There is plenty of chatter, on this site and on others, about why investment banking is a difficult career path. The hours are brutal, pay isn’t what it was and there is still a bit of a stigma attached to the industry following the financial crisis.
Yet, tens of thousand of people still apply to analyst programs, with only a few hundred being accepted. Only 4% of the roughly 43,000 people who applied to Goldman’s program were accepted, as an example. Around 90,000 applied to Morgan Stanley, with just 2% receiving offers.
Clearly, the interest is still there. Why so? The money is most obvious reason. Earning $80k plus bonus right out of college is not possible in most every other industry. But there are other reasons besides money. We talked to a few investment bankers in and out of the industry about some of the non-monetary benefits that they enjoy. You won’t have a great work-life balance, that’s for sure, but you have a few other things to look forward to.
No, investment bankers don’t work 365 days a year. In fact, their vacations are likely more enjoyable than those the rest of us take, simply because they are forced to completely unplug from work for two full weeks.
“You’re not allowed on conference calls, you can’t talk to clients, you can’t even respond to email,” said one VP. “There is a zero percent chance of someone bothering you.”
Known as mandatory block leave at some banks, the two weeks are indeed required. You are literally forced to take them.
Most jobs create somewhat defined career paths. Investment banking doesn’t. “It’s the most laterally applicable skill set imaginable,” said a former banker. The analytical tool chest earned in investment banking can be leveraged to move to the buy side, consulting or corporate finance, among other options.
Many former investment bankers successfully launch their own companies, even in completely different industries, simply because of their understanding of finance and how companies operate.
“There’s something to be said about doing the hardest thing first [in your career],” he said. “Then everything else becomes easier.”
Long hours add up
Clearly a glass-full type of argument, but one that’s still accurate. Working longer hours provides more experience during a compressed period of time. In many industries, employees are still a pup three years into their career.
“Three years is a lifetime of experience in investment banking,” said the VP, referencing the 10,000-hour rule of becoming an expert at something.
Someone might be prone to wonder how Kunal Shah, age 31, was just named partner at Goldman Sachs, or how such young people are responsible for managing hundreds of millions of dollars. The likely answer is that they have put in the lifetime hours of a 50-year-old. Experience comes fast in investment banking.
It may be a frustration for some workaholics, but it’s a nice long paid vacation for others. If you leave one bank for another, you’ll likely be required to take between one and six months off before starting your new job.
Most gardening leave periods for analysts, associates and VPs are three months to make sure that all proprietary information that a person would know would become public during quarterly reports. MDs often get six months of gardening leave – all paid by their former employer – to ensure they can’t take deals to their new firm.
It’s not a bad side effect of quitting a job, if you can get it.
Smart people make you smarter
“You’re surrounding by smart, driven, tenacious people,” said the VP. “The benefits of long, concentrated interactions would those people can’t be overlooked,” he added, comparing it to the improvement rate of playing tennis with someone who’s better than you.