Moving into Front Office Investment Banking MidCcareer, Without an MBA
In order to do a top MBA, you need to be a) wealthy and b) optimistic. Harvard recommends a budget of $79,000 for two terms if you're single and $111,600 if you have the misfortune to be married with two children. The London Business School is charging 49,900 for the privilege of studying its two year program.
All of this is clearly worthwhile if you are also optimistic and think an MBA will increase your employment prospects and future income. However, MBA unemployment is increasing, and fewer MBAs are going into finance than previously.
What happens, therefore, if you happen to be poor and pessimistic? Can you still move into investment banking mid-career without re-mortgaging? Possibly.
We've listed several of the alternative options below, plus our subjective and non-scientific estimation of your likely success if you pursue them.
None of them are easy. "Investment banks aren't keen from hiring outside their industry," points out the head of one recruitment firm. "They tend to think the only clever people work for other banks, even though this obviously isn't the case."
What it's good for: In a strong market, banks hire lawyers into M&A teams. The most common hires are sector specialists with experience of working with a particular client niche.
Who it's good for: Numerate lawyers with strong academics who are willing to move into boutique M&A firms, who are often more receptive than large investment banks. It will help if you can prove some prior experience of financial modelling. "We had a small firm yesterday who said they would look at lawyers," says Logan Naidu at recruitment firm The Cornell Partnership. "This is rare though - most lawyers don't have the right modelling skills required by investment banks."
Likelihood of success: in the current market: 15%. It will help if your sector experience is in areas where there's still hiring - eg. Energy, healthcare, oil and gas.
2) The Army
What it's good for: Officer class individuals from the army have been known to go into areas like corporate broking. However, the head of recruitment at one U.S. bank in the City says ex-army people are usually more appropriate for operational roles.
Who it's good for: If you want to move into the front office you'll need strong academics and a large network of school friends/army colleagues who are already working in banking.
Likelihood of success: 7.5%.
3) Accounting (Big Four)
What it's good for: Big Four accountants are mostly hired into the finance function of banks as product controllers, management, or regulatory accountants. However, in a strong market they are also hired into front office roles as M&A bankers and equity researchers. Historically, UK mid-market private equity firms have also hired ACAs.
Who it's good for: ACA qualified accountants with good academics who have passed their exams in the past few years. "It becomes much harder to move into private equity as your (accounting)] career progresses," says David Howell at recruitment firm EM Consulting. "By that stage, you're competing against people who already have private equity experience on their CV."
James Heath at recruitment firm Greenwich Partners says it can be possible to move out of an accounting firm into a corporate finance role, but that this is most easily achieved by moving into a boutique. Moving into a front office role with an ACCA or CIMA qualification is very rare.
4) Strategy Consulting
What it's good for: Strategy consultants with deep industry experience can occasionally move into equity research or M&A coverage roles. It may be easier to move into asset management or equity research boutiques first and to move across into investment banking from there.
"A few asset managers will consider hiring people from McKinsey and Bain as Investment Analysts," says James Heath. "If you've got significant sector experience at McKinsey, this is often very interesting to them."
Who it's good for: Strategy consultants working for McKinsey, Bain and Boston Consulting will be best placed. Even better placed will be strategy consultants working for McKinsey, Bain and Boston Consulting who also specialise in sectors where there is currently hiring. "It's down to supply and demand," reflects David Little, managing director of recruitment firm Shepherd Little.
Likelihood of success: 17.5%
5) The CFA
What it's good for: Originally, the CFA was primarily an asset management qualification. It will still, therefore, be best received if you want to work in asset management. However, it's also valued in equity research roles in investment banks, and - to a lesser extent - in corporate finance and private equity.
Who it's good for: The unfortunate reality is that a CFA will only really count if you also have the requisite impeccable academics and previous front office banking experience. "The CFA is a great qualification, but only to complement an already strong CV," says James Heath.
Likelihood of success Without strong academic credentials and prior front office banking experience, 5%.
What it's good for: Experience in strategy and development roles in particular industries is valued for some sector-focused equity research, corporate finance and private equity roles. However, like lawyers you will need to prove your numeracy and may be hindered by a lack of financial modelling experience.
Who it's good for: Moving from industry is most viable if you've worked in an area where the products are complex and difficult to assess for outsiders. "In areas like technology and pharmaceuticals, an industry background can be valuable, because new products launched by companies are so complicated. It is difficult for people without a very strong understanding of the sector to calculate whether a new product will be profitable" says Heath.
Likelihood of success: For individuals with strong academics, proven numeracy skills and deep knowledge of a particular sector, 20%.
7) Trading Houses
What they're good for: Time spent in the middle office (eg. A trade support role) at a top commodities trading house may, occasionally, prove a stepping stone into a trading role in a junior trading role investment bank, but it's unlikely. Equally, time spent at a "prop shop" could theoretically equip you to move into a trading role at an investment bank, but your application is likely to be viewed with skepticism. "If you're an out and out prop trader, I can't understand why you'd want to move into an investment bank to work on customer business," says the head of one commodities search firm.
Who they're good for: Juniors with excellent academic qualifications (who've spent time in middle office roles at top trading houses like Glencore) and are willing to move into a junior trading position at a second tier investment bank.
Likelihood of success: 10%
8) Interdealer Brokers
What they're good for: Getting to know lots of traders.
Who they're good for: Impeccably qualified individuals who make lots of trader contacts and move on as soon as possible - probably into a trade support role in the first instance.
Likelihood of success: 7%. "Investment broking simply isn't seen as a place where potential traders would like to work," says the head of the commodities search firm. "It's not a challenging and mentally stimulating environment to work in."
9) Trading your Own Account
What it's good for: Getting into a prop shop, not really for getting into an investment bank now that pure prop trading has been outlawed under the Volcker Rule. "Trading your own book really doesn't differentiate any more," says the head of one markets search firm. "If anything, it can put people off."
Who it's good for: People with a back-up plan.
Likelihood of success: Unless your results are completely off the scale, 5%.
10) The Regulator
What it's good for: In theory, someone with strong regulatory experience could move into an up and coming area like regulatory capital management. In reality, these roles are mostly middle office, but may become more front office focused in future as banks come up with new techniques such as counterparty valuation adjustment to mitigate their capital requirements.
Who it's good for: People with a passion for regulation and extreme patience.
Likelihood of success: 15%, but not immediately.