Have you really thought about what life is like working for an investment bank? Before you decide on your career path and start applying for internships or full-time IB analyst or associate programs, ask yourself these eight questions.
1. How important is work-life balance to me during the first years of my career and beyond?
Investment banks have made some effort to reduce working hours for analysts by introducing a protected day on the weekend when work is supposedly off-limits, or early finishes on Fridays, but get real – the hours are still long. In IBD, you have to be ready for an MD to throw work on your desk at the last minute thanks to an urgent pitch, meeting or a request from a client. In markets roles, banks expect you to be available even when clients aren't trading.
“While hours on the job and work-life balance improve as one becomes more senior, even senior bankers put in lots of hours,” says Janet Raiffa, former recruiting manager at Goldman Sachs and career adviser.
If you cherish your time and enjoy spending it with friends, traveling or playing, then Wall Street may not be for you, says Roy Cohen, career coach and author of The Wall Street Professional's Survival Guide.
“This is standard operating procedure when you begin your career," he says. "You belong to the firm – it is a form of indentured service.
"You get the benefit of experience and a pedigree at a name-brand firm and they get the right to own your time and life early on in your career."
2. How do I operate under pressure?
For entry-level candidates – both analysts and associates – Wall Street is a grind.
“All-nighters, weekends at the office, tight deadlines and bosses who score low on emotional intelligence, or EQ, are the norm,” Cohen said. “You either accept it as a rite of passage or you get marginalized quickly.”
3. Am I really someone who enjoys working in a fixed team structure?
While nobody wants to admit that they are not a "team player," are you actually someone who enjoys working in teams versus being an individual contributor?
“In entering banking, you will play a pretty fixed role as an analyst and associate, and even as you move up the ladder you will be locked into set relationships with those on your teams,” Raiffa said. “There are other areas of finance that allow for more independence and entrepreneurial work earlier on.”
4. Do financial models excite me?
Be honest. If your brain is not wired to handle numbers and mathematical complexity, then you are not likely to be well-suited to succeed as an entry-level candidate, Cohen said.
“At the start of your career on Wall Street, you will spend much of your time building financial models,” he said. “The expectation will be for you to accomplish this task with speed, ease and accuracy."
5. Who are my role models?
If they are more closely aligned with Rosa Parks and Mother Teresa than with Warren Buffet and Lloyd Blankfein, then you may need to reexamine your priorities, Cohen said.
“Wall Street is either about the pursuit of wealth or the challenge of finding solutions to complex financial situations,” he said. “Although it can be argued that the latter help to elevate the world, at its core investment banking is not driven by doing good, so if that is your passion, then you are on the wrong track.”
6. Am I OK with being fired?
“Reviews in investment banks can be brutal, with reviewers being encouraged to detail unfavorable aspects of a reviewee's performance, 360-degree reviews and rankings being doled out on a very large number of categories,” says Raiffa. “In a down market, bankers may be laid off not for any specific performance issues or mistakes, but because they are in the bottom quartile amongst very talented and high-achieving peers.
“They also may be doing well, but lack of revenue in the division or sector may necessitate layoffs,” she says. “Even making it to the partnership level is not a guarantee of continued employment, and partners are regularly forced into early retirement.”
7. How committed to investment banking am I really?
Graduate recruitment is a competitive process and there are plenty of qualified candidates. What makes you different, better and likely to be successful?
“Will you bend over backward to convince them that your commitment is undivided, that you will exercise good judgment and that you have demonstrated through prior experience an ability to break through barriers?” Cohen says.
8. Am I doing it for the exit options?
Only the best investment banking analysts make it to private equity. You may therefore be going into banking long-term.
“You'll need to have worked on a good number of deals to successfully pitch yourself to PE, and certain practice areas like M&A and leveraged finance work may be attractive to PE employers whereas other practice areas may not be,” Raiffa says.
Ask yourself: If you are able to move into a buy-side role, will it actually be that much better than IB in terms of compensation, stress and lifestyle, and what will the downsides be? Do you need to start in IB to get to the industry you really want versus pursuing them straight out of college or business school? Maybe so, maybe not.
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