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Moving into front office investment banking mid-career, without an MBA

In order to do a top MBA, you need to be a) wealthy and b) optimistic. The London Business School is currently charging 49,900 for the privilege of studying its two year programme. INSEAD is charging €52,000 for one year. Harvard is recommending a budget of
$79,000 for two terms if you’re single and $111,600 if you have the misfortune to be married with two children.

All of this is clearly worthwhile if you are also optimistic and think an MBA will increase your employment prospects and future income. However, MBA unemployment is increasing, and fewer MBAs are going into finance than previously.

What happens, therefore, if you happen to be poor and pessimistic? Can you still move into investment banking mid-career without re-mortgaging? Possibly.

We’ve listed several of the alternative options below, plus our subjective and non-scientific estimation of your likely success if you pursue them.

None of them are easy. “Investment banks aren’t keen from hiring outside their industry,” points out the head of one recruitment firm. “They tend to think the only clever people work for other banks, even though this obviously isn’t the case.”


1) Law

What it’s good for In a strong market, banks hire lawyers into M&A teams. The most common hires are sector specialists with experience of working with a particular client niche.

Who it’s good for Numerate lawyers with strong academics who are willing to move into boutique M&A firms, who are often more receptive than large investment banks. It will help if you can prove some prior experience of financial modelling. “We had a small firm yesterday who said they would look at lawyers,” says Logan Naidu at recruitment firm The Cornell Partnership. “This is rare though – most lawyers don’t have the right modelling skills
required by investment banks.”

Likelihood of success In the current market, 15%. It will help if your sector experience is in areas where there’s still hiring – eg. Energy, healthcare, oil and gas.


2) The army

What it’s good for Officer class individuals from the army have been known to go into areas like corporate broking. However, the head of recruitment at one US bank in the City says ex-army people are usually more appropriate for operational roles.

Who it’s good for If you want to move into the front office you’ll need strong academics and a large network of school friends/army colleagues who are already working in banking.

Likelihood of success 7.5%.


3) Accounting (Big Four

What it’s good for Big Four Accountants are mostly hired into the finance function of banks as product controllers, management, or regulatory accountants. However, in a strong market they are also hired into front office roles as M&A bankers and equity researchers. Historically, UK mid-market private equity firms have also hired ACAs.

Who it’s good for ACA qualified accountants with good academics who have passed their exams in the past few years. “It becomes much harder to move into private equity as your [accountancy] career progresses,” says David Howell at recruitment firm EM Consulting. “By that stage, you’re competing against people who already have private equity experience on their CV.”

James Heath at recruitment firm Greenwich Partners says it can be possible to move out of an accounting firm into a corporate finance role, but that this is most easily achieved by moving into a boutique. Moving into a front office role with an ACCA or CIMA qualification is very rare.

Likelihood of success With an ACA: 15%. With a CIMA or ACCA: 5%.


4) Strategy consulting

What it’s good for Strategy consultants with deep industry experience can occasionally move into equity research or M&A coverage roles. It may be easier to move into asset management or equity research boutiques first and to move across into investment banking from there.

“A few asset managers will consider hiring people from McKinsey and Bain as Investment Analysts,” says James Heath. “If you’ve got significant sector experience at McKinsey, this is often very interesting to them.”

Who it’s good for Strategy consultants working for McKinsey, Bain and Boston Consulting will be best placed. Even better placed will be strategy consultants working for McKinsey, Bain and Boston Consulting who also specialise in sectors where there is currently hiring. “It’s down to supply and demand,” reflects David Little, managing director of recruitment firm Shepherd Little.

Likelihood of success 17.5%


5) The CFA

What it’s good for Originally, the CFA was primarily an asset management qualification. It will still, therefore, be best received if you want to work in asset management. However, it’s also valued in equity research roles in investment banks, and – to a lesser extent – in corporate finance and private equity.

Who it’s good for The unfortunate reality is that a CFA will only really count if you also have the requisite impeccable academics and previous front office banking experience. “The CFA is a great qualification, but only to complement an already strong CV,” says James Heath.

Likelihood of success Without strong academic credentials and prior front office banking experience, 5%.


6) Industry

What it’s good for Experience in strategy and development roles in particular industries is valued for some sector-focused equity research, corporate finance and private equity roles. However, like lawyers you will need to prove your numeracy and may be hindered by a lack of financial modelling experience.

Who it’s good for Moving from industry is most viable if you’ve worked in an area where the products are complex and difficult to assess for outsiders. “In areas like technology and pharmaceuticals, an industry background can be valuable, because new products launched by companies are so complicated. It is difficult for people without a very strong understanding of the sector to calculate whether a new product will be profitable” says Heath.

Likelihood of success For individuals with strong academics, proven numeracy skills and deep knowledge of a particular sector, 20%.


7) Trading houses

What they’re good for Time spent in the middle office (eg. A trade support role) at a top commodities trading house may, occasionally, prove a stepping stone into a trading role in a junior trading role investment bank, but it’s unlikely. Equally, time spent at a ‘prop shop’ could theoretically equip you to move into a trading role at an investment bank, but your application is likely to be viewed with scepticism. “If you’re an out and out prop trader, I can’t understand why you’d want to move into an investment bank to work on customer business,” says the head of one commodities search firm.

Who they’re good for Juniors with excellent academic qualifications (who’ve spent time in middle office roles at top trading houses like Glencore) and are willing to move into a junior trading position at a 2nd tier investment bank.

