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Investment Banking Discussion Thread

post #1 of 622
Thread Starter 
I've seen a few threads on IBD floating around in General Chat, but wanted to create one in this section to hopefully serve as a definitive reference thread for those looking to get into IBD.

Let's start talking. Thoughts on the industry as a whole? Compensation? Future direction? Those who are currently working in IBD - would you say that it's worth taking the plunge into the industry now, or is it a slowly dying field of work (and of course by dying, I'm referring to overall compensation)?

M&I
WSO
post #2 of 622
I'll make some points that more senior members can confirm or not:

Dying field / compensation is not what you think it is -- at least not as easy as what a lot of students or early career oriented people have in mind. It is overvalued and over-saturated field to get into now

Ask yourself why investment? Why finance? Do you really enjoy the field? Are you in it for only the money? IMO a lot of people do it for the money and rarely is it "Because I want to plan and manage money for others in order to maintain their status quo"
Do you have others best interest in mind? Or only yourself


Investment is not fun unless you enjoy sitting in front of a computer most of your days, attending meetings daily/hourly, and/or meeting clients hourly, some who will just ask you circular questions about products, techniques, plans etc. or keep beating the stick on you about fees and commission rates.

You will never make what the highest percentile of IBankers make unless you are well connected to high net worth clientele (environment) = getting the foot into the right firm.

Taking some steps back, what higher education are you considering? MBA ≠ IB ... get into some more quantitative, technical educational degree. As said before, finance itself is not hard to pickup and learn, but many do not grasp the higher levels of quantitative math and planning.


I lost my train of thought ...

Edit:
If you are a student in any humanity track and for many schools this includes business administration degree, you already gave yourself a losing chance if you are thinking about IB. You need not read any further if this case applies to you. Perhaps a major in history to a small degree is advantageous but only because I personally really enjoy the subject and so am bias.
Edited by gettoasty - 3/10/12 at 1:04pm
post #3 of 622
Quote:
Originally Posted by gettoasty View Post

I'll make some points that more senior members can confirm or not:
Dying field / compensation is not what you think it is -- at least not as easy as what a lot of students or early career oriented people have in mind. It is overvalued and over-saturated field to get into now
Ask yourself why investment? Why finance? Do you really enjoy the field? Are you in it for only the money? IMO a lot of people do it for the money and rarely is it "Because I want to plan and manage money for others in order to maintain their status quo"
Do you have others best interest in mind? Or only yourself
Investment is not fun unless you enjoy sitting in front of a computer most of your days, attending meetings daily/hourly, and/or meeting clients hourly, some who will just ask you circular questions about products, techniques, plans etc. or keep beating the stick on you about fees and commission rates.
You will never make what the highest percentile of IBankers make unless you are well connected to high net worth clientele (environment) = getting the foot into the right firm.
Taking some steps back, what higher education are you considering? MBA ≠ IB ... get into some more quantitative, technical educational degree. As said before, finance itself is not hard to pickup and learn, but many do not grasp the higher levels of quantitative math and planning.
I lost my train of thought ...
Edit:
If you are a student in any humanity track and for many schools this includes business administration degree, you already gave yourself a losing chance if you are thinking about IB. You need not read any further if this case applies to you. Perhaps a major in history to a small degree is advantageous but only because I personally really enjoy the subject and so am bias.

You seem to be confused about the job scope of the IBD. IBD focuses on raising capital for companies, M&A and restructuring of companies. They don't manage portfolios or conduct trading of securities. They pitch deals for possible M&A targets.

You mixed up IB with WM, S&T and Research.
post #4 of 622
All I can say is, the sea is red with banker blood this year. Lots of monkeys have gotten zeros on their bonus checks as the world economy stagnates and deals aren't forthcoming. We're looking to re-enter the big bad days of the middle of the 20th Century when retail banking was more well-regarded than investment banking if this keeps going.
post #5 of 622
Thread Starter 
gettoasty, as Verniza mentioned, what you're referring to is more along the lines of PWM and S&T.

Also, I've seen this advice tossed around on Sufu in some form or another quite a bit:
Quote:
If you are a student in any humanity track and for many schools this includes business administration degree, you already gave yourself a losing chance if you are thinking about IB. You need not read any further if this case applies to you.
I asked a question on Sufu in some thread (I think it was called "What are you doing with your life?") a while back, and the general advice that I received was that I had to pursue some sort of technical degree if I even wanted to stand a chance of breaking into the financial services industry, let alone a BB. It freaked me out then, but I decided to do some of my own research instead of jumping to conclusions and blindly following e-advice.

