The rise of the freelance investment banker

Imagine you’re an investment banker who’s fallen on harder times and need a little side-income. There aren’t exactly huge numbers of options available to you – investment banking pays well and finding work that can offer similar remuneration while not destroying your resume is difficult.

Enter the world of the freelance investment banker. This is not to be confused with contracting, which is common in various financial services roles from IT to change management. Instead, investment bankers are parachuted into freelance assignments that can last anything from two weeks to six months.

“It’s the nature of investment banking that a lot of talented people leave the industry for a variety of reasons and are looking to earn money before their next opportunity,” says Vikram Ashok, a former private equity professional who now runs SpareHire, an online marketplace for corporate finance and consulting professionals seeking freelance work.

“However, it’s not just because of cut backs. Some stay-at-home parents want to make side income using their investment banking skills rather than work 100-hour weeks. There’s also a tech boom now and bankers who quit their day jobs to run a start-up need to earn money until their new firm takes off,” he says.

How much money, exactly? While it’s not uncommon for high-paying contractor jobs to pay up to $1,000 a day, senior investment bankers are drafted in at $250-300 an hour. Assuming an eight-hour day, it’s therefore possible to earn $2.4k.

However, the volume recruitment right now is for associates, says Ashok. He claims they typically earn $150 an hour. Analyst level recruits are brought in at $100 an hour and are sought after for their financial modelling skills.

In the past few months the requirements have increased and so have the number of people signing up for the freelance lifestyle. Sparehire now has 2,100 people registered, although this is for banking and consulting.

Still, currently, it’s unlikely that Goldman Sachs or J.P. Morgan will draft in freelancers. Compliance issues are still an issue, says Ashok, which means that the bulk of work comes from boutique banks or smaller firms looking for capital raising advice.

Boutique firms often find themselves understaffed due to the episodic nature of their workflow, so the ability to tap into a virtual pool of investment banking talent is appealing,” he says.

More often, though, smaller firms and start-ups going through a period of change or growth are only too happy to bring in a senior investment banker to help.