Investment banking is a volatile career choice. Those that enter it should expect lay-offs at some point and those that survive will be battle-hardened. Assuming that you decide the industry is not for you, the good news is that there are plenty of exit options at various stages of your career. Here are a few to consider.
1. Join a private equity firm
An obvious option but one that you need to consider after just two or three years into your investment banking career. In China, young banking analysts flock to private equity firms in increasing numbers. In extreme cases, 80% of an analyst class left for the buy-side. Almost all those who left cite better hours and less pressure as the main reasons. They seem so determined that they would still leave even if there is a pay cut of up to 20%.
However, mind the (huge) gap between investment banking and PE. Although both belong to financial sector, the skills required could be very different. Already there are people who fail to adapt to the PE industry and return to banking in frustration after just a few months, even weeks.
2. Start a private equity firm
Senior bankers, especially those who have reached managing director level, have accumulated numerous resources and networks throughout their time in investment banking. They should be able to tap into this vast resource pool to start and run their own private equity firms. An example is Fred Hu, who used to be the chairman of Greater China at Goldman Sachs. He left Goldman in 2010 and started his own investment firm Primavera Capital Group. It currently has more than 30 investment professionals and manages both RMB and USD funds for leading institutions, corporations, and families in China and around the world.
3. Move to academia
Investment bankers, particularly senior ones, usually have a very good understanding of finance theories as well as years of experience in the practical world. This combination, if articulated well, is valuable to university students who aspire to go into finance. As a result, some senior bankers, especially those equipped with a PhD degree, could be hired by top business schools as professors once they decide to quit the banking world.
Tao Wang, currently an Associate Professor of Practice at Shanghai Jiaotong University, is just such as example. With a PhD in Engineering Systems from Massachusetts Institute of Technology (MIT), he spent more than eight years working in the banking world in Hong Kong, first for Morgan Stanley and then for China International Capital Corporation (CICC). When he left CICC at the end of 2013 to take up the teaching post at Jiaotong University, he was already an executive director at the fixed income division.
4. Become an executive coach
Training or coaching is a very common exit options for bankers. Again, it’s mainly because bankers with years of experience in the industry have a lot of good practice and skills, and these can be applied to new ventures. Back in April we profiled a senior Chinese banker who left a big UK bank at the level of executive director and started his own training business in Beijing. Although running a business brings along a different set of challenges and pressures, the financial return he gained over the banking years meant initially he didn’t have to worry about his personal financial circumstances too much. And he is not the only banker who is in such a position.
5. Ride the wave of China’s high-tech boom
Traditionally banking and consulting are the most attractive industries to bright young graduates, not least because of the (much) higher pay. But in the past few years, high-tech firms such as Facebook and Google have rapidly caught up. Similar things are now happening in China too. Dozens of Chinese high-tech firms have listed in the US. Most of them are seeking to expand abroad, a process where prominent senior bankers may find themselves useful. One recent example is the announcement from Winston Cheng, the head of Asia technology, media and telecommunications (TMT) at Bank of America Merrill Lynch, who has confirmed that he’s leaving BAML to join China’s online video giant LeTV, where he will be a senior vice president and head of corporate finance and development, responsible for the firm’s investment projects and potential M&As.
6. Do something whacky (that utilises your business acumen)
It is again a quite common exit route for bankers, in that bankers tend to have accumulated sophisticated industry knowledge and built up a reasonably wide networks over their banking career, which could be made useful once they decide to start up their own businesses. In addition, their excellent understanding of the nature of businesses and commerce means they could almost go into any type of business. We have recently talked to a few former bankers who are running their own businesses now. One opened up a hotel in China’s Yunnan province, another launched a juice business. There are many more like them. What’s more, you don’t have be particularly senior to do this.
7. Go into the public sector
This might be a relatively narrower route, because it only applies to very senior and prominent bankers. And there are only a handful so far. One of them is Ma Jun, who is the current chief economist at People’s Bank of China (PBOC) – China’s central bank. He used to work for Deutsche Bank for about 14 years. When he left to join PBOC in 2014, he was already Deutsche Bank’s chief economist for Greater China. Another one is Zhang Hongli, who is now a Senior Executive Vice President of at Industrial and Commercial Bank of China (ICBC) — one of China’s “Big Four” state-owned banks. Before joining ICBC in 2010, he was President of Greater China of Deutsche Bank.
The most legendary one, however, could be Zhu Changhong, who moved from PIMCO in 2010 to become the chief investment officer at the State Administration of Foreign Exchange – the government body looking after China’s huge foreign exchange reserves. However, Zhu left the position after four years for reasons that remain unclear today.