Post-Layoff Options: 8 Strategies to Pursue If You Get the Axe (and 3 Mistakes to Avoid)
“M&A is all I know! What else could I do?”
-Banker Fearful of Potential Layoffs
This quote comes from a story a reader was telling me the other day. With layoffs spreading, even those currently employed in banking are starting to think about their “Plan B.”
We’ve previously looked at how to get into the industry in spite of a bad market, as well as what to do if you can’tget in despite your best efforts.
But if you get laid off, what can you do besides M&A?
“M&A is All I Know” – Really?
It’s easy to believe this one.
But in my experience it’s not true, especially at the junior levels. Analysts or younger Associates often jump into new pursuits without much hassle – the less experience you have, the easier it is to switch. Mid-level guys trying to transition face a much tougher task.
Also keep in mind that little of what you learn in finance has much to do with finance.
You spend more time learning people/teamwork skills, proper email and phone etiquette, and even how to present yourself than you do learning Excel (don’t tell that to anyone who just spent $10,000 on a training course, though).
So even if you think M&A is all you know, chances are you’ve picked up some other valuable skills along the way.
Your Marketability Goes Up, Not Down, After Working in Finance
After investment banking, your options increase – even if you get laid off before your “time is up.”
You have more skills, more contacts, and you have a much better idea of what you actually want to do. Yes, there are a few options that may become more difficult to pursue, but nothing’s 100% certain.
The banker who thought that “all she knew was M&A” made a common mistake: underestimating yourself. Thinking small, rather than Thinking Big
And thinking small harms you far more than getting laid off.
Exceptions
Private equity is one area that becomes more difficult to pursue post-layoff. Like banking, PE recruiting is very structured and most people who get in from banking have followed a “standard” path. PE recruiters view anyone who did not finish a 2-year analyst stint with suspicion.
Earlier this year, some friends ran into this exact problem – they ended up going to industry or spending months pounding the pavement at smaller PE firms to win offers.
You’ll have better luck with hedge funds and anything that lacks structured recruiting. They care more about what you can do rather than whether you “put in your time.”
Ok, So Give Me Some Strategies!
Here are 8 “strategic alternatives” outside of finance you might consider in the case of a layoff.
1. “Moving to Industry”
Although bankers sometimes look down on “moving to industry,” when times are bad they start saying, “Wow, you’re employed? Cool!”
Coming from something as intense as banking, you also have an advantage over others competing for Corporate Finance / Business Development roles at companies.
Yes, you will take a pay cut, it will not be as “prestigious,” and the advancement opportunities will not be as good.
But it pays the bills. And it might just be more interesting than spreading comps.
2. Teach for America / Peace Corps
Both these programs have excellent reputations and in some cases even have established recruiting programs, so either one could be a good option.
One warning, though: make sure you actually care about what you’re doing – don’t use it as a way to time the market.
Let’s be honest, not everyone actually likes this type of work. Don’t lie to yourself if you really want that new Ferrari that only a $200,000 bonus could finance.
There are plenty of other nonprofits you could join, but these are 2 that are well-positioned to help you with recruiting in the future.
3. Government Agencies
In past recessions, laid off financiers sometimes went to government organizations like the World Bank or the International Monetary Fund.
Those are still good options, but these days we should add the US Treasury – and any other governments that now own stakes in public companies – to the list.
Effectively, these government agencies are now mini-private equity funds, with portfolio companies such as… Citigroup. And they’ll need some financiers to help manage their new holdings.
Yes, it will be a pay cut and it may not be as “prestigious,” but this one is going to become even more attractive in future years.
4. That Ski Bum Idea
We covered the ski bum option before from the perspective of someone trying to get into finance.
But for someone who has been laid off, traveling or taking a “gap year” can also be viable – the major issue comes down to whether the economy will be better or worse in a year, which no one can predict.
However, if you’ve already been working for years and have some experience, market recovery is less of an issue in the long run.