From what I've seen, if you're attending a target school, having only a BBA should be enough for IBD. I think 4-5 people from my business school received analyst offers from GS this year, and only one of them to my knowledge had a degree other than a standalone BBA (now an incoming analyst at GS TMT). I even know a girl who received an internship at GS S&T with a 3.4 GPA and no family or pre-business-school connections.
Quote:
Originally Posted by Nereis View Post

All I can say is, the sea is red with banker blood this year. Lots of monkeys have gotten zeros on their bonus checks as the world economy stagnates and deals aren't forthcoming. We're looking to re-enter the big bad days of the middle of the 20th Century when retail banking was more well-regarded than investment banking if this keeps going.
There's no doubt that all of the investment bankers on the street are getting shafted this year, but the question to ask is whether or not compensation will return when the economy gets going again. I'm not talking about compensation in terms of the golden days of investment banking here; rather, just enough compensation to make the hours and loss of young life worth it (all subjective, I know).
post #6 of 622
It seems I did

whoops!
post #7 of 622
IBD isn't going anywhere, nor are the fees going down in the long run. Think about incentives from the perspective of the clients, specifically the incentives the clients' management. They're bringing us on for deals that generally represent the single largest and most important transaction of their careers. Whether the client eventually wins or loses on the deal, a rational CEO cannot allow the possibility to exist that the failure occurred because they wanted to save a percentage by going with a second-rate shop, auction or doing the transaction in-house. It would be the last good job they ever hold in the country, and that's why the investment banking business has a future.

In terms of deal flow, there will always lean and fat years. Learn to live a bit below your means, and it's a good living. And this probably doesn't even need to be said, but a stint in a bulge bracket opens up doors like nothing if you don't want to stick with banking, and this includes careers outside of finance.

If you really want to do this, you need to do the junior year internship. When Goldman cancels it's info session at fucking Wharton this year because they filled most of their fulltime slots with interns, you know this to be true...
post #8 of 622
IB was my goal for this summer, but no luck so far. It's tough out there, but I'm still pushing.

Regardless, I did a PWM internship and it's not for me.
post #9 of 622
^what PWM?

And why not? Don't like sales right?
post #10 of 622
I was doing mostly cold-calling and not really learning much at all. There was no learning curve beyond generating reports.
post #11 of 622
Cold calling to bring in investors right?

Yeah that is a by and large a big part of firms such GS or Morgan Stanley from what I heard from another intern

I can't say it gets better because it is relative, but if you start working with the financial advisers/planners more closely it is more than just cold-calling.
But the internship was short I assume (3-6 months) so not a lot of expectations or follow through into other parts of the business

Cold calling is actually pretty hard for a lot of people and they have books to teach how to make phone calls when you have that self-doubt
So actually, despite what the actual function is, it is a very good skill to have
post #12 of 622
Quote:
Originally Posted by gettoasty View Post

1. Investment is not fun unless you enjoy sitting in front of a computer most of your days, attending meetings daily/hourly, and/or meeting clients hourly, some who will just ask you circular questions about products, techniques, plans etc. or keep beating the stick on you about fees and commission rates.
...
2. Taking some steps back, what higher education are you considering? MBA ≠ IB ... get into some more quantitative, technical educational degree. As said before, finance itself is not hard to pickup and learn, but many do not grasp the higher levels of quantitative math and planning.
...
Edit:
If you are a student in any humanity track and for many schools this includes business administration degree, you already gave yourself a losing chance if you are thinking about IB. You need not read any further if this case applies to you. Perhaps a major in history to a small degree is advantageous but only because I personally really enjoy the subject and so am bias.

If we're talking about the advisory side of IB (as opposed to S&T):

1. This is somewhat true. As an analyst, you'll spend countless hours at your computer building financial models, scouring through company filings and financials, writing and formatting various documents, and putting together slides. You don't really get any real client responsibility until you are a VP or possibly an associate. For a lot of people, it's not really about the work you do on a day to day basis but what you learn from the job and the opportunities you get as you move up/when you leave.

2. Investment banks love to recruit at liberal arts schools. The bank really has no need for an analyst with a technical degree since modeling financial statements doesn't really take any more than basic math. Quant and technical degrees are useful for a lot of hedge funds and trading firms, but all you really need for IB is some reasonable level of intelligence, a positive attitude, and good worth ethic. Banks do tend to hire quite a large number of Econ and Finance majors though.
post #13 of 622
I agree that it is the work ethic and "fast paced" environment that is what most people will take out of working in IB.
The day to day is just a grind on your soul

So definitely see and agree w/ your first POV.
post #14 of 622
bottles and models
post #15 of 622
Quote:
Originally Posted by gettoasty View Post

The day to day is just a grind on your soul
pretty much. waking up every morning looking for the light at the end of the tunnel!
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