Everyone knows about the 80-hour weeks in investment banking, but little else about the reality of working in the industry makes it into the public sphere. Every year, thousands of fresh-faced graduates eagerly apply to become part of the industry with only the merest taste of what the job actually entails.
As a junior, you are the pawn, or the private, of the banking industry. You are powerless to influence your fate until you gain years of experience. This is the truth about working in investment banking.
You are expected to be the first one in and the last one out, no questions asked. Otherwise, you better have a darn good excuse. Even if you have nothing to do, fill your time up with reading news and looking into past deals/models. If you have already done these two, you may also need to pretend to work.
Many investment banks are offering their analysts faster promotions and more interesting work. Some even market themselves as having a ‘flat culture’. In reality, this is never the case. Banking always has been and is expected to continue to be a hierarchical industry. Yes, you can be best buds with your MD or your VP, but when push comes to shove, you are still the analyst who is expected to create pitch books or update models.
For most analysts, the work ultimately boils down to two things. First off, it is creating “pitch books”, i.e. building PowerPoint presentations for your seniors to use for client pitches or conversations. Secondly, it is either building Excel financial models or (the more likely scenario) updating existing models with financial statements of a particular company. This is what your day-to-day in M&A, Corporate Advisory, Restructuring or ECM looks like. In DCM or Leveraged Finance, you may replace some of the modelling work with pricing bonds using tools such as Bloomberg or proprietary software.
Right from the outset, be ready to get compartmentalised into a sub-team, focused either on a particular geographic region or a particular sub-product. In some instances, you may have some say in what you do, but in most cases, you will get allocated based on your education or prior work experience, or even purely randomly. In fact, it may sometimes remind you of the infamous Harry Potter “sorting hat.”
One of the main charms of front-office is to have a client-facing role. This is true, but only at a senior level. Yes, you will send and receive emails to and from the client, and listen in on due-diligence calls. However, unless you are the next Gordon Gekko, you will not directly speak with or pitch to the client until at least becoming a vice president, which takes six years minimum.
The decisions are mostly made by the MDs or directors of your team. Analysts will most closely work with associates or VPs, so your job is to follow orders and execute with precision, and not to show creativity. Get the job done correctly and on time, and everyone will be happy.
Just like a cadet in the army, you cannot jump ranks. It will take over a decade to go from an Officer Cadet to a Major General, and in the same way, it takes at least a decade for most analysts to make it to a managing director.
The day-to-day workflow is not efficient. Quite often, you will get allocated work late during the day, causing you to stay late in the office to get it done. So, the infamous 100-hour work weeks are filled with empty hours of sitting around and waiting for work.
In comparison, investment banking analysts receive a total compensation (salary + bonus) that is non-trivially higher and grows quicker than most other industries. The money is good and, at the right firm, you also have high job security. Investment banking is second to none for quickly learning how to deal with authority, sharpening your commercial acumen, gaining business confidence and showing to others that you have the training necessary to get the job done.
Sameer Rizvi, CFA is the managing partner of RD Capital Partners LLP, an alternative investments and financial advisory firm that invests into European healthcare, real estate and high growth technology companies. He has previously worked as an Investment Banker at the Royal Bank of Scotland and at Commerzbank