A career in banking is by definition brief. In fact, the phrase, “burning the candle at both ends,” must have been thought up by an M&A analyst.
This is what the job involves – working extremely hard, because, as a junior grunt you are a small cog in a huge machine and all you have to offer is your time and your daylight hours.
Your economics degree is worth nothing until you know how to operate PowerPoint and Excel whilst being water-boarded.
That’s a brutal summary but it’s the truth, and you are paid well for your sacrifice. A friend of mine, when we meet up from time to time and reminisce about the bad old days, calls it blood money, because that’s what it is.
Each one of our graduate intake had their own individual reasons for wanting to work in M&A (the most common overlapping one was obviously money, followed closely by prestige). Moving further down the list however, our motivations were all quite different.
One of our friends wanted a sports car and banking was the quickest way he could think of to get one (he got it after two years). Another one desperately wanted to prove himself to his older brother.
However, six years on and the percentage of our fellow first year analysts who are still in exactly the same role is low to negligible. In fact, here is the analysis, done on the back of a beer mat last week:
|Current Role||Percentage in each category|
|Exactly the same role in the same bank all along||4%|
|Different role in the same bank (at least one internal move)||7%|
|Different bank (different or same role)||16%|
|Moved to the buyside (asset management, PE, Hedge Funds)||42%|
|Something totally different (e.g. consulting, entrepreneurship)||24%|
|Lying on a beach||7%|
Clearly, the temptation to parachute out of banking is high. Why is this? Well, simply put, the money and the hours may be better elsewhere (AKA private equity, hedge funds), but none of these places recruit directly from university. You need a few years’ banking experience before these opportunities are open to you. And even when the money is not better elsewhere, the temptation to leave banking for a job with better hours is still high.
The key question is: when do people tend to leave? Is there a sweet spot for how long it takes to become worth something to a private equity firm or a hedge fund - before you lose your humanity entirely through sleep deprivation?
The rule of thumb is that you can start to look for a new job at any point after your first eighteen months. Some of the larger funds hire second year analysts, but you should know that the big shops (KKR, Carlyle, Permira) tend to feel a lot like banking and the hours can be just as bad. After all, there’s no point jumping out of the frying pan and into the fire.
Although it doesn’t hurt to start before then, the best time to look is when you have reached the Associate level, after 3 to 4 years. At that point you’ll have the hard skills necessary but will probably have developed some soft skills too, where hard skills are financial modelling and company valuation, and soft skills are ability to negotiate and handle yourself in a business meeting with CEOs or investors.
Should all of this put you off trying to get a job in a bank in the first place? Clearly not, as long as you know what you are signing up for.
The author started his career in investment banking and has since moved to a hedge fund