by Brian DeChesare Comments (235)

Investment Banker vs. Management Consultant: Why the Banker Wins with a Knockout in Round 1

Investment Banker vs. Management Consultant: Why the Banker Wins with a Knockout in Round 1

“What’s missing from your resume is a focus on the results… I see all your recommendations and the projects you worked on, but I don’t see what happened as a result of your work.”

-McKinsey Recruiter to Me, 3 Years Ago

Some of you have asked about consulting (as in management consulting, not IT consulting – who in their right mind would do that?) vs. investment banking and which is “better” to pursue.

So here’s why investment bankers dominate management consultants, and why you should do banking.

The Myth: Bankers vs. Consultants Video

On the day the infamous Leveraged Sellout video was released, I received about 10 forwards from readers and friends, so I’m guessing almost everyone has seen it by now.

But just in case you haven’t, here it is again for good measure:

[youtube:http://www.youtube.com/watch?v=ROlDmux7Tk4]

Although it’s fiction, the video does a surprisingly good job of summarizing the bankers vs. consultants debate.

“Be a Burnout Banker, Teaching Math at My Prep School”

There’s a lot of burnout in both fields.  My management consultant friend almost quit after he had to work 14 hours on his birthday once.  True, consultants get uninterrupted weekends… sometimes… but regardless of whether you’re a banker or consultant, you’re going to work a lot.

To imagine the schedule of a consultant, just take my Week in the Life series and add traveling to Idaho at the beginning of the week and coming back at the end of the week.  Also delete all references to quantitative work and replace them with finger-painting.

“Nothing but Grunt Work”

Not quite.

There’s a lot of grunt work in both industries.  In banking, it’s more quantitative and no one cares about offering “strategic insight” and putting things in quadrants – they just care what the Pro Forma EPS is.

“Make a Really Significant Impact and Get Home by 7:15”

I know of no consultants who get home by 7:15.  One of my friends is an IT Consultant and even he doesn’t get home by 7:15.

So far, banking and consulting might seem similar… but let’s take a look at the first part of this claim – “Make a Really Significant Impact.”

Despite what the consultant argues, bankers typically make far more of an impact than consultants.  True, some transactions fall apart, but when they happen you get a new public company or a new conglomerate.

By contrast, you never know if the recommendations consultants make will be implemented.

Got results?

“Mining for Gold out in Saskatchewan”

“Business travel” sounds cool to people who haven’t traveled much before, but it’s less appealing when you’re flying to Saskatchewan every week in February.  Consultants are always on the road, and while bankers do travel occasionally, it is much less of a burden.

It’s fun to live in another country for an extended period, but it’s much less fun to travel back and forth every single week.

Plus, even if you are stationed in Saskatchewan you probably won’t discover any gold.

“You Try to Add Value… I Straight Create It”

At the junior level, no banker or consultant “creates value” and they rarely even “add value.”  Senior bankers who negotiate on their clients’ behalf can sometimes “add value” by getting the buyer to pay more, but even that is rare.

Both banks and consulting firms are in the business of giving advice: advice on what to do financially and what to do operationally.  Companies actually “create value.”

“House in the Hamptons and a Penthouse Loft”

Even at the market peak in mid-2007, 1st Year Analysts made only $150K ($60K base + $90K bonus).  While that’s a lot of money for someone fresh out of school, it’s certainly not enough for a house in the Hamptons and a penthouse loft – especially after taxes.

Bankers do make more than consultants, but it will take quite some time to turn yourself into Gordon Gekko.

“But You Still Can’t Buy Bottles with Starwood Points”

True.

Consultants make a fraction of bankers’ bonuses – firms are notoriously secretive about exact numbers, but even in good times a $10K bonus isn’t unreasonable for consultants.

You could argue that they work a lot less and therefore make about the same hourly wage, but I’m not convinced.  Sure, you won’t pull consistent 100-hour weeks in consulting, but it’s a lot more than 9-5, especially when you take into account the travel.

