Investment Banking: Is It Worth It?

I’ve recently found myself having numerous conversations with people who are either considering entering the Investment Banking (IB) industry, currently in IB or have recently quit the industry. Those who know me understand that I have strong opinions on the topic and the industry, but not just because the industry itself is controversial, but more because I am sometimes worried that many of the world’s brightest young minds in top undergraduate and graduate institutions are lured into IB for the wrong reasons. The decision to start their professional lives in IB can shape their entire careers in either a positive or negative way, which entirely depends on many factors which I will try and explain below.

Before I get into details, a little background on my experience: I worked as an Investment Banking Analyst at a bulge bracket bank for about 18 months. My first 12 months were in NYC and my last 6 months were in the Mexico City offices. Towards the end of 2015, I decided to quit and have now been out of the industry for about 4 months. My other experiences include summer internships in Private Banking in NYC and Private Equity Real Estate in Florida. Furthermore, I have good friends who have been or currently are in IB at Goldman Sachs, BofAML, Citigroup, Deutsche Bank, Barclays, Morgan Stanley, BNP Paribas, Jeffries, Nomura, and some boutique investment banks. Most of these were/are based in NYC and others were/are based in London, Hong Kong and Mexico, among others; some of them were/are in Product groups (M&A, Equity Capital Markets, Debt Capital Markets) and others were/are in Coverage groups (Financial Institutions, Consumer Retail, Energy & Power, etc.).

I believe it’s important to mention all this to you so you’re aware of my background and experience on this topic, which are what have helped me develop what I consider to be a reliable and unbiased opinion on this topic. I did not see enough emphasis on these things and more when I was browsing the internet to read about people’s experiences with IB, particularly when I was deciding whether to accept or reject my offer. Not to pick on anyone, but I remember the week before I accepted my offer, I read a piece from Stephen Ridley, a guy who quit a top-tier bank in London to become a musician. He made some great points about why IB can be horrible and the wrong choice for many people, but I thought it was incredibly biased against investment banking, mainly because he decided to go into a field that had absolutely nothing to do with finance post-IB and probably doesn’t even require him to get used to an office life. That’s not the case for most of us, so I thought it was very subjective. That’s just one story, but examples like his motivated me to write this piece.

I wrote this piece as a reflection of my experience, but the main purpose is to help provide further information and insight into the industry for those who are considering joining it or have friends who are considering joining.

Is Investment Banking Worth It? My answer is: It might be. It all depends on who you are and what you want to do with your life. Read on.

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Why I Accepted My Offer

I still remember receiving my offer from BofAML in early October 2013, only a month or so into my senior year at Bentley University. I was extremely happy, and immediately went on to tell my family and close friends. As an international student who didn’t go to an Ivy League university, this felt like a step towards greater things.

What I started questioning after the excitement faded is that it felt great to tell people I was going into IB at a big bank in NYC, but was it really going to be great? It still feels great to say that I worked in IB, but in retrospect, parts of the experience were pretty brutal and some will probably be useless in most of my future endeavors. Some Israeli acquaintances who have both served in the Israeli army and worked in IB in NYC have told my friends and I that both experiences are highly comparable in this regard; it sounds great to say you went through the experience when it’s over, but you don’t know how tough it can be until you actually go through some hard times on the job. Some of these acquaintances even said they preferred the army in some respects, where staying up all night doing fitness drills would not require the brainpower & stress-levels that building a full-fledged financial model overnight could require.

Back to the story: I had one week to accept or reject the offer and at this point, all the first-hand information I had about IB came from one close friend from Bentley who had just finished his summer internship as an IB Summer Analyst at Citi, and had accepted a full-time offer to come back after graduation. He told me about his crazy hours, his lack of sleep, his highly demanding superiors, and the very hierarchical mentality within the industry which he’d encountered; however, he also told me that he’d never learnt so much in a span of 10 weeks as he had during that summer internship, and that he was really excited to go back and rise up to the challenge. (FYI: He also quit after 2 years, like many other colleagues who started at the same time as me.)

On the surface, with the brief knowledge I had about the industry, it seemed like a bittersweet proposition; sacrifice your health, free time and social life in exchange for money, learning, prestige and a great deal of opportunities that would only be available to you after going through this experience, should you choose to leave. How could I know if it was actually worth it? Some people who have clear ideas of what they want to do with their life and who prioritize health and personal life would have already rejected the offer at this point. That wasn’t my case, maybe it isn’t for you either. All I knew was I had no idea what I wanted to do with my life at this point except become a “successful businessman” somewhere down the road and I figured this job was a great way to start because, well, a lot of other successful businessmen started out this way. I also remember telling myself that there had to be a reason why the industry seemed to attract the best and brightest students in the country.

