/industrial/tech field would they actually be able to control those industries? It seems they would naturally lack the technical knowledge to understand those products. That's the reason I don't particular like the ibanking/finance industry.</p>

39

<p>Is it hard to land a job as an investment banker? If you graduate from one of the top business schools (i.e. Berkeley), would it be rather easy to get an i-banking job?</p>

40

<p>^^Bump...My question really is: do you have to beone of the top students to get a job as an i-banker? I will be going to Berkeley for my undergrad next year and i was wondering how difficult it would be to get a job as an analyst after i finish my 4 years at Berkeley. Do you have to be in the top x% of your schools to get interviews from recruiters? Also, how hard is it to get a job as an associate after you graduate from an MBA program? Again, do you have to be at the top of your class? Thansk guys!</p>