And even if it is more per hour, good luck having enough for bottles, let alone models.

“Take This Mouse and Get Back to Making $60K a Year”

Most consultants make more than $60K, but not by much.

However, they definitely don’t know how to use Excel properly – just ask that consultant we hired after I unplugged his mouse and he almost fainted.

The Consultant Formerly Known as Banker

One year, we hired a summer intern who was pretty good as far as investment banking interns go.  He didn’t do anything stupid, he always smiled, and he even bought us drinks.  But he “couldn’t take the hours” and he went to consulting full-time instead, in search of that elusive “work-life balance.”

I spoke with him the other day and he said the hours were pretty bad and he was being dragged around between 3 continents on clients’ whims – in other words, it was actually worse than banking, and he was getting paid less.

Damn, It Feels Good to Be a… Consultant?!

I didn’t continue with consulting because:

  1. I hated constant travel.
  2. I wanted to get tangible results rather than making “strategic recommendations” to management.
  3. Oh yeah, I couldn’t tolerate making $60K a year.  Even $70K is pushing it.

That said, you may still want to consider consulting if your original plan was finance:

  1. Consulting is diversified in different industries, so the financial chaos won’t hit it quite as hard.
  2. No consulting firms have subprime anything on their balance sheets.
  3. You might still sneak into PE if you get lucky.  Golden Gate Capital, for example, hires most of its Associates from Bain Consulting.

Rebuttal?

If you’re a consultant who now feels angered, feel free to write in with a rebuttal and I’ll publish some of the most entertaining responses.  Make sure you also enclose some of those Starwood points.

 

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Comments

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  1. Brian,
    This might have already been addressed somewhere, but I haven’t seen it if so. Bain consulting relies heavily of the PE consulting business. This is something I hadn’t heard of until recently. What is this and how does it work? Is it a natural spot for former bankers? Seems like a great article topic. Thanks!

    1. We have a few upcoming articles on this topic (consultants getting into PE). I can’t speak to Bain specifically, but future interviews will cover it. This article is ancient (2008), so I’m not sure how much it holds up anymore.

  2. To switch to PE after MBA should go MBA -> IB -> PE or MBA -> MC -> PE. In general, what happens more often?
    Thanks

    1. IB to PE following an MBA is far more common.

  3. Dear author,

    Do you offer resume/cover letter review for IB for a fee?

    Thanks in advance

  4. geologist in corporate finance as an consultant in M&A. How do you adjust?

    1. Avatar
      M&I - Nicole

      I’m not quite sure what your question is?

  5. Avatar
    RJ Nundy

    I’m born and raised in Saskatchewan and have been working as a procurement/contracts consultant… No gold but plenty of natural resources.. Working in client sites here may mean working in the middle of nowhere with snow 6 months of the year (trust me been there done that, google McArthur River SK). Its not glamourous, but it’s not terrible.. Remember that it’s people that make a project and people here are excellent. Canadians will bump into you and say sorry cause it was probably their fault then buy you lunch.

    Not often you hear a plug for Sask, great point of view, personally I have found tangible results in consulting which keeps me into it, must be a whole other ball game where you come from Brian. Thanks for the article.

    – Cheers

    1. Thanks for your comments.

      To clarify, the comments here were mostly tongue-in-cheek. I have nothing against Saskatchewan and I’m sure it is a lovely place (I haven’t visited, personally, though I was in Brandon in Manitoba a while back). And yes, Canadians are very nice.

      I have nothing against management (or other) consulting, either, but I do think many undergrads and MBAs are better off going into finance if they’re torn between the two. Though it depends on your personal preferences and such as well.

