Twenty proven exit strategies from a career in an investment bank
So you want to make an exit from your career in banking. What can you do instead? Well...
1. Private equity
Who? Only the best of the best of the best. Bankers who move into PE will have big name universities on their CVs, followed by time in corporate finance or M&A at a big name bank where they will have been ranked top in their peer group (ideally for two years running).
Why not? Everyone else has had the same idea. As we reported last month, there are 200-300 applications from investment bankers for every single private equity place in London.
2. In-house advisory for large corporates
Who? Mid-ranking and junior M&A bankers who want an easy life and don't care about earning less. Senior M&A bankers who've made their money and want an easy life too. Richard Tyrrell, a former Perella Weinberg banker, recently joined Norwegian infrastructure company Hoegh LNG, for example.
Why not? Pay does not match M&A. You may find yourself working as part of a small parochial team doing a lot of uninteresting deals. Choose the corporate you work for carefully.
3. Strategy consulting
Who? People who move from banking to strategy consulting will often have spent some time in consulting before moving into banking. In banking, they're usually still in a strategy role and therefore aren't 'bankers' per se.
Why not? An admission of defeat and acceptance that matrix diagrams and Powerpoint presentations are more helpful than Excel.
4. Regulatory consulting
Who? Former risk and compliance professionals from investment banks.
Why not? You will almost certainly feel disgruntled about the fact that you are being charged out at an hourly rate far in excess of the amount you yourself are being paid.
5. Investor relations
Who? Ex-equity research professionals, sometimes ex-corporate financiers with a strong command of English.
Why not? Investor relations teams are small and opportunities can be hard to come by. Although senior investor relations roles can pay six figures, junior ones are very less remunerative than banking.
Who? M&A professionals who want more exposure to senior staff (if they're junior) or to be able to offer unprejudiced advice (if they're senior).
Why not? A good move for a senior M&A professional, but if you're junior you could find yourself worked even harder than at a big bank.
7. Hedge funds
Who? Former traders from investment banks with audited trading records and a clearly articulated trading strategy.
Why not? Hedge funds are having a hard start to the year - especially if they're invested in emerging market stocks. Many hedge funds impose very harsh performance requirements and will dump traders who lose even a small amount of money. Working for a hedge fund can therefore be a tough proposition.
Who? Former technologists and (occasionally) sales staff from investment banks - especially if the latter have been selling banks' trading systems.
Why not? Silicon valley can be even more political than banking.
Who? Former product controllers who qualified as accountants and thought (sometimes mistakenly) that banking would be a more exciting option.
Why not? Audit is not exciting either. It is a retrograde step (see 3).
10. Public Relations
Who? Former equity researchers, sometimes former M&A bankers and equity researchers who can write (see Investor Relations).
Why not? The pay.
Who? A possibility for American M&A bankers who went to law school.
Why not? Lawyers work harder than bankers, for less money.
12. Selling application advice to people who want to get into banking
Who? A population option with young ex-M&A bankers who realized they were being worked to death, but that plenty of other people will pay for the option to do so.
Why not? A crowded market.
13. Writing tell-all books about your time in the industry
Who? Mid-ranking bankers with thwarted career aspirations who've been around for long enough to have something to say (see Greg Smith).
Why not? Your book may not sell. You will almost certainly never work in the industry again. Journalists will call you in 20 years time and ask you about what it's like to work in banking.
14. Starting a restaurant
Who? Very wealthy senior bankers with money to throw around (think Ahmass Fakahany) or junior bankers who are following their dream (Frank Yeung).
Why not? Even Jamie Oliver is struggling to make the restaurant business work.
15. Starting a strip bar?
Who? Bruce Ashmore, the former head of Goodbody Stockbrokers in Dublin, has started a strip club in Bristol. Likely to appeal to brokers who have frequented such places in the past.
Why not? Insalubrious.
16. Trading with your own money
Who? Former mid-ranking prop traders who couldn't get into hedge funds, now seated at so-called 'prop shops.'
Why not? That's your own money your losing.
17. Trading with someone else's money
Who? Ex-traders with rich friends and family. Fundamentally, this is a hedge fund.
Why not? Rich friends are not always patient.
18. Make a career out of telling people how to trade with their own money
Who? Traders who have become household names. Think Lex Van Dam and Anton Kreil.
Why not? You need to become a household name. To achieve this, Van Dam had to put up $1m of his own money for people to trade with on TV.
19. An MBA
Who? Analysts who aren't sure they'll make it to associate. Back and middle office professionals who want to move into the front office (and therefore come into an investment bank later). Anyone who wants to get out of banking an into a different industry entirely.
Why not? Careers releases from major business schools suggest it's becoming harder to use an MBA to transition into a new career area. Also, an MBA is realistically most effective if you're aged 30 and below. And it costs $$,$$$.
Who? Anyone who's worked in banking for long enough to know people.
Why not? It won't be long before those people stop returning your calls.