Holla Back, Office: 7 Reasons You Shouldn’t Work In The Back Office

530 Comments | Investment Banking - The Back Office

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“Andy used to want to be in the heat of things, sealing deals and wooing clients, but now he’s destined to be support staff.

Holla back, office?”

BigLaw, BigSchmaw, The Leveraged Sellout

Ah, the back office. Should you go there? Is it worthwhile? Are there any exit opportunities?

I try to give detailed tips on everything from private equity interviews to investment banking resumes, but my advice on this one is simple:

No.

Front Office vs. Back Office

There seems to be some confusion over what constitutes “Front Office” vs. “Back Office” (and then there’s that netherworld of “Middle Office” in between the two), so let’s be clear on terminology.

“Front Office” refers to any group that generates revenue for the firm – investment banking, wealth management, private equity, and sales & trading are all examples.

One exception: equity research is still “front office” even though it doesn’t directly bring in revenue.

“Back Office” is anything that does not generate revenue – IT, accounting, HR, risk management and compliance are examples.

You might consider some of these “back office” roles – such as risk management and compliance – to be “middle office.” But let’s make things simple and just go with “back office” for now.

As you might surmise, groups that don’t bring in revenue are not viewed favorably in a culture where greed is good.

But why specifically should you not work in the back office?

1) The Front Office Doesn’t Care

This might be the biggest misconception that prospective financiers have: that it’s “easy” to transition from back office to front office.

In practice, it’s very difficult and I’ve rarely, if ever, seen it done. In cases where it does happen, usually it’s moving from “middle office” areas such as risk management rather than jumping from IT to M&A.

Often, engineers who want to move into finance are “sold the dream” on joining IT at a large bank, thinking that they’ll be able to break in at some point in the future.

But you know what? Out of every single engineer friend who graduated with me several years ago and went to work in IT at a bank, not a single one has successfully transitioned over – even though they all want to.

2) Top Business Schools Don’t Care

Business schools classify candidates into 3 categories – the “prestigious job” (finance / consulting) crowd, the “average job” (IT consulting / accounting / product management) crowd and the “did something completely different” (became a monk in Tibet / started a company / became a wandering bard) crowd.

Or as Alex Chu over at MBA Apply so eloquently puts it, the “Blue Chips,” “Average Joes” and “Vagabonds.”

Banks and other financial services firms recruit primarily at the top 10 business schools; these schools have very few students who took the “average job” path, and by doing back office work, you put yourself in this category and therefore reduce your chances of getting into one of these top schools.

Don’t believe me? Take a look at what Alex has to say on the topic:

“The difference with HBS, Stanford and Wharton is that you’ll see far more Blue Chips and Vagabonds (and by extension, less Average Joes) than you’ll see at other schools, and particularly at HBS and Stanford.”

Needless to say, HBS, Stanford and Wharton are some of the top business schools for finance recruiting.

3) The Buy-Side Doesn’t Care Either

This one mostly applies to hedge funds, but doing back office work at a large bank is not a good way to break into the buy-side.

Some people get the idea that working in trade execution support might be a good way to network with hedge funds and eventually break in.

While this logic almost makes sense on paper, in practice it’s much better to get actual experience doing trading or investing if you want to work at a hedge fund – even a small “prop shop” or smaller hedge fund would be a much better strategy for getting into SAC or Citadel one day.

And Steve Schwarzman really doesn’t care that you did IT work at a bank – so don’t expect a great reception in private equity, either.

4) Goodbye, Models And Bottles, We Hardly Knew Ye

Don’t expect too much pay in back office jobs, let alone the models and bottles you lust after (if you’re female just think of male models here).

You’ll likely be earning slightly less than what investment banking analysts make as base salary ($60K), so probably $40-50K in your first year with a very small bonus (5-15% of base salary).

It’s hard enough living in New York or London on this kind of base salary, but to barely get a bonus either… that’s like pouring salt in the wound.

5) Respect, I Never Get Any Respect Around Here

There are myths about how bankers don’t respect lawyers when working on deals, but in my experience this is rarely true; no matter what you say behind their backs, no one directly insults or disrespects lawyers.

But back office folks are directly insulted. I’ve seen MDs yell at risk management and compliance staff because of draconian restrictions, and I’ve seen even lowly Analysts get into arguments with IT staff who are told “FIX IT NOW!!!” repeatedly.

Once again, those who don’t generate money in a culture of money are not very well off.

