“Should I work in investment banking or not?”
That’s the question that thousands of students are asking themselves every year, when they first hear about the extravagant salaries of investment bankers and the unmatched social prestige associated with the job.
Many ambitious applicants would sell their left kidney to land a job at Goldman Sachs – almost univocally considered as the absolute “Saint Graal” for a successful career in finance.
But should students succumb to the song of sirens? Is it really worth the effort to get a job at a top investment bank? Or is it not worth it, if we take into account the terrible working hours, the virtual absence of work life balance, and the highly stressful working conditions? That’s what we’re going to see in this article.
On this page, you’ll learn more about the pros and cons of a career in investment banking – the things that you need to have in mind before going any further in this path…
I’ll also share some key tips to help you decide if this career is made for you or not, based on your personality, your strengths and weaknesses, and what you value the most in life.
As we’ll see, it’s not all black and white. Both the good and the bad are largely exaggerated by people who typically never stepped a single foot in this industry.
The goal of this article is to give you my personal perspective, after working in this industry for over 4 years at places like Goldman Sachs and Lazard. Let’s get to it.
If you’re reading this, you probably already know what investment banking is about so I’ll keep this short.
Put simply, the role of investment bankers is to advise companies when they want to sell their business or acquire another company. When they advise a company to sell a business, it’s called a “sell-side” deal. When they advise a company to buy another one, it’s a “buy-side” deal.
You can see investment bankers as real estate agents: their role is to connect buyers and sellers, ensure that both parties are happy, and make the deal happen. They get paid for the financial advice they give.
This is the most simplistic explanation that you could find. Now, what I have just explained mostly illustrates the role of M&A bankers – people that work in Mergers & Acquisitions.
Aside from M&A, there are other functions that also falls under the “investment banking” umbrella, including IPO advisory (helping private companies become publicly traded), DCM (“Debt Capital Markets”, helping companies finance their activities by raising debt), and several other jobs that require the expertise of investment banks.
So what will you do as an investment banker? Advising the CEO of Coca Cola, while having Michelin-star business dinners at the Four Seasons every single night? Not really. First, you’ll start as an Analyst.
Your role will mostly consist in creating Excel models, preparing PowerPoint slides, and dealing with several admin tasks. It may not seem super glamorous, but that’s where everybody needs to start.
It will take years (if not decades) to become a legendary rainmaker “whispering in the ears of S&P 500 CEOs”… And most people never make it to this level.
Now that the basics are covered, let’s talk about the pros and cons of working in investment banking.
We can criticize investment banking as much as we want, but there are certain benefits that come with the job that are simply impossible to find in other career paths.
There is a reason why hundreds of thousands of applicants are applying to investment banking roles every year.
Investment banking is one of the best – if not the best – career options for ambitious students who want a high compensation straight out of uni, fantastic “exit opportunities”, and the thrill of working on headline-making transactions.
Let’s be real: the primary reason most students want to work in IB is not to “ensure the smooth functioning of financial markets to enable companies to thrive and prosper, benefiting society as a whole”. Let’s save the idealistic – or “corporate-brochuresque” – talk for another time (yes, I’ve just invented one word).
The reason so many students aspire to become investment bankers is to make money. Lots of it. If investment banks didn’t offer very generous pay checks, you probably wouldn’t see armies of hungry students banging at their doors with all their strength.
To give you some numbers, an entry-level investment banking Analyst can expect to make £100,000 per year on average, including base salary and bonus.
In other words, students who manage to land a role in IB at a top investment bank like Goldman Sachs or Morgan Stanley can clear £100k right out of uni. Not bad.
But the real cash comes with seniority: Vice Presidents generally earn between £300,000 and £400,000 per year (based on 2022 data from Dartmouth Partners), and Managing Directors, who are at the top of the corporate ladder, can make over £500k in a single year.
So yes, there is a lot of money to be made in investment banking, for those who are determined enough to thrive in this industry for several years.
Another major benefit of working in investment banking is the unparalleled “exit opportunities” that this career path provides. Investment banking is a fantastic stepping stone to other jobs which can be even more lucrative than IB, while offering better work-life balance.
You may have heard some people saying “when you work in investment banking for a few years, you can do anything after that”.
While this statement may be exaggerated, it is true that candidates who have IB experience on their CV are highly sought after by recruiters across several industries related to business and finance.
Why is that the case?
Because people who work in investment banking develop a wide range of technical skills in corporate finance, valuation, financial analysis, along with valuable soft skills such as extreme attention to detail, ability to deliver within tight deadlines, and high resistance to pressure.
All those skills are both valuable and desired by hedge funds, private equity firms, tier-one consulting firms or even S&P 500 companies looking to hire top-level executives.
Here are some examples of “exit opportunities” investment banking can offer:
It’s no secret that many investment bankers leave the industry after 3-5 years of “grind”, to join a top-tier Private Equity firm or Hedge Fund. Once they make this move, they can have an even higher paycheck and a better work-life balance.