I decided to accept because while I knew it would be tough, I felt I’d regret passing up an opportunity that would push me to my mental and physical limits and where I would learn from very smart people. For me specifically, it was a great opportunity to get serious with my life because I’d spent most of my young adult life partying. My internal consolation was that I had my entire senior year to mentally and physically prepare, and I told myself I’d only be there for 1 or 2 years anyway, since most people who join as analysts only do a few years and then leave for a private equity fund, a hedge fund or for some other lucrative endeavor, using their “IB badge” as a credential.

My Experience

I’m sure there’s some groups that don’t work this way, but if I had to give you some useful figures about my experience as an analyst, below is what it would look like. To reiterate, this was my experience; I could give you dozens of examples of people whose life was worse or better than what I’m about to describe.

1. Time Spent in Office: Average 80–100 hours per week. From Monday to Thursday, I’d get in around 930-10 am, and leave around midnight on a good day, but 1–2 am was more common. On some days, I’d have to get in earlier to take a conference call, print books, or set up a conference room if we were meeting a client that morning. This was during normal days, but when there was a “live deal,” meaning we have important deadlines to meet for an ongoing deal, those hours could become much worse, and sometimes we didn’t go home and stayed 25–35 hours straight. I have heard of worse cases, but that’s about as bad as it gets these days. On Fridays, we would typically get in around 930–10 am and leave between 8–10pm, with some exceptions where you’d have to stay late. I worked most weekends as well, which was not the case for many other of my friends in different groups and different banks. I think I worked about 7 out of every 10 Saturdays, and about 9 out of every 10 Sundays during my stint in NYC. On Saturdays and Sundays, you’d work anywhere between 2 hours if you were lucky to 15–17 hours if there was a pressing deadline. If you’re in Capital Markets, your hours are probably more reasonable than these, since they are somewhat geared around the markets (but not entirely), but again, this will always depend on your group and your deal teams. My time in Mexico was more relaxed than what is described above.

2. Time Spent Making “Pretty” Slides on Powerpoint with Zero Quantitative Work: About 80–85% of my time was dedicated to this. The output of an Investment Banker’s work is almost always PowerPoint slides. There is a huge emphasis on making sure everything is pretty/well-formatted, and in this regard, you spend a surprisingly high proportion of your time making slides prettier; this ranges from making sure everything in your slides is properly aligned all the way to making sure you are following your bank’s color scheme for every pie chart, graph and object on your slides. I even had one senior who wouldn’t let me send a list of questions to a client via e-mail; instead, we would have to put them in a special, “pretty,” word document, and format it perfectly before sending, even if it was only three, one-sentence, questions.

3. Time Spent Making Financial Models/Quantitative Analyses/anything interesting with numbers: About 15–20% of my time. This really is the part that all analysts crave to learn and master. This is also the part a lot of people in IB like to brag they do all day, but in reality it does not take up even half of your day-to-day activities, unless you’re on a live deal that is going to require a stint of 1–3 months of hardcore financial modeling. If you are given the chance to work on deals and pitches where you are actually required to use your brain, and do something interesting with numbers, you will feel fulfilled as an analyst; also, developing these skills is extremely important if you’d like to go into jobs like Private Equity or Hedge Funds afterwards.

4. Time Spent Waiting Around for Work: Roughly 5–10% of my time. My experience was pretty intense and never boring. I have repeatedly read people saying they waited around doing nothing for work while they waited for their MD’s to give them “comments” in the evening, but that’s not how it went down for me. I could barely go and have lunch most days from how intense my work days could get in NYC.

5. Time Spent Sleeping: 5–6 hours per night on average, and about 2–4 hours when it got real bad. A full night’s sleep was rare, even if I didn’t have to work weekends because you feel like you need to go out and be social after spending so much time in the office, which translates into sleeping poorly on most weekends too. It’s a vicious cycle, unless you’re very mature and are okay with staying in and sleeping on the 1–2 nights a week where you can actually have a social life. Also, when you leave the office late at night, you probably had a very intense, adrenaline-filled night where you were under pressure to meet a deadline and I personally needed 30–45 minutes in bed to get distracted from everything before I could fall asleep.

6. Exercise: I was the guy pushing for gym and health in my group, and still I think I didn’t set foot in a gym until my 4th month on the job, and after that I only went about 1–2 times per week, which were mostly on weekends where I could get in to the office later than usual. Going 1–2 times a week was considered a huge amount in my group for a junior banker. Also, if I chose to go to the gym during the day (because I knew things might get more intense at night), it was perceived as me being lazy, or something of that nature. I think the only benefit towards exercise/fitness was that every night I had a free $30 meal, where instead of ordering unhealthy food or large quantities (which is what most people did), I chose to eat good, healthy food.

7. Health: Towards the end of my NYC tenure, I was on a very intense deal where we worked for roughly 3 months, 7 days a week with about 20+ nights where we stayed in the office past 5–6 am and came back around 11am-noon the next day. I remember during this time period we never left the office before 2 am (except for maybe 1–2 nights) and we’d always be back by 10–11 am. Because of this, I spent almost 3–4 months sick, mostly from lack of rest. I remained sick for a while even after that deal was over, because when things “mellowed out,” I was still working 14–15 hours a day, which is typically the industry standard for M&A/Coverage groups. Even without an experience as brutal as this one, you will be tired most of the time in the office, because your routine becomes one where you simply go to the office & then to your bed, and not much else.