  6. Hi Brain,
    Nice article you have shared. I read it full. This is awesome blog.
    Thanks for the share this post.

    1. Thanks for reading!

  7. The issue I have with this article is simple: you don’t address the work culture. Consulting is a respect driven area. There isn’t that absurd and often macho sense of hierarchy. Quality of life isn’t just correlated to hours clocked, it’s how awful the hours you clock are–ask any PhD. MBB goes after highly intelligent people: physicists, mathematicians, etc. IB has a lot of finance and MBA people. (Yes there is an overlap and that isn’t hard nosed). The difference in the type of people they recruit makes huge differences when it comes to work. Do you want to work with intelligent, well educated, respectful coworkers? Or do you want to work with often psychotic, ill mannered after 5pm, status driven coworkers? It makes a difference (esp if you’re not a shallow white christian US male).

    Other thing to throw in: earning potential after you leave. Of course consultants don’t make as much, but that usually isn’t why people go to McKinsey. They go to build a network and prove they are smart and mature enough to make it in big business. Then they leave after 2-3 years and take a high level corporate finance position, move into policy/lobbying in DC, or eventually end up in academia (check out the CVs of profs at top 10 business/economics programs).

    It really just depends on what you want, acting like work to pay ratios are that important is missing the point of the question “which is better”…

    1. Thanks for your feedback. To clarify, this article was meant to be “tongue in cheek” i.e. not to be taken seriously as it was partially a response to another parody video from a long time ago. With all that said, you still see far more consultants trying to move into finance than you do bankers trying to move into consulting… so there must be something to it.

  8. Avatar
    Yash Kankaria

    Hey I am a Junior in Mechanical Engineering at Michigan State. It is definitely not a target school. I am interested in Mergers and Acquisitions. How do I apply to Investment Banking firms since I am not from the usual background and target school.
    My GPA is 3.75 and I am also a part of the Analyst Program at an Investment Association in my Uni. I hold different leadership positions as well on campus. I have been tracking trends in the sector for a year and a half now.
    How can I contact bulge bracket banks and also the boutique investment banks? How do I essentially increase my chances since I think pretty much all the odds are stacked against me? Do I need to do some type of training like Training The Street or something apart from all this experience to land an internship

  9. Why is there so much animosity between bankers and consultants?

    1. Avatar
      M&I - Nicole

      I don’t think there is. But if there were, perhaps it’s just misunderstanding, or one party thinks the other earns more etc etc

  10. Everyone mentions the pay disparity between bankers and consultants. But people rarely talk about why.

    *Why* is it that bankers get paid more than consultants?

    1. Avatar
      M&I - Nicole

      Good question. I think it varies a/c to the individual because some consultants may get paid more. But in general, perhaps the deals bankers do are somewhat larger and more high profile especially at larger banks so bankers get paid a bit more. However, this may be changing.

    2. It’s because bankers charge higher fees, relative to the workload, than consultants, and can charge those fees because they’re responsible for making huge deals happen… whereas the dollar value is harder to hone in on with consulting, so they can’t just charge a percentage of the “transaction value.”

      1. This seems to be a strike against the consultants’ argument that they “add more value”. If they actually do, then you’d expect clients to pay more for their services than for bankers’ services…

  11. Hello Brian,

    Can you please tell me how to get into Management Consulting. I am a recent graduate and wish to make a career in Management. Also is it really worth getting into Masters in Management Program to get into MC fresher job and than if needed go for MBA later?.. It’s getting really hard to find a job in MC and I don’t wanna waste more time as it’s already been over 5 Months.

    Appreciate your earliest reply

    Regards
    Akshay

    1. do you think it is possible to get into MC with MiF?

      1. Avatar
        M&I - Nicole

        Yes, but an MBA is better because MiF isn’t too relevant for MC roles – MC is more qualitative and “business” focused

        1. Hello,
          Thank you Nicole for your reply.

          Don’t you think Masters in Management would restrict my opportunities only to management openings.

          With MiF don’t you think I would be open for finance as well as consulting opportunity?? Which will give me enough leverage for employment in US?

