Banking v. Consulting - Which is really best?
Banking and consulting are too funny little peas in a pod. Under any forum or social media post populated by either profession, you’ll find arguments and… Erm… Salary-measuring competitions over which is the better field, both to go into and to stay in.
The truth is, the people that populate the two are remarkably similar, and superficially the jobs are similar. Great money, horrendous work-life balance, and populated by the most elite performers of the most elite universities in the world. Or, as one McKinsey director described them, “insecure, deeply left-brain, hyper-intellectual, OCD over-achievers.”
There are differences though of course, and substantial ones at that. We spoke to a wide variety of people at Goldman Sachs, JPMorgan, McKinsey, and Bain & Co. for their opinions on these two of the most prestigious careers in the world.
Want to get paid? Choose banking.
Okay, so everyone kind of knew this, but it’s a lot tighter than you imagine. In their early careers, bankers will earn far more than consultants – just compare Harvard MBA graduate salaries to see – but the potential growth only goes so far into your career.
"Once you reach MD-level in an investment bank, compensation starts to plateau,” an ex-McKinsey consultant, now in IB, tells us. “In banking, you can be subject to volatility, both from the market and personal performance. Consultants are on a consistent trend upwards.”
When (or “if”, rather) you hit partner level as a consultant, the paydays become huge. Bain & Co. paid out an average of £1.5m to its UK partners in 2022, higher than all but the most senior banking directors across the world. But consultant pay doesn't get close to IB levels until this sort of seniority.
Job security? Consulting is the way to go.
It’s a world of layoffs. Goldman Sachs, Credit Suisse, Morgan Stanley, Barclays – you name them, and they’re probably looking at reducing headcount.
You know who isn’t reducing headcount? Consultants. Although they go from town to town and company to company looking to trim every inch of fat a client needs, it’s rare to see the same mass lay-offs being brought back home.
Whether that’s a sign of good management or a blind one, the point is that you’re much less likely to lose your job working in consulting than banking.
Work life balance? It was only ever going to be consulting.
Every single person we spoke to agreed that consultants have a better work-life balance than bankers.
Seriously, every single one. "My life is unimaginably better as a consultant," says one former banker (M&A). "My current colleagues are always listening in horror and shock when I recount some of my long months on less than a handful of hours of sleep when I was in M&A. Leaving at 11pm is really late in most cases in consulting."
The biggest differences, he says, are the weekends. “Most consulting firms treat the weekend as sacred and it's relatively rare to get an e-mail from a partner or a client.”
The travel as a consultant, however, means that even if you’re not working weekends, you’re still away from home and “on the road” (see below). And you are expected to work long weekdays – one former consultant that spoke to us said that he was lucky to be in by 10pm. Oh, and if you couldn’t complete your work during the week, you might have to work weekends to catch up.
Consultancies are aware of the toll that the job takes on work-life balance, as well as general mental health. Boston Consulting Group (BCG) has operated a “Predictable Time Off” model for years, in which its consultants are required to be off completely during certain phases of a project – no email, no voicemail, nothing.
McKinsey has been operating flexible work programmes for a few years now, too – with employees able to take blocks of (unpaid) leave between projects, work three days a week, or take a leave of absence.
Want to travel less? Banking is the one for you (mostly).
It’s travel where the horse starts to buck in consulting.
“The travel is a killer – you’re on the road non-stop unless you get a plush home city assignment,” an ex-McKinsey consultant, who now works in banking, told us.
McKinsey’s “client model” is to spend Mondays to Thursdays at client sites, and Fridays at the “home office”. That client could be closer to (your) home than McKinsey’s own office – or it could be hundreds of miles away. If it’s the latter, congratulations, and we hope you like the microwave cordon-bleu hobby kit.
Banks, on the other hand, keep you in the office, albeit it for absurd lengths of time (see above). That might have to involve some travelling, yes, but it’s to a location you know and can plan your living arrangements around. When you get to a more senior position, however, you will be meeting clients, which will likely involve travel, but that’s a long way down the road.
Interested in interesting work? Consulting.
If you’re planning on giving the best efforts of your best years to a profession, it helps if it’s interesting – and the people we spoke to agreed that consulting wins in that regard.
"I'm given a lot more responsibility here," a young consultant and former banker says. "Already, I'm presenting to the top management of our clients, whereas when I was in banking, I had little hope of meeting clients until I made vice president."