Likelihood of success 10%


8) Interdealer brokers

What they’re good for Getting to know lots of traders across the City.

Who they’re good for Impeccably qualified individuals who make lots of trader contacts and move on as soon as possible – probably into a trade support role in the first instance.

Likelihood of success 7%. “Investment broking simply isn’t seen as a place where potential traders would like to work,” says the head of the commodities search firm. “It’s not a challenging and mentally stimulating environment to work in.”


9) Trading your own account

What it’s good for Getting into a prop shop, not really for getting into an investment bank now that pure prop trading has been outlawed under the Volcker Rule. “Trading your own book really doesn’t differentiate any more,” says the head of one markets search firm. “If anything, it can put people off.”

Who it’s good for People with a back-up plan.

Likelihood of success Unless your results are completely off the scale, 5%.


10) The regulator

What it’s good for In theory, someone with strong regulatory experience could move into an up and coming area like regulatory capital management. In reality, these roles are mostly middle office, but may become more front office focused in future as banks come up with new techniques such as counterparty valuation adjustment to mitigate their capital requirements.

Who it’s good for People with a passion for regulation and extreme patience.

Likelihood of success 15%, but not immediately.

Comments (22)

Comments
  1. A pretty good synopsis all in all. Only one question remains – what is the % likelihood with an MBA from one of these top top schools?

  2. Does this assume that working in the front office investment banking is something desirable? Starting your own business is far more challenging and stimulating – and rewarding (these days)…

  3. Does this website cover anything except front office investment banking roles!? Its like a career in any other part of the financial industry should be considered failure.

  4. Will – yes, that is true. If you are not in a front office role then you have indeed failed in life, although you may actually have a life, and some friends, and probably nearly as much cash looking ahead!

  5. .I agree with Will, is anything apart from FO suicide?

  6. are you sure bout the inter-dealer route? half my desk are ex-brokers and my current broker is an old trader mate of mine, its kinda inter-changeable in some products..

  7. CIMA has more chance in front office than CFA? do these people know what they are writing about?

  8. ..this is probably the dumbest thing I’ve read today….and I read quite a few articles everyday…..

  9. How did you calculate the 17.5% of success for strategy consultants?

  10. Would love to know how the percentages were calculated. I think pulled out of a rabbits ****.

    Actually, probably Bugs Bunny wrote this, its an awful piece.

  11. You could calculate it by subtracting 82.5% from 100%.

  12. @Dominque and Homer Simpson – Just to clarify, Bugs Bunny didn’t write this. The percentages are purely an estimation and are intended as a discussion point.

    @ J – I’ve increased CIMA to the same % as the CFA. The reality is that the CFA won’t make much difference unless you have a good academic track record and relevant experience. The % figure above applies to people in this situation.

  13. How many people you know have made the successful transition withouth an MBA??

  14. London Business School MBA graduates. I know many of them who are unable to find work and hassled by HSBC to pay off their study loan but they cannot cause they live on Job Seeker Allowance (which does not allow you to attend interviews abroad and if you do then you will not be paid.) And LBS is not being helpful at all. Such a schame.

  15. I’m guessing it doesn’t make any/much difference. MBA is good for contacts/networking/getting onto the MBA milk round. If neither of those are working for you it doesn’t tend to impress (certainly not the people I know). But you will still have that network for some-time so just keep persisting with that, in the mean-time the above are paying your bills. The path that suits you will also depend on your path – if academics are your weakness then try to do something that will overcome those. Similarly, if experience is your weakness then try to get internships, preferably those that enable you to demonstrate something tangible that you have achieved during your time there.

  16. business consulting (and not at McKinsey) + IB Sales business manager role + now in Sales at top tier IB…

    also

    I agree with some comments written above. There are many part of an IB organization you can work in and still aspire to some nice $300k – $400k salary.

    There s total misconception of what Middle Office / Back office is. Of course it s not galmorous, but not every job entails sending email confirmation to the Bank clients

  17. Insert your comment here (under 1200 characters)…The author clearly needs a basic maths lesson.

    Adding up the probabilities one gets 117% or 107% (depending on accounting qualifications). You know you want to check that i’m right.

  18. @clever – the probabilities are not intended to sum to 100. Each stands on its own merit (or not).

  19. what if we do MSc Finance?? Is it not sufficient? Please advise

  20. Nice article. However, I think the probabilities are a bit high, as there are many qualified FO people available who are availble and are inexpensive; and these are the people those wanting to transition into FO.

    In this market, hiring managers can easily specify the precise characteristics they are looking for (type of FO experience, tier of bank) and get a list of several qualified people. Moreover, it is much easier for the hiring manager to justify hiring an expericenced FO person to senior management, as opposed to taking a chance on someone without FO experience. Whether this is “right” is not the issue, this is the situation.

  21. The 17.5% success of strategy consultants – it is the VAT rate they were awarded and that is about it.

  22. I think its all about being smart enough (not book smart) to identify the opportunity to get a foot in the door and then making it happen….my situation
    10 years Recruitment (sales)….left good salary / package and took junior role as Relationship Banker prior to GFC…..from there into a more substantial role selling direct equities and fixed interest to retail client….currently selling Fixed interest to Insto clients for a large regional player….next step tier one IB sales…all with an undergraduate business degree (non finance) and a post grad diploma in applied finance from no-name university – sure an ivy league degree will help but more important for sales roles is hunger, tenacity, smarts and the ability to make things happen

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