          1. Avatar
            M&I - Nicole

            I was talking about MBA (Master of Business Administration), not Masters in Management

            This link should help you: http://managementconsulted.com/business-consulting/mba-business-school-management-and-strategy-consulting/#

            For consulting questions, please visit managementconsulted.com and leave your comments there. Thanks for visiting!

    2. Avatar
      M&I - Nicole

      Yes going to a target MBA like HBS will help you. You may want to visit http://managementconsulted.com/

      1. I was either looking for MiM or MiF since MBA at this point is too costly to invest it and also I do not have very good job in hand.

        1. Avatar
          M&I - Nicole

          Please refer to my earlier response.

  12. Thank you for this informative post. I have some technical questions that I thought you might shed some light on.
    1. How do consulting firms typically obtain financing? Is it predominantly from partner equity or bank credit?
    2. What does a typical (Big Three or mid-size boutique firm) balance sheet look like? Is it mostly office space rentals, labor costs, overhead?
    3. Is there much competition between financial firms, consulting firms, and other professional services (legal services, accounting firms) for clients? How much overlap is there? What about competition over hires?
    4. Are there professional ethics rules and codes of conduct that consulting firms are subject to that are similar to what we see for legal or accounting companies (which are in fact codified in state law/state bar associations)?
    Thanks in advance for any information,
    Nick

    1. Avatar
      M&I - Nicole

      You’re welcome.
      1. I’m not 100% sure and I think it depends on the firm and its structure,
      2. Good question – I’d leave this to readers
      3. I wouldn’t say there’s too much competition over hires because the skill sets are different and you’re referring to various fields – broad options to choose from
      4. I’m sure http://amcf.org/index.php?option=com_content&view=article&id=14&Itemid=25 but I’m not 100% sure
      Please bear in mind that our website is focused on the investment banking and finance industry. If you have questions on other industry fields i.e. consulting we’re happy to answer them though you may want to explore http://managementconsulted.com/

  13. Is it easier to breaking into banking of management consulting with a low gpa (under 2.5)? I got to a target school, which route is best to go if my final goal is to work at a place like either

    goldman/ms or bain/bcg in the long run?

    1. Avatar
      M&I - Nicole

      I think both require high GPA. The easiest way is to break into a boutique, 2nd or 3rd tier bank.

  14. Hi, Thanks for your article. Just a quick question.

    I have two offers, one is Risk Analytics (Back Office) of an bulge bracket investment bank, other one is Big Data Retail Analytics in a major blue chip silicon valley software company. Which one is better if I wish to work for 3 to 5 years and then go for an MBA ? I plan on moving to strategy consulting post MBA.

    Thank you.

    1. Avatar
      M&I - Nicole

      I’d probably choose the silicon valley software company.

      1. Thank you for your reply !

  15. Interesting article. Thanks for sharing your perspective (I’m assuming that last snarky bit was good-natured sarcasm). Just to clarify for those that stumble upon this post while researching directions to take their nascent career: this whole post is only geared towards MANAGEMENT consultants vs. IB. Management consulting is not the only (or, in my opinion, most attractive) form of consulting. I’m a statistical consultant for pharma/biotech companies and I thought I would share a little bit about it:
    1) The pay is good (6 figure compensation after your first year or two, but still less than IB/MC without accounting for “hours worked”)
    2) Hours are great. I rarely work longer than 40 hours a week and it leaves time for side projects (coding apps, trading on the FX market, etc.) or life (gf, concerts, happy hours, etc.). Accounting for the reduction in hours (vs. IB/MC) and any side projects that generate cash-flow you can potentially make as much (or more) than IBs/MCs per hour over the year (if accumulating wealth is one of your larger goals in life). I personally spend most of my time studying academic areas (econ, astro, math, physics), but the extra time is great regardless how it is used
    3) PhD is not needed. My diplomas: M.S., 2 B.A.s and a minor
    4) Minimal travel. I travel maybe once a quarter (probably closer to once every 6 months)
    5) Work is challenging and interesting (building patient simulation models, applying machine learning techniques, etc.). Disclaimer: I never really liked pure finance and always found science-related areas far more interesting.
    6) Great exposure to both execs and internal strategy/organization (I guess somewhat similar to what MCs do, but you obviously won’t get as much exposure as them) almost immediately.
    7) Work with VERY smart people in a non-cutthroat environment