6) It’s A 9 To 5 Job

Yes, this is a bad thing. The problem with standard (or almost standard) hours is that learning and advancement opportunities are also very limited. If you value peace of mind and a stress-free environment more than the potential to advance, then back office work might be for you.

But I’m guessing most of you don’t fall into that category.

This type of work is more appropriate if you want to have a secure, stable job with little in the way of either downside or upside.

7) The Work Itself

Finally, the work you do in the back office is almost uniformly boring and even more repetitive than spreading comps, creating pitch books and pulling all-nighters to fix broken printers.

While you could argue that investment bankers are overpaid paper pushers as well, they actually bring in revenue via deals. And at the senior levels they focus on relationship-building, which is far more interesting than monitoring employee trades.

Ok, But Is It Really That Bad?

There are a few exceptions. As mentioned above, if you are simply seeking a low-stress environment while still being able to claim that you “work in finance,” then the back office might be for you.

Another exception: internships. It’s not necessarily the end of the world if you end up in a back or middle-office role in a summer internship, but you should try to transition out as soon as possible – it’s much easier to move over as an intern than as a full-timer.

The Solution

“Ok,” you might say, “But if I can only get back or middle office roles at bulge bracket banks what should I do?”

Simple: Go smaller. It’s far superior to do banking or trading at a boutique than to do back office work at a large company.

Sure, you might not have the same exit opportunities as your friends at Morgan Stanley IBD, but you’ll still be much better off than your friends at Morgan Stanley IT.

Boutiques are still hiring, even in this market, and are often the best strategy for those who are transitioning into finance from other careers.

Holla Back…

…if you can find me a single example of someone who successfully moved from back office to front office.

In the meantime, focus on doing client-facing work anywhere you can – that’s always better than being the IT guy (or girl).

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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530 Comments to “Holla Back, Office: 7 Reasons You Shouldn’t Work In The Back Office”

Comments

  1. Anders says

    I have read a few comments now and are getting more and more depressed. Have been working in risk management 4y now and have tried to move so many times. Have a master in finance from a good university. Now it feels like I have waster my career and I don’t know what to do. really sad

    • says

      I wouldn’t get depressed. This article is probably overly negative. You can definitely transition out to other groups, but IB is harder than other options such as those that are more S&T-related (if you’re currently in risk management). Transitions are actually more common now than when this article was written years ago.

  2. Adam Holden says

    Hi,

    After 7-8 painful months of job searching I now have two offers to choose between.

    1) Internship within top 15 Banks in Business Data (Mid Office) – 12 month fixed contract. I know a number of interns who have gone permanent, I would either do that or use the money to take a finance masters in London.

    2) Grad role within Accounts/Expenses Payable (Back Office) the top 5 Hedge funds in Europe. Opportunity for ACCA, CIMA, CFA support. Its smaller so would offer more exposure to senior employees & broader responsibilities.

    Like most others i am interested in moving into the front office after a professional qualification. Having researched and interviewed for many entry positions in trading, equity research, IB & portfolio management found all interesting with no clear preference.

    Any advice?

    • M&I - Nicole says

      Congratulations! I’d say 1 – at this point, pick a role that offers you higher pay and a role that you enjoy most so you can save up, perform very well at work (for grad school applications), and go to a target school.

  3. Jackie says

    Here is my example Brian

    I did it, for one of the top 5 banks in Canada. I started in a settlements role and worked very closely with my traders. I shadowed them and used all the systems. We worked very closely for years and I even gave suggestions. Traders can’t function without backoffice so they wont disrespect you. Usually they give sh*t to the back office managers to rush deals.

    I had a strong academic background in finance and now I work there. Don’t lose hope. Anything is possible and always make a good first impression. It took me 4 years but I did it.

    Good luck to you all

  4. Marty Mcfly says

    I’ve been in the back office at two of the best tier one firms and going into my 9th year I’ve become quite depressed at the failure of my career. This article is spot on except you work more likely 12-14 hours and have to take shit from arrogant guys younger than you making 3 to 4 times more and higher title faster. Post Lehman world I would NOT recommend this career to anyone, especially operations who get the least respect, longest hours, and least pay of them all. I want to get out of finance but feeling s bit hopeless at 31. Nine years at the top shops on the street and really have nothing to show for it, maybe only a year’s worth of base (still under 6 figures) in savings. What can I do with my career at this point? Am I too old for an MBA and switching to business development for a Fortune 500?

    • M&I - Nicole says

      I may actually go back to a top tier business school to rebrand yourself. You maybe a bit older in the MBA program, but this is doable.

