GUEST COMMENT: Investment banking vs management consulting (take II)

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I love investment banking, and was a banker in a previous life, so I'm not about to embark on a spree of banker-bashing.

I enjoyed and relished every moment of investment banking (I'm not being sarcastic here): the long hours, the tight deadlines, the arrogance, the shallowness, and even the odd maniac director (who obviously had been caged up in his office for one too many years).

However, having spent some years (though not too many) in IB I decided it was time to taste the life of consulting. My fellow IB bankers of course couldn't understand why someone would leave to do consulting - particularly if you're not being made redundant or forced out. In their opinion, consulting was a step down. I agreed with them at the time, and funnily enough I still do today.

However, now that I've taken that step, I realise that consulting has three things to recommend it. And they are:

'Work/life balance'

In the time I have worked in consulting, I have done maybe 2 weekends worth of work and a handful of all-nighters - not because I was being shafted by some managing director, but because at heart I was still an investment banker and real work only gets done after close of play on any normal day.

However, apart from these odd occurrences, my home time was anything between 5.30pm and 7pm. If there was a client deadline, I was told it could wait (if of course the client agreed - which they did ALL of the time).

The attitude was plainly that the world wasn't going to trip up because of a delayed deadline so why work when you could be in the pub?

Since being in consulting, never have I had to rush an email or piece of work, or destroy a Sunday morning football session to finish off some financial model or complete some other piece of work which obviously could have waited until the following Monday.

Salary

When I made the move, I knew only one thing - there would be no huge bonus. But when I did the maths, I realized that, ok, I wont have that swimming pool by my country house but I would still be able to afford that country house (I'm by-passing the Chalet conversation here).

Come to think of it, the base salaries in both consulting and banking were +/-10% in the same bracket and certainly the same tax rate. My bonus will never be extravagant, but nonetheless, per hour worked, my salary is higher in consulting than in IB. Bonuses are evidently excluded, but bonuses in banking may never be the same again.

Calibre of colleagues

The most intriguing part of consulting was (and it hurts to say this) the discovery that consultants are, and always will be a more knowledgeable folk than investment bankers.

They may not be as shrewd, as cunning, or as arrogant, as the investment bankers I knew in my previous life, but whatever's missing on the alpha-male-side is by far made up for by their thorough industry knowledge.

The most humbling experience is to be the industry-tsar in an investment bank, and then to be put in your place by some chap who has dedicated his life to understanding the fundamentals of a particular industry.

Be it energy or telecoms, I am yet to come across an investment banker who knows as much as the consultants in the same area.

And I guess, this is where the line is drawn. Investment bankers don't need to know a lot to be experts in any industry. As long as they can get a transaction complete, then all is well.

Consultants however, take their mistakes to the grave, their personal reputation is on the line every time they give an independent judgement. So they have to embody their industry in order to really be the experts they are. If you want this depth of knowledge, reasonable hours, and a high salary, you'll be a consultant. If you want big bonuses, big kudos, and alpha-companions, be a banker.

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