    Lastly–again for those of you researching industries to apply to–don’t let the weird hierarchal atmosphere that develops among classmates as job offers are accepted cloud your judgment on what you want to do. People started walking around with noses up in the air because they landed some coveted MC or IB job somewhere and onlookers salivated with envy. I got sucked into that a little and interviewed with a few hedge funds, but quickly stopped because I realized I didn’t want to work those crazy hours etc. I feel a lot of my classmates only pursued certain jobs because they were told “these jobs are the best.” I know it’s cliché to say, but you’ll do best at the job you genuinely enjoy and that should be one of the main drivers behind where you apply.

    I hope my post was somewhat helpful. It may only be helpful to those who are currently in a similar positions as I was (love science, but hate academic life and find pure finance to be boring).

    1. B.S.s*

    2. Avatar
      M&I - Nicole

      Awesome. Thanks for your comment! I’m sure readers will find your post helpful!

    3. Hi Ashla! Thank you for sharing. I am currently a senior majoring in economics and finance with a minor in accounting with a high GPA at a non-target school. I am considering many different job options. What exactly did you get your BAs and MS in? Your description of statistical consulting sounds very interesting.

  16. To add more clarity to the debate of banker vs consultant , maybe the team should get an interview from a guy in the mergers team of say mckinsey,booze or BCG , what say?
    Work is more comparable

    1. Avatar
      M&I - Nicole

      Thanks for your input. We will keep this in mind.

  17. Hi, I just received 2 offers, a Operations Analyst (back office) at a Branded Investment bank and a Management Consultant at a small boutique consulting firm.
    The IB offers good pay and brand name but a back-office role (smelling boring all over it) While the consulting job sounds like what i really want to do but the poor pay and name.
    This is actually my first job and i would like to only work for about 3 years before i decide to enrol in a top business school for MBA.
    What do you suggest i choose? Thanks. I am a Singaporean by the way.

    1. I would probably take the consulting role since it’s more relevant and helpful for top MBA programs and eventually moving to banking.

      1. Hi,
        Similar to Wei, i recently got 2 offers but they are for 3 months summer internships. One is with Visa Cards- Consulting while the other is with DnB Bank- Corporate Banking (an offshore Norwegian bank based in Singapore). Which one will be a better deal? say if i am interested in mgmt consulting as a graduate career but wouldn’t mind working in a Bank too.
        I was told that Corporate Banking offers a higher level of B-to-B skillsets while in Visa is more of a Merchant level. Hence in terms of getting the exposure and finanical products knowledge, a banking internship will work better on my resume.

        May i hear your thoughts on it?

        I am a penultimate undergraduate by the way.

        1. Avatar
          M&I - Nicole

          I am not too familiar with the two areas. I’d agree that corporate banking will offer you more exposure to knowledge of financial products, since corporate banks provide financing to corporations and institutional clients (https://www.mergersandinquisitions.com/corporate-banking/) However, if you are interested in management consulting, the visa cards opportunity may be worth exploring because you’ll be helping clients improve their bottom line by getting the best value from their Visa portfolios.

  18. Avatar
    John Smith

    This is what managementconsulted.com says about Banking vs. Consulting.

    http://managementconsulted.com/consulting-jobs/question-of-the-day-management-consulting-versus-investment-banking/

    Do you agree or disagree?

