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Morning Coffee: Leave banking to become a ‘consultant’ and you may never work again

No return from consulting work (Photo credit: sebr)

No return from consulting work (Photo credit: sebr)

It’s a well trodden route: after a decade or so collecting a very healthy salary in an investment banking job, people leave – often involuntarily – and become ‘consultants’, touting their wares on a freelance basis. So far, so good. Consultancy has things going for it, like the chance to continue earning money outside full time employment. Be warned, however: once you’ve become a consultant, it may become a lot harder to return to a proper job in an investment bank.

Research by Erasmus University in Rotterdam, the University of Vienna and the Munich School of Management reported in the Wall Street Journal, found that individuals who are working as consultants are far less likely to receive a positive to response to their job applications than individuals in a corporate role. The researchers sent pairs of fictitious CVs to nearly 100 real job postings in the UK. Both CVs belonged to HR professionals with almost identical job histories, but one was currently working in a corporate role and the other was consulting. The consultant’s CV received 63% fewer positive responses than the corporate CV.

It’s not clear whether the same rule applies in banking but with banking jobs massively over-subscribed at every level, it’s reasonable to assume that banks might prefer hiring corporate men and women to consulting mavericks. Does this matter? Yes, if you want to go back into banking. No, if you’re very glad to be out. There may be no going back from consulting, but we suspect that most consultants wouldn’t want to go back anyway.


UBS offers the most generous client lunches in the City, paying £150 per head. (Financial News)

Citi is building in prime brokerage and has hired a very experienced Goldman banker to help it along. (Finalternatives) 

Deutsche has hired one high yield trader from Goldman Sachs, one distressed trader from Citi. (Wall Street Journal) 

Hedge fund EQI has hired Christopher Lynch from RBS. (Financial News) 

After a decade as rock stars, hedge fund managers seem to be fading just as quickly as musicians do. (Businessweek)

It’s not looking at all good for M&A bankers. (Twitter) 

The new device used by George Osborne to monitor his fitness and sleeping patterns. (Edmund Conway) 

How Google saved its employees from Wall Street. (Reformed Broker) 

Warning: American power postures are a bad idea in Asia. (Science Direct) 

Man meditating outside Goldman Sachs says bankers are people too. (NYMag) 

The best antidotes to envy. (Psychyourmind)

The Shard has become a recognized climbing route. (BMC)

(Morning Coffee has replaced Lunchtime Links…)

Related articles:

The outrageous Merrill Lynch entrance exam question.

How pay in private equity seems to have halved.

 M&A house clears out mid-ranking bankers and rewards its rainmakers





Comments (4)

  1. If I begin my career at Accenture, I won’t be able to come back in an Investment Bank? I haven’t seen many people doing this route actually.
    What is safer? Accepting that management consulting position or doing an internship in the financial world to get another shot at Investment banking? It is the jungle to be hired in a bank even if I have 3 great internships in internal audit (4 months), financial control (11 months) and internal control (8 months) in a French bank and a booming asset management company.
    Any advice would be appreciated!

  2. @Bob, the consultants referred to in this article are not consultants in the style of people working at Accenture, they are consultants in the style of people who work on short term consultancy contracts for all sorts of different banks and are therefore self-employed. If you work at Accenture or McKinsey & Co, or another consultancy firm, you’ll still be in the corporate world and your ability to switch into banking won’t necessarily be affected. However, banks will usually prefer to hire someone with previous banking experience than someone who’s been a management consultant (unless as a consultant you’ve specialized in financial services…)

  3. Interesting article.

    I work as a headhunter for a firm that works across the £800-1500, D, MD level “Consultant” band and we are seeing exactly the opposite. Due to headcount restrictions, we are seeing a huge increase in clients looking to attract talent from competitors by engaging them on an initial “freelance” basis before flipping them to a permanent headcount.

    Additionally, we are also seeing career Consultants that are being engaged on a permanent basis with a number of clients due to specialist regulatory knowledge and also hiring them to work for technology or business aligned change functions due to the mix of function head and change experience through their Consulting lives.

  4. “Both CVs belonged to HR professionals with almost identical job histories, but one was currently working in a corporate role and the other was consulting. The consultant’s CV received 63% fewer positive responses than the corporate CV.”

    I suggest you read this sentence many times and then think about the title of the article!! In plain English, HR in a bank is not a particularly specialised function in the way of being an IB business analyst which I think is much more appropriate area to study. In fact, if you think about it how many freelance HR contractors do you know? How many freelance business analysts do you know?

    Whoever did this study obviously doesn’t understand the banking world at best and at worst is just plain stupid.

    Charlie Chaplin Reply

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