You do need to figure out how to pay the bills, but if you have enough saved up this is not a big deal in the short-term. And the cost of living is so much lower in countries outside the US / Japan / Western Europe that paying the bills becomes easier while you’re traveling.
Note: I am off being a ski bum as I write this, and would seriously consider it if I had been laid off.
5. Medical / Law School
Most people go into medicine and law for the wrong reasons – so neither is at the top of my list.
Medicine in particular might have a negative ROI if you look at the amount of work, school and money required compared to what you eventually earn.
Law can be better, but corporate law is even more mundane than finance and you still take a pay cut – even at the Partner-level.
You shouldn’t jump into either one unless you’ve already had strong inclinations to pursue them in the past.
Other grad school could work as well, but again make sure you have an actual reason for doing it.
6. Move Back with Parents and Reassess Life
You might combine this one with some of the others on this list, so it’s not a completely separate option.
There’s no shame in moving back home, cutting back on expenses and figuring out what you want to do. To be honest, I think people don’t do enough of this.
Many readers email me with questions on the lifestyle, whether they really have to work 16 hours a day, and how long it will take to “make it.” If you’re contemplating any of these right now, you should reconsider any plans to work in finance.
And taking a time-out might just be a good way to do that.
7. Consulting
I don’t mean “Management Consulting” – I mean actually taking on clients of your own.
For example, let’s say you know a lot about the investment banking recruiting process and you decide to start a website to promote yourself and your services.
You’d be copying me, of course, but you’re welcome to try. 
It’s not just junior employees who do this, either. I know of several Managing Directors who found themselves out of work and consulted for companies during the last downturn.
Of course, you probably don’t want to do consulting forever – but it can boost your reputation and give you a lot of useful connections.
Anything you’re an “expert” in can be something you turn into a side business. I have friends who consult in everything from fitness to personal finance to fashion.
8. Start a Business
I’ve received some questions about this one since I’ve done a combination of this and #7 post-banking.
You could be like Johnny Drama and open your own bar in New York, you could start a retail business, or you could start the next Microsoft or YouTube.
Your biggest fears will be failing and/or losing a lot of money – and the best way to deal with these is to start small, test frequently, and avoid anything that requires huge upfront investments. That’s why everything I do is online.
You could argue that banking is good preparation since you’ll develop a great work ethic; in other ways it’s not so good since you don’t learn much about implementation.
The best time to start a business is during a recession – that’s when others run away scared and when big companies cut their budgets and stop exploring new markets, which creates more lucrative opportunities for you.
What NOT to Do
Ok, so those are 8 strategies you could pursue if you get laid off and the prospects of another finance job don’t look promising.
But what should you not do?
1. Worry About Gaps on Your Resume
These days almost no one has a standard career and a “perfect” resume almost strikes me as suspicious.
As long as you can explain your time away from work, you’ll be fine. Sure, if you took 6 months off to watch Cartoon Network all day, I won’t hire you – but if you can say that was part of your study to be a cartoonist and you have a portfolio to show me, you’re in a much better position.
(Just not in finance – we don’t accept artists, sorry.)
Over the past 4 years alone, I’ve hopped between technology, consulting, banking, and entrepreneurship, and I’m still fine. In fact, I still get buy-side opportunities forwarded to me, despite the market and my random background.
2. Think Your Life is Over
This one drives me nuts.
If you’re young and don’t yet have a family, house, or other major obligations, your life is never over if you get laid off. VPs who get “the axe” and have 2 mortgages with little money saved up are in a far worse position than you are.
Cut back on your expenses, move back home if necessary, sell some of your stuff, and cover your expenses while you’re figuring out what to do next.
Resist the urge to prematurely declare that your life is over.
3. Let Others Tell You What to Do
So, which “post-layoff strategy” is best? Which one has the best “exit opps?”
These are pointless questions because there is no “best” – there’s only what works for you and what doesn’t work for you.
When times are good, everyone tends to follow the herd (Late 90’s – Start or join a dot-com company, Mid-2000’s – Go into finance). But a bad economy actually makes this problem worse since desperation levels tend to rise.