Another consultant says he's presenting to ground-floor employees as well as management, which gives him a better feeling for how the business really works. "In banking, you only think about the people at the top."
"In banking, you end up specialized in a particular industry whereas here I'm more of a generalist. As a junior consultant, I get to handle a lot of different kinds of challenge each day and it's about finding the right answer to a difficult problem. In banking, it was usually about getting the same things done in a short amount of time - we always felt very rushed,” another ex-banker said.
One consultant, an “executive transitioner” who works with consultants moving into other industries, says that consultants get frustrated with the endless presentations and the limited opportunities to put their ideas into practice, leading many to move into management roles within industry instead.
Although project variety helps keep life interesting, according to a former McKinsey consultant turned banker, the “transitioner” says this often makes life difficult for junior consultants who have to learn to work quickly and efficiently with new teams and industry sectors.
Another ex-consultant-turned-banker says that banking has higher quality standards. “In consulting I often felt that we were guessing the solutions without any reasonable argument. In banking, 100% correctness is always required, and the level of work delivered to clients is very high."
They also says that consultancy firms waste time and are inefficient: "In consulting, 4,000 slides were thrown on me to find something relevant for the task I had to do. You don't get this in banking."
Want to practice your maths? Banking.
An analyst for McKinsey said that bankers are more analytical. “They're more numbers driven," he says, adding that bankers use numbers to build up a big picture. By comparison, consultants have better communication skills and more aware of the small details behind a successful organization.
"Junior bankers are routinely used to narrowing down a lot of info [such as due diligence into its essential components], whereas most consultants will focus on getting additional information, creating deeper insights," he says.
Do you want to be a generalist or a specialist? Pick consulting or banking, respectively.
Although consulting and banking can be quite complimentary careers, one former-banker-turned-consultant in London says, the skillsets they develop can be quite different.
Consulting has “a focus on general problem solving and thinking about why a business should do something, and how to convince a client to actually do it."
Banking, meanwhile, is more focused on a few topics, and it’s expected that you’ll develop an expert knowledge on valuation methods, financial modelling, and transactions – and how these apply to a one-off transformational event such as M&A.
The former banker says that consulting involves a broad range of projects, "from strategy to organization, performance improvement to due diligence," and is about business life day in day out, whilst M&A is fixated on expertise in a single event.
Prefer a flatter hierarchical structure? Consulting is for you.
Juniors tell us that the lifestyle in consulting is more extravagant from early on in your career. While some banks are cutting back on luxuries such as the free coffee and company card cab rides, consultants report cabs to and from work, as well as "many expensive dinners on the company” and “private drivers to the airport."
Your bosses are also more likely to care about you, we’ve found. "You feel that the seniors you're working for actually care about your personal development and they're often quite proactive in getting to know you beyond the scope of work," a McKinsey analyst says.
"That wasn't really the feeling in banking - although granted I wasn't too keen on spending that much more time with my MD after having worked with him for a daily average of 18 hours over at least a month,” he adds.
Prefer to work with interesting people? Consulting is the way to go.
We’ve found that consultants are definitely seen as the more interesting of the two groups, in general. Juniors who have worked in both industries have called consultants more “lifestyle” focused, in the sense that they have a life.
Bankers, on the other hand, tend to be more homogenous. "This is great, because you'll make friends for life in your analyst class, but in consulting you meet people with really varied interests and backgrounds, which can be more enriching,” a consultant and former banker said.
Another, however, said that bankers are smarter. So, there’s that.
Thinking about exit opportunities? Believe it or not, consulting.
What happens when you want to leave banking or consulting?
If you’ve been in banking, it’s usually private equity or a hedge fund. Or perhaps start a yoga class – there’s banking alumni everywhere – but let’s keep it professional. Going into corporate finance is also a popular option. But there are often more people who want to leave banking than there are places for those same people.
Consulting has a much broader set of options. Going into a senior executive position in the industry that you’ve been consulting is popular. Some of McKinsey’s alumni include the CEO of Google, Sundar Pichai, and James Gorman – the current CEO of Morgan Stanley. So were the former CEOs of UBS, Commonwealth Bank, and Credit Suisse.
There are, interestingly, more bankers going into consultancy than the other way around. One junior consultant puts that phenomenon down to the educational experience of banking. "I'll never learn as much in consulting as I did during those two years in banking, but I'm having a lot more fun as a consultant,” he says.
The best thing then, it seems, is to start in banking and move into consulting after a few years.
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