Banking juniors keep leaving for consulting. Are they making a terrible mistake?
Jobs in banking and jobs in consulting have long been different sides of the same coin. Both attract highly driven people from elite universities. Both pay well and expect hard work in return - even if banking bonuses are bigger over time. Anecdotally, though, consultancy firms have begun gaining the upper hand: after a few years in finance, more and more junior bankers are peering across to consulting firms and deciding that they like what they think they see there.
"The number of CVs that I'm seeing from junior bankers has suddenly shot up in 2018," says a senior consultant at one of the big three 'MBB' (McKinsey & Co, Bain & Co, Boston Consulting Group) consulting firms in London. "The CVs we got from bankers were relatively steady in 2016 and 2017, but this year the increase in banking CVs is very noticeable. It's almost as if, after years as being seen as a second choice career behind a full-blooded banking job, consulting is now seen as the better option."
Historically, junior bankers who want to go into consulting have taken a top tier MBA course to help ease the transition. The proportion of MBAs choosing consulting famously rose following the financial crisis. Technology firms now compete for MBAs too, leaving banks further down the queue. Increasingly, though, it seems junior bankers are either going into consulting directly, or after a few years in private equity (PE).
The preferred route into consulting, for example, is either a few years on the Goldman Sachs analyst program followed by a jump across to become a business analyst at McKinsey & Co, or a few years as an analyst in a bank, a few years in PE and then a transition across to a consulting firm at a higher level. Although a move into consulting without an MBA can be tough as junior bankers aren't always seen as having a well-rounded consulting skillset, it helps that consulting firms are replete with ex-bankers who've made similar choices. Sara Hudson, head of McKinsey’s EMEA consumer private equity practice, started out in Goldman Sachs' North American healthcare group before moving to PE and then McKinsey, for example.
For banking juniors, consulting firms' appeal comes down to two things: job security and exit options. This applies as much on the trading floor as in investment banking divisions. "A lot of people here are looking around and wondering how screwed they're going to be in a couple of years' time," says a junior equities salesman at a Swiss bank in London. "They worry about the longevity of their job in an investment bank when costs are being cut, and specifically in equities sales they don't feel they're developing a skill-set which will be usable later on.
"It's different when you're somewhere like Bain & Co.," he adds. "When you're at a consulting firm you build optionality into your career - you can always move into industry or into another role in consulting." He says that moving to consulting feels like an "intuitive" thing to do now: "You can see that people don't have 20 year careers in banking and that MiFID II is destroying a lot of sales jobs while banks are doing nothing to help mitigate the pain." Of 12 people who started five years ago in his graduate class, he says 10 have left - mostly for consulting roles.
And yet junior bankers are cautioned against a grass is greener mentality. Consulting jobs have one huge disadvantage: the travel. It can be extreme. Nor are the hours that much less onerous than in banking, particularly now that banks are more alert to the dangers of juniors working themselves to death and have systems in place to stop it happening.
"On average, up to VP-equivalent level we do around 12-15 hours a day, NO weekends," says the senior MBB consultant who was an associate at a U.S. bank in a previous life. "The pain points for us is travel. For example, I fly weekly from London to New York and there are others here who fly weekly, for months on end, between Sydney and LA."
The upshot is that while consulting might give you an hour or so to yourself in the evenings, that hour will usually be spent in a faceless hotel miles away from home, friends and family. To the extent that people leave consulting, it is the travel that drives them away: "On Monday morning we'd get up very early and go to Manchester, where we'd stay in a Marriott hotel near the airport until Friday," says one ex-consultant who now works full-time for a finance company in London. "It was exciting and I built up a big bond with my colleagues, but I was only coming home at the weekends to do my laundry. After eight years, I'd had enough."
In this sense, then, consulting and banking are also similar. - Both are young person's industries best embarked upon when you have minimal family ties and maximal ability to commit to work. The danger for junior bankers who jump into consulting is that they're already that older. Set against the hard slog of relentless travel in consulting jobs, the perpetual uncertainty of banking careers might seem more bearable after all, particularly when you're thinking of starting a family.
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