Life After IB & Conclusion

Before going further, I think it’s only fair to acknowledge that large banks have truly been making an effort to improve the experiences of junior bankers in the past 1–2 years, but there are still friends of mine who are going through experiences much tougher than the one I went through. I guess my point is, if you want to do IB, find out as much as possible about your group and who you’re going to be working with, because that really does shape your experience to an inexplicable degree.

I have friends who, as IB analysts, travel 3–4 times a month, deal directly with clients, have performed extremely complex quantitative analyses and are given a ton of responsibility every day, which I would argue makes the experience pretty worth it, even if you don’t get too much sleep for the first few years. However, I also have many friends (much more in this bracket, unfortunately) who spend their days on PowerPoint not learning anything substantial, who never are taken to client meetings or trips, who hate their superiors because they don’t care about their health or their professional development, and who would much rather be doing something else with their life but don’t really know how to quit without having something else lined up.

I want to end with my reflection from my experience in IB. Now that I’ve quit, I feel as though I’m capable of pretty much figuring anything out and that I can work hard and efficiently when I set my mind to it. How do I know that? That’s what I had to do my entire time in IB.

Even though in IB you have an associate and a VP/MD that you report to and who tell you what to do, there is an overarching expectation that analysts in this industry can and will figure things out quickly. They won’t complain and whine, even though they haven’t slept properly in weeks/months. They’ll (mostly) always portray strength, and they know that when things need to get done, they need to get done, no matter what. This culture really isn’t for everyone. It wasn’t for me, but it did help me develop some great skills which I will probably use a great deal for the rest of my life. I’ve gone through crazy stints of months with little sleep and high-stress, dealt with crazy old-fashioned banker type personalities who don’t care about you, your health or your professional development, and saw first-hand how tough this lifestyle can be on your health and your personal life. I think these were the worst parts of the experience, but they made me grow up and see things very clearly, in terms of what I want in my professional life and my priorities as a person.

That’s valuable to me. I am now pursuing entrepreneurial endeavors and there is no roadmap of how things need to be done or how to figure out next steps. No one tells me how to organize my day or how to deal with the uncertainty of what will happen tomorrow or next month or next year. But I know I can figure things out, one day at a time, just like I did in IB. I see a bunch of people in the startup world working from 9 am to 3/4 pm, not getting much done, and then going for happy hours. I’m not hating on enjoying your day at work, but if you’re ambitious like I am, you know that it requires hard work. The work ethic in IB and this startup mentality I described (which I know is not the case in all startups) are two extremes, and I agree with none of them.

Part of my life after quitting has been, and will continue to be, finding a balance between the two; where I know the work-pace, structure and efficiency in IB makes you a machine designed to get things done properly, with detail and quickly, I also know that I will do these things in limits, giving myself time to tend to the other things in life which are extremely important: family, friends, health and hobbies. Will you figure all this stuff out from something that isn’t IB? No clue, you’ll know that about yourself, not me.

Lastly, look at things from my perspective. How can life be worse now that I’ve quit and gone through with all this? Everything seems to be uphill/easier for me now, and that feeling would not exist if I hadn’t gone through IB. I appreciate a lot of things that I did not appreciate before, like being able to sleep properly at night, planning a dinner with a friend on a Tuesday, exercising, or reading things in my free time because I’m not tired and stressed all day anymore.

Would I still accept the offer if I went back in time? Yes, I would.

Was it the best place to start my career? How can I know? I made a decision, and I’m choosing to look at the best parts and positive effects that came of this experience. If you have this mentality, any job you take or experience you have can turn into something more meaningful, which is something I learned from my college friends.

Would you go back? Nope. To be very clear on my stance, I would probably not let my kids go into this industry if it still exists and functions in the same way by that time. Most people are in IB for the money, and ironically, I happen to think the money you make isn’t that much when you consider everything you sacrifice, especially if you think medium/long-term. Even if the money was better, I realized that I am really passionate about certain projects and initiatives which I feel contribute something to society, even if in a small way. IB is all about getting a good bonus and trying to get home as soon as possible. There’s nothing that I, personally, can get excited or passionate about with that. At first, it’s all very glamorous because the clients are big companies, and you become very quick on things like Excel and PowerPoint, which makes you think you’re gaining tools and knowledge to change big industries and markets, but you’re really not. Everyone around you is just trying to get paid, and that’s probably the case for most jobs in financial services.

Is IB for everybody? Absolutely not. You’ll know better than anyone if it’s something you could/should/would do. I just hope that all this information helps you make a more informed decision, while you consider it in your particular situation.

The End