    1. Avatar
      M&I - Nicole

      Sure. Everyone has a different view point so I’d suggest you to speak to as many consultants and bankers as you can so you can come up with your own conclusion

  19. Avatar
    Wizard of oz

    There is one point missing from this article – the ability to go solo and freelance. As a successful young consultant I left my top tier firm and freelanced at the age of 27. Made my first million usd’s by 29. Now 42 I am retired – well from consulting anyway. A good consultant is exposed at a young age to many differing circumstances which gives an incredible background to do things in later life. Not sure the ib rigidity gives the same chances to break free.

    1. Avatar
      M&I - Nicole

      Awesome – thanks for sharing your story with us. How did you make your millions by freelancing?

      1. Avatar
        Wizard of oz

        Worked for multi-nationals based in Europe who were doing executing global restructuring programs. Had one big client for 4 years, another for 7 years, and charged about 60% of what McKinsey do. Except it went to me and not the firm. I now have expertise in logistics, finance, International tax, and internet sales. Ingredients which are pretty useful when you start your own business later in life. Im not sure what skills I would have picked up if I took that grad role offered to me by Lehman Brothers in 1993…

        1. Avatar
          M&I - Nicole

          Interesting, how did you end up doing this?

    2. I agree with Wizard of oz. Freelancing has endless opportunities and benefits. Flexibility and control over your time are one of tthem. However, it will be also challenging to get private clients. Thanks for sharing your story!

  20. Hi, I was wondering if anyone had any information on the consulting division of Wood Mackenzie?

    I know they only do energy and resources consulting but are the other aspects like? Work hours? Salary?

    Thanks

    1. Avatar
      M&I - Nicole

      Readers may have better insights!

  21. M&I : Congratulations on a wonderful site !

    So hear’s the rebuttal (or at least an alternative view as I’m not angered : ) )

    To put things into context my viewpoint is coming mainly from senior level Management Consulting & direct Executive Management, with specialization in I-Banks & Funds.

    Given this, I perhaps have a unique view on both sides, though I admit I am a bit biased more towards the management consulting side due to the nature of work and value provided.

    In any case, while I agree in part to many of your fine points, here’s my 2 cents :

    a. the hours for consulting and banking are about the same; however, this may be biased as our clients were I-banks. At the more senior levels, hours get a lot better as you push down more of the ‘busy work’ downstream (which is necessary for lower level folks to learn anyway).

    b. On average, management consultants make a lot higher base; thus, at an entry level situation, consultants will on average win (since the bonuses will suck in either role unless you have a really generous boss), but in the medium to longer term, bankers definitely win, assuming they can get a good bonus.

    However, I think this is a moot point as the skills for these 2 roles are very different. If you are really trying to make “bank” and you really think you have the talent to choose whatever opportunity, then they both lose out…join a hedge fund…a top producer at a HF will frankly embarrass a top performing I-Banker and put to shame a ‘high earning’ management consultant.

    c. re: your stated salary above…most management consulting firms hire MBAs so a starting salary is more closer to at least $80k-120K base for even the most average firm and much higher at the strategy boutiques, especially if you have a top MBA.

    With the salary you mentioned above, I assume its an undergraduate researcher supporting consultants, but not someone who is actually doing management consulting with clients ? This holds true to either ‘strategy consultants’ or ‘operational consultants’

    d. Re: Darius’ question, if they have reasonable experience, six figures is very common…I personally don’t know any management consultant at a top firm or boutique who doesn’t make six figures, whether in the US, Europe or Asia.

    e. re: Value : well, I agree with your McKinsey Recruiter comment above in terms of results…but the point is not that a consultant doesn’t provide value and/or results, but the point should be that you, as a potential candidate, should really know what kind of result you are actually producing, why and for whom. If you don’t know this or how to communicate this…then whose fault is that ?
    The value you provide is quite different in both of these roles.

