Investment banking analysts get the brunt of the unsavory elements and it is no surprise that the attrition rate is extremely high. Although there are a lot of people who stay with the same bank their entire careers, they pale in comparison to the people in their same entry class or vintage who left.
For a lot of analysts, they look at their 100 hour weeks and then to the lifestyles of the rich and famous up top.
Associates are going to the gym at 7PM and then home at 8PM. VPs leave at 6. Managing directors are on calls all day, a golf event and then flying off for business trips. Analysts will then think, “just a few more years, and then I can live that life.”
Reduced Investment Banking Hours
Do the hours get better? Sort of – you end up trading hours for responsibility. And at least at the senior level, the responsibility is immense and the pressure is real. For many top tier bulge brackets and certain elite boutique investment banks, the clock immediately starts ticking after the vice president years and executive directors will need to pull in a certain amount of revenue each year or they are on the chopping block. Spring cleaning!
When investment banking analysts make bad mistakes, they get chewed out – but generally it is impossible for an investment banking analyst to screw up a book bad enough to lose the deal.
There are far too many checks and balances in between, and even with some very serious botches that we have seen in our past lives the MD can generally salvage it because they are hired for their advice, not a pitch book. These are corporate finance subject experts and this is why they are paid thousands by the hour.
We have seen managing directors in the office at 2, 3, 4 and 5 AM pushing materials over the line for client meetings and bid deadlines. Although the average day gets shorter, the client focused and transactional nature of the job (which you are supposed to mention that you love in the investment banking interview) means that there is never a guaranteed day off even at the top of the heap as an MD.
We came across a glorious summary on Quora – investment bankers are money butlers – they shuffle money around for institutions and individuals with the real money. Investment bankers get paid well too – if you stand next to a waterfall, you are going to get wet. But these figures are meaningless relative to the big players they actually serve.
Also, especially for MDs – their pressure to have the phone on at all times is possibly even bigger than the analysts. And for those who spend most of their time on a plane, this is time away from family and friends – even if they do fly business or first. Junior investment bankers do not have to make “real” sacrifices other than not joining their buddies on the patio at 5PM.
10,000 Hour Rule – Accomplished In A Few Months in Investment Banking
Four weeks into investment banking after the orientation program, I felt equipped to ride the wave to MD. There was an analyst-to-associate (A2A) who came in at 10 and left at 6 almost every day. He spent the entire duration of his day looking at ESPN while I pested him to check my work. At meetings, he would drop a couple of buzzwords and lay out the general direction of the book.
After a few books, I started to resent him. I thought he was completely checked out and yet was paid twice what I was making.
He took a week off and I started working alone with the MD for a pitch. Time to shine!
After being called into the MD’s office for a check-in, I realized that I needed him. Although the book was perfectly formatted and I looked at all the numbers, the MD knew right away which multiples were “off” and what was directionally not there. I was embarrassed. The reason why the associate sat in his chair and I sat in mine was because he could do my job but I could not do his.
Now there are certainly bad associates (MBA associates are particularly hit or miss), to the point where investment banking analysts may actually have to check their work for quality control. However, those who have gone up the ranks and earned it know that there is no substitute for the hours in terms of becoming a quality investment banker.
The reason why an associate or VP will know that a logo is in the wrong place is because they have comped the transportation and logistics names thousands of times – they know that a certain EV/EBITDAR multiple has never happened and something is mislinked. They know that the map is off because all of the assets are in a different region.
And because they have sat in on so many internal beat-ups and client meetings, they know what the appropriate corporate actions are and who a client would be interested in merging with and what is a non-starter.
This is why associates are allowed to check work and VPs are in charge of quarterbacking a project. To get to that level, aim to take on all the responsibilities of one position up.
Efficiency in Investment Banking
The best experiences I had in learning were brainstorming sessions with managing directors on a one-to-one basis. All they have to do is pull the latest trading comparables sheet to see what works at what does not.
“Hmm, I don’t think they will want to pay through their own multiple for any of these smaller guys.“
“They have been buying back stock, so I would think they would think that using their own paper as currency would be prohibitively expensive” – offering vendor take-back equity or stock consideration in a merger
“They are precluded from this deal because their leverage is too high and equity capital markets are closed.”
“I spoke to them last week and this is not the bite size that they are looking for – their corporate development team is pretty busy right now so I don’t see this one coming up on their radar.”
Soon enough, they have the appropriate buyers list for a great discussion. This can only come with time and having a finger on the pulse. Then they run off to the next lunch meeting at one of the best restaurants in time.
They work fewer hours, but their hours are worth a lot more.