Don’t let anyone convince you to drop $200K and 5-10 years on medicine because it’s “stable.”
Other Strategies?
I just went through a few of the more common options, but I’m curious to hear what other strategies you’ve heard of for those who have been laid off (either recently or in the last recession).
If I can get enough good submissions, I may write another article featuring financiers who have successfully dealt with layoffs.
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Tags: changing careers, economic recession, investment banking, understanding investment banking
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You say that you still get forwarded offers for buy-side opportunities. Out of curiosity, do you get forwarded to them by friends or headhunters? And do they forward them to you because they know you’re not working in investment banking anymore, or because you asked them to?
And last question–are you still considering going into the buy-side?
Mix from both friends and recruiters and even our old staffer haha. They know I’m not doing banking anymore but I never said what I was doing, so I think they assume I am looking for work. I never ask for anything, they just send them along.
I’m not considering buy-side at the moment, though I may one day do VC or be an angel investor far in the future.
Why not add management consulting to the list?
Also: Any benefit in pre-emp jumping from banking? If you leave on your own after a year (say you don’t like banking) is that viewed as any better?
I sort of considered it to be within the whole finance realm, and seeing as consulting isn’t doing too great either lately, didn’t think it was worth mentioning.
I think it’s better if you leave voluntarily rather than getting fired, but only if you have something else lined up and immediately start with that.
Speaking of management consulting, do you expect to see a noticeable amount of layoffs in this sector soon?
It certainly is not insulated from the economy, as it derives fees from many of these firms looking to cut expenses, but there has not been much news about layoffs in reference to the top-tier firms — MBB
Yeah I think there will be layoffs, I was just speaking with a friend at MBB recently and he mentioned his office was only 40% utilized in recent weeks… definitely cause for concern.
Every job is competitive now though–even corp dev! I think its probably better just to try and hold on until we can see the economy turning around. As a banker I never thought I would say this, but billable hours look like a nice revenue stream with low beta. I admit comp in good times is lower, but depending on risk tolerance it might be nice to have that steady stream of income and high base throughout your career. I also think partners make more money that people think. If you’re a partner pulling down a couple mil a year, isn’t that the same as what an MD makes?
MDs can potentially make quite a bit more than that, though yes, most make in that range.
Still, I think lawyers/consultants/anything that bills by the hour gets paid less overall.
I know that this is not your area of expertise, but I thought that only a few medical specialties, such as spinal surgery, broke 1 mil/year. I have long harbored an interest in medicine, but the compensation was a definite deterrent. If there is a way to earn more than that, this recession may be a good opportunity to change focus. How would a MD reach that level of compensation? By opening his own medical facility?
MD = Managing Director at a bank
DO NOT DO MEDICINE FOR THE MONEY.
I repeat, do not ever go into medicine because you want to make a certain dollar amount – there are 1,000 better ways to reach whatever level you’re looking for.
As an aside, I really have no clue how you would go about opening a medical facility seeing as I am a finance and marketing guy, not a doctor. I sell things, I don’t save people.
This is a bit of a tangent question… but maybe not so much. I hope to live in Spain forever not long after I turn 30 (currently 22). I’ve always liked to learn so I’m pretty sure that I’ll go to grad school before making the transition though.
So my question is simple: is an MBA much more portable than a JD degree?
-PS: Spanish Fútbol >>> American Football !!!
I’m not sure what you mean by “portable” but generally MBAs from top schools are respected/recognized worldwide.
There is really no reason to go to law school unless you want to practice law or do policy work… business gives you a much wider set of options.
Thank you for sharing your thoughts here, incredibly useful information for us readers.
Although you have discussed this in one of your articles, how do you rate this move: Masters in Finance graduate getting into Finance Operations role (budgeting, forecasting, etc) in a BB.
Yes, in an ideal situation i would go for a more Investments / Capital Markets kind of role. But i think this opportunity is challenging as well. What about my future prospects if I want to switch back to a more Front Office role.