    Generally speaking, if you wish to provide value at a holistic business perspective, including trying to determine which markets to enter, how to compete, which companies to acquire, what products to offer and how to fix operational issues, then this is management consulting. If you like number crunching, repackaging financial risk and move money around while getting paid a lot, then this requires a very different type of skill set and interest. Since you will be spending over 80% of your waking moments working, pick something you like, not just purely based on the $$$.

    f. Re: Impact and your comment, “bankers typically make far more of an impact than consultants.” Since there is a wide definition of what a ‘consultant’ does (eg. at a local gym, trainers call themselves health & fitness consultants), and that you didn’t state whether the impact was positive or negative, then I can agree.

    While providing money seems to have ‘more of an impact’ over advice, since the nature of the role & impact of I-bankers vs consultants are different, it’s like comparing apples to oranges or perhaps like comparing the benefits of using ROIC & WACC in shareholder valuation vs quantifying the risk adjusted benefits of alpha generating algorithms to optimize hedge fund portfolios. Uh…well let’s stick to apples vs oranges…the point is that they are totally different.

    So at least from a job seeker’s perspective, I believe the question whether to go to an I-bank vs consulting firm is not the degree of impact, but the nature of impact they wish to make (both as a group and individually) and perhaps more importantly what skills/relationships they plan to gain to help them with their career down the road (assuming they have a 3 to 5 year outlook).

    Re: a bit more on I-bank vs consultant ‘impact’
    If you really want to try to debate ‘more positive impact’ then it should be based /measured on the original rationale for the requested service in the first place. Eg. at least with the type of work I have been involved with, in many projects, strategic advice (including rationale) is why an I-banker was contacted in the first place. In fact, financial strategy (and use of I-bankers) is only one small component of an overarching strategic plan. Thus, in such cases, I-bankers were the grunts helping to execute a small component of a bigger plan.

    So, strategy consulting helped define what was needed and the players who needed to be involved (including, for example, I-banks, lawyers, accountants, regulatory agencies, other consultants/advisors, etc.).

    Thus, Strategy consultants helped facilitate the direction, I-Banks were useful to get the money. Operational Consultants helped spend the money in line with what the client wanted to achieve.

    From this context, did the I-banker help provide ‘more impact’ ? I’m frankly not sure as if it weren’t for the strategy component, the I-bankers wouldn’t have been involved in the first place.

    If you measure value & impact not from the end client perspective but in terms of making ‘bank’ and only in it for the money, then I-banking is more scalable as fees is based on size of deal, while consulting’s greatest problem is the difficulty to scale as you have a theoretical limit on the number of bodies you can pimp out and charge for based on a daily rate.

    However, as mentioned above, if you are only in it for the money and you think you really have the skills and interest to do everything and anything, then join a hedge fund.

    Summary (yes finally, sorry for the lengthy comment)

    I am not advocating either the I-bank or consultant route (or even HF/PE), but advocating that your readers take a hard look at their own passion and interests before making a decision. In general, the longer you are in one path, it will be difficult to change.

    Hope some of this helps to the future I-bankers and consultants out there.

  22. Great article! How easy it is to move to consulting from investment banking on a pre-MBA level after 1-2 years of IBD?

    1. Avatar
      M&I - Nicole

      If you have had IB experience and want to go back to IB after your MBA it should be pretty straight forward. If you want to break into IB after your experience in consulting your target MBA will help you “rebrand” yourself

      1. Thanks Nicole. I was thinking from IB to consulting on pre-MBA level after 1-2 yrs of analyst in IB?

        1. Avatar
          M&I - Nicole

          Are you asking me if you can switch to IB from consulting after 1-2 years in IB?

          1. From IB to consulting on a pre-MBA level.

          2. Avatar
            M&I - Nicole

            Please contact http://managementconsulted.com/ if you want to move into consulting

          3. Avatar
            MatthewMars

            Have you heard about people that made the switch to IB after 1-2 years of consulting?

          4. Avatar
            M&I - Nicole

            I haven’t heard of such cases, though I’m sure there are people who have made such switch.

