Thursday, September 17, 2009

Getting a banking job

What's hot and what's not in today's job market depends as much on popular media and film as they do with reality (e.g. the economy, demand).  In the 1980s, movies showed high flying wealthy LBO (leverage buyouts) investment bankers who lived life on the edge.  They worked hard and played hard and seemingly run the world.  Movies such as "Wall Street" and "Pretty Woman" glorified the position.  The craze resumed with the popular remake of "The Thomas Crown Affair", and "Boiler Room".

I remembered back in college everyone was seeking one of these coveted investment banking positions.  Competition was fierce and acceptance was very low.  Classmates who went off to become investment bankers (i.e. entry level analysts) return in flashy suits to interview prospective candidates.  It was all about the image. 

Having gone through the investment banker route myself (Prudential Equity Group) I relate more to Harold in the movie "Harold and Kumar Goes to WhiteCastle".  Simply put, an entry level position in investment banking sucks.  You work long hours doing mundane work as an entry level analyst and although paid more than your classmates, the quality of life is disproportionally less.  In order for individuals to justify their decision, some even resort to exaggerating the amount of money they actually make.  Here is a reality check, entry level positions in investment banking equity research was $45,000/year (back in 2001).  Bonus vary drastically as well in equity research, there is a standard 10-15% bonus that analysts are allocated, but there is also additional discretionary bonus that your boss can give you out of pocket.  Bonus structures vary depending on the department - mergers and acquisitions would probably be based on the successful deals you have worked on, and sales is probably more commission based.

An individual in an analyst position would probably do about the same level of mundane work.  Creating PowerPoints (translating what a supervisor wrote on paper and making it look pretty), making copies, completing very basic Excel data entry, bringing coffee for your boss - things that I didn't think I needed a 4-year degree from an elite private college to do.  This is also probably why investment banks put very little emphasis on the degree or major a new hire has. 

Now just cause your friend says he/she is an investment banker, it should not immediately conjure up a scene from Pretty Woman and/or Thomas Crown Affair.  There are many aspects of investment banking - a stock broker, stock and bond trader, equity research, portfolio managers, mergers and acquisitions, private equity, corporate finance (IPO, equity, other financing), and let's not forget about the sales side.  In fact, many may even group individuals in hedge funds and venture capital as investment bankers.   Not all offer the same learning experience, nor are all of these positions prestigious.  Because of the kill or be killed mentality, don't expect a lot of support and help as you are climbing the learning curve.

As we can clearly see from the current economic crisis, just because an individual is an investment banker doesn't mean that they are "smarter", but many incorrectly assume that.  The result is placing trust in someone that may or may not know more than you do.  Many individuals in the investment banking world are living paycheck to paycheck and highly leveraged - kind of ironic those are the same individuals we are trusting to manage our finances, huh? 

My experience in investment banking did prepare me for success for my later positions.  No matter how crappy the assignment I receive, I can always look back and think to myself, "well, it was better than investment banking."

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