If you work for the largest, most reputable investment banks, you will probably have a chance to work on billion-dollar deals that will have far-reaching consequences on entire industries, and potentially affect the lives of millions of people. The type of deals that you see on the headlines.
For instance, the merger of FCA and PSA Group (which was announced in 2020) had a significant impact on the automotive industry, by creating the fourth-biggest automaker in the world by volume.
This merger, leading to the creation of the group “Stellantis”, will allow the two companies to accelerate their move towards car electrification. This deal will not only affect the auto industry as a whole, but also have an impact on the lives of millions of consumers (by enabling the roll out of electric vehicles on the market that may not have even existed had the merger not occurred).
A great friend of mine worked on this deal, and I can tell you that the immense sense of responsibility and pride that he derived from working on this deal (even though he was “just” making PowerPoint slides) is very, very hard to find elsewhere.
By working as a junior investment banker, you’ll be exposed to high-stake business problems that will teach you invaluable knowledge about business strategy, corporate finance, negotiation, PR and more.
You’ll also get the chance to participate in meetings with seasoned CEOs and other top-level executives, which is by itself a phenomenal learning opportunity that is almost impossible to find in other industries.
This benefit is rarely mentioned in the list of reasons to work in investment banking, yet it’s a big one. The good thing about this job is that you get to work with very competent people every single day.
People who come from some of the world’s finest universities, who can execute well and fast, and who often have a rock-solid work ethic. It might sound like a small detail, but trust me, when you’re working 14 hours a day with the same people, it makes a HUGE difference.
When you have 4 hours to finish a 57-slide PowerPoint presentation for a large client, you’re happy to have competent teammates on your side who can help you get it done swiftly and accurately… Working with high-caliber people helps make the job more enjoyable and less stressful (relatively speaking).
Ok, now that we’ve discussed the “good reasons” to work in investment banking, let’s see the other side of the coin…
This one is not a myth: investment bankers work very hard. You cannot expect to have a work balance if you choose this career path, especially in the early years of your career.
You may have heard terrible stories of people grinding 100 hours a week and sleeping at their desk…
Let me tell you right now: while these brutal hours may happen during extraordinarily busy periods, they are NOT the norm, and it is unlikely that you will have to work this much in a single week.
Most of the time, you can expect to work between 70 and 80 hours per week, with frequent work on Saturdays. 70 hours of work per week is 14 hours per day on average if you don’t work on weekends, or less than 12 hours per day if you work on Saturdays.
That is indeed a very heavy workload, but it is still manageable for a young recruit in good health. The question is: why are the hours so long? A few reasons:
One thing to keep in mind before considering a career in IB is that you won’t have much control over your own time.
The demands of clients and the orders of senior bankers will largely dictate how you will use your time, which can be frustrating if you place a high value on work life balance.
No one likes to have to cancel dinner plans on a Friday night after receiving an urgent email request from the MD. So if you want to start a career in this field, you have to accept that you won’t have much time for yourself. Most of your time will be spent at work.
One thing that creates a lot of frustration among junior investment bankers is the fact that a good part of the work is administrative.
Bankers spent hours every day correcting typos on PowerPoint slides, making the formatting right so that it looks good for the clients, gathering corporate filings at the request of VPs and MDs, and so on.
I can’t tell you how many times I heard students complaining about the menial tasks associated with the job…
“I have a master’s in finance from LSE, worked my socks off to get a 4.0 GPA, spent hundreds of hours learning valuation modeling and corporate finance, and had 8 super-hard interviews before getting this job. All of that for what? Correcting double spaces and typos on PowerPoint until 2am?!”
This kind of talk…
Now, bear in mind that these admin tasks are not everything. There is some really interesting work to be done in investment banking which is both truly enjoyable and intellectually stimulating.
And aside from the work itself, you may get the opportunity to travel and meet with the management of very big companies. But admin tasks are indeed part of the job.
Now that we’ve covered the pros and cons, you’re probably wondering: “is investment banking for me or not?”
“I want the money, the prestige, the opportunity to work on headline-making deals… but at the same time, I don’t want to work 80 hours per week, I need plenty of sleep, and I hate PowerPoint!”
I understand the internal dilemma, trust me. Now, to help you decide if investment banking could be a suitable career path for you or not, I’m going to list a few reasons that should either persuade you – or dissuade you – to choose this path.
Having worked in this industry for several years, I know which types of people can thrive and be fulfilled in this business, and which ones are unlikely to be a good fit.
Investment banking is for you if:
Investment banking is NOT for you if:
I hope you found this guide helpful. If you’re still unsure if investment banking is the right path for you, you may want to try to get at least one internship at a reputable investment bank, to see if you like this environment. You can read as many articles as you want, but at the end of the day, nothing trumps real-world experience.
Alpha Lane is an online education platform dedicated to helping students and young professionals secure job offers of their highest ambitions in the investment banking industry.
Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.
He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.
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