  23. I am a career changer (Wealth Management to IB)and wanted to do a non-paid pre-MBA Internship before I begin my MBA in the summer to help reinforce I am serious about the change. M&I suggested PE, VC or HF as industries which I should target. However, this is proving a bit challenging, yet I am steadfast in my pursue still. However, I came across a pre-MBA internship offered by a Top 5 Consulting firm. Should I consider Consulting as one of potential industries or will this hurt my chances at a elite summer internship in IB?

    1. Avatar
      M&I - Nicole

      It won’t hurt your chances. I’d apply to both and see which interviews you land first

  24. Sorry, was wondering if moving from a boutique firm would make sense in a small country like malaysia to a bb firm? I know its the norm for the states or europe as they do learn and get good bites out of deals due to huge market cap. Would you still recommend someone in asia to start at a smaller firm rather than doing the whole consulting route at say Accenture?

    1. Avatar
      M&I - Nicole

      Yes, I thought I’ve responded to your comment previously? Other readers may be able to offer you other insights

  25. Hi, have been job hunting for a while and it seems that no networking or connection can seem to get me a place at a bb foreign firm in asia as they are all in retrenchment mode currently. Hence, I may decide to take up consulting while still having a goal of breaking into Ibanking later on. What are the odds of someone in Accenture asia braeking into Ibanking later> Would it be wiser to take a smaller position such as a equity dealer for now instead or should I pursue at a large multinational corp like Accenture and pounce when the job market improves?

    I have of course gone through pros and cons for both jobs and still have my eyes set on ultimately getting into Ibanking.

    Fyi, in asia the trend shows quite a number of ppl moving from management consulting to ibank. However, is it crucial to rebrand yourself with expensive MBA`s and such> I would of course like to take my cfa during my time with the consulting firm.

    1. Avatar
      M&I - Nicole

      Yes an MBA from a target would be useful if you don’t have IB experience. With the above being said, I think people value work experience more so than pedigree so if you can obtain some sort of IB experience that will set you apart. I don’t think consulting or equity dealership help too much in positioning you in getting a job in IB going forward. I’d suggest you choose between the two based on your strengths and passion. Otherwise, look at IB roles at boutiques, second/third tier firms, local/Chinese banks – don’t give up

      1. Being in a boutique firm, I am afraid that the name may not be highly appreciated compared to bulge bracket or even 2nd tier banks. You mentioned that it will make more sense then to move from lower tier banks to a bulge bracket?

        The boutique concept espc in malaysia is also not highly known compared to the states or europe where the market cap is big enough for everyone. I am afraid that there will be a lack of exposure to deals and such. I have also heard of some leaving tier-1 banks due to lack of transferable skills within cf division. The skills gained there are not appreciated when moving to Singapore bulge bracket banks.

        THANKS for your time. Just want to be really sure before applying.

        1. Avatar
          M&I - Nicole

          Anytime, but I am not quite sure what your question is?

  26. Hi M&I,

    Was wondering whether anyone knew anything about these ‘part time assistant’ or ‘PTA’ roles with buldge bracket management consulting firms for eg. part time assistance with Bain&Company, PTA with BCG that I keep seeing popping up on Linkedin Profiles with professionals in the Asian region (Shanghai/Beijing/HK)

    They are definitely not Admin roles, they were doing real ‘intern’ work, yet they are not internships as I have seen on some profiles, a jump from PTA to Summer Intern.

    What is this role? Might it be specific to the Asian region? Does anyone know how you can apply for it?

    Thanks

    1. Avatar
      M&I - Nicole

      Not sure, readers may have better insights on what PTA roles entail

  27. I agree with your blog.I join an investment banking firm, is it easier to switch into consulting later or is the switch easier the other way round?

    1. Avatar
      M&I - Nicole

      I think it might be a bit easier to switch into consulting later though I think it can be more challenging to switch from IB – consulting and vice versa as you progress in your career.

  28. Avatar
    Patrick

    