  5. Sjf1239 says

    I need advice, I’m not sure if I’m in back office or what and made a bad choice. Last summer I interned as s&t at a japenese bank in Nyc (smaller than Nomura in U.S.) left there to go intern in the analytics group at largest asset manager in ny…the analytics group though got merged with another group that’s more back office ish..I mean they interact with clients daily but more in a support function, we go to client sites and help with implementation etc but my job as a full time analyst is basically helping the client with anything as it relates to finance and our software…feels semi ITish…I’ve seen other interns swing consulting from this full time (we are advising kind of but not really) did I make a bad move by interning here/ accepting full time? I know s&t is better but it was a crappy company/ bad culture…help!

    • M&I - Nicole says

      I’d try to move to another company in a more “front office capacity” if you can. I don’t think you made a bad move, but if you want to do more front office work you may want to consider transitioning.

  6. Rick says

    Hi Brian,

    I’ve been trying to break into finance for years. I’m 3 years out of business school and nearly 38 years old. I did an internship in Investment Banking in 2011, but no full time conversion.

    Now I have several opportunities, though they aren’t Front Office. I have a few days to decide.

    Full time offer with M&T in Buffalo, in credit.
    Or
    9 week internship in Treasury Services with JP Morgan, NYC. TS is client facing, not the corporate treasury role.

    The internship is supposed to get me in the door, so a full time position at TS is unlikely. The idea is that I do well in TS, then my manager endorses me for another position at JPM at the end of the 9 weeks.

    I’m not sure which to choose. By the way, I don’t care about age and I’m willing to do whatever.

    Do you have any recommendations? Thanks in advance.

    • M&I - Nicole says

      It depends on how risk averse you are. If you are ok with the possibility of not getting a return offer, I’d go with JPM given its brand name and it’s also in NYC, giving you plenty of opportunities to network. If you really want job security then perhaps the M&T offer maybe a better bet.

  7. William says

    Hello,

    I am looking to get into IB. I currently work as senior consultant for a well-known public sector consulting firm and I am starting an MSF program in the fall.

    I have had an offer come up to be an analyst at a commercial bank in balance sheet management. I am trying to see if the client facing work at my current firm performing financial analysis for public sector clients would more relevant than this back office work (but happens to be closer to banking in nature) at a commercial bank for getting into IB when I finish school. Trying to determine in the short term what is the most leverageable experience.

    Any advice?

    • M&I - Nicole says

      Yes your client facing work is probably more important and I’d focus on elaborating on that.

  8. Sue says

    Hi,

    I am currently in a trade support ops role at a off site location for a well known bank. I really want to get out of ops and change my location. Right now, I have two options: 1) move to another ops role on the buyside with better compensation and possibly more exposures to the PM/trader or 2) another internal middle office role that might lead to different opportunities in the bank after a year or two. I am afraid that if I move into my second ops role, I will be stuck with ops. Which one do you think will help me more in the long run more?

    Thanks,
    Sue

  9. ME says

    What is Data resource group in IB, is it back or mid-office? I have heard people transition into front end after a few years, does that seem like a viable option?

    • M&I - Nicole says

      I’d say it is back office because you maybe pulling up data for the IB team. Yes it can be viable but I am not sure how likely the transition can be.

      • ME says

        Do you think doing courses like WallStreet Prep, CFA level 1, series 79/63 would be helpful to advance a career from back-end to front-end within a year? I would have loved to pursue an MBA, but I doubt I can afford it at this point!!

  10. Jeff says

    Serious Quesiton: Was this article written when the perception of IT was geeky kids that just fix broken keyboards? I just finished an internship at a prestigious BB as a software Developer and worked on some really cool applications. They offered me a return offer that is actually very competitve, but I’m nervous to take it because of articles like this….My goal is to work for three years and then get an MBA at a top 15 school. (Im a senior)

    Thanks for your feedback.

    • M&I - Nicole says

      Not necessarily. IT is very important these days and if you think that this role is something you want in the next few years, yes if I were you, I’d take it. You may also want to explore tech companies too because your skills may also be valued there and pay is also competitive.

      • Jeff says

        True about other tech companies. I’ll probably stick to the bank because the pay is more than gracious for my current skill level. I’d be hard pressed to find higher pay at a tech company for my entry level skills (tech is something I started recently in college). Also their training is super good. Essentially my plan is to learn on their dime, probably go to another pure tech company after a couple of years (3) and stay there for a year to 2 years and then apply for an mba. Looking for top 10 programs. With a solid GMAT, does this sound like a feasible plan?

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