Thanks
It’s ok but honestly it is pretty difficult to move from back office to front office in most cases. Easier if you’re moving to more of a trading role though. Still, in this market I would take what you can get.
Hey mate.
Would love to know how your friends moved into personal finance consulting from investment banking…
Cheers
The same way you do anything: he started small, built up a following (using a popular website) and got to the point where people started asking him for help. Then he decided to formalize what he was doing.
It does take quite awhile to ramp up – I made almost nothing when I first started M&I, for example, so it’s not something you can do overnight. It’s a gradual process.
Two random questions that do not really pertain to the article. You may or may not be able to answer them, but I will throw it out there.
1. How easy is it / what is the process to get into a PE shop in London from a boutique bank in NYC? I would have completed the two-year analyst stint and want to get some experience on the buy-side in a different financial hub. Just for the heck of it, what if I had bulge bracket experience and wanted to do the same thing?
2. How should I put the Tuck Business Bridge Program on my resume? I attended it the summer after my graduation right before I began full-time. I assume it is something I should have on there because of name recognition and the fact that it is fairly prestigious (plus, I went to a liberal arts college, so it gives me some “finance” education).
Thanks for your help.
1. It would be very difficult logistically to recruit because you would have to fly across the Atlantic every so often. Possible, but significantly more difficult than staying in the US.
2. Use no more than 1 line and put it at the bottom or as a brief mention in Education.
I am currently a Junior and projections continue to not look good into next year, which in turn means full time recruitment will be difficult again. What is your opinion on pursuing a Masters in Finance or Econ. Will going to a prestigious school for a grad degree help leverage a fulltime offer there after? I know you do not suggest timing the market, but if recruiting is as difficult (if not more) next fall as it is now, could getting further education at top ranked school put one in a better position after that year or two of study?
Thank you.
The degree alone will not help you, but if you have no other options and want to “wait it out” you can try. A better school will definitely help, but the only degree that makes a difference by itself is an MBA.
I’m currently a sophomore and will be applying for an SA position next year. I’m considering this boutique ib internship..
The problem with this boutique ib internship is that 99% of the work would be cold-calling firms for potential deals. Should I take this or look for a more worthwhile internship?
Thanks.
If thats your only option, take it, otherwise look for something better. I’d keep it as a backup plan only
I know it is a bit counter-cultural given the traditional snobbery amongst IBers, but you haven’t mentioned moving from the IB side of things to the more plain vanilla institutional/commercial or even retail banking sides of things.
With the upheavals in debt capital markets and the flight of savings into deposit-taking institutions, there seem to be some good opportunities around creating new products in this area, and a lot of staff in these areas seem to lack the entrepreneurial flair needed to make new products work.
I still have my job, but in the last few months two friends have made the jump out of IB into product design roles in deposit taking businesses, both are working less hours and both have the opportunity for significant bonuses if their product innovations succeed.
That’s true and that’s a really good point you make – I guess I just left it out because most of my friends have not done that.
But definitely something to consider these days with the way the market is!
Is it possible to get laid off immediately after training? I didn’t do too well on some of the exams in training, but I just started at my desk. They haven’t released the results from training yet. Is there a possibility my job may still be okay?
It’s rare but it does happen – I would not worry about it too much if your main concern is not doing well on exams… usually they only fire people for repeatedly screwing up on the job.
I’m a lawyer who was laid off in the past year from one of the largest Philly firms (a nationwide firm). I almost exclusively worked on private equity M&A along with some securities work. Prior to law school I worked for 3 years on a trading desk at a global commodities trading firm.
I would love to break into small / middle market PE but don’t seem to possess the requisite background. Any advice regarding PE or another realm of finance that may be easier for me to break into? Any suggestions for ways of bolstering my resume would be great.
thanks
Getting into banking might actually be easier, because PE is hard without a banking background first. For your resume, just focus on 2-3 specific M&A deals you worked on and try to make what you did sound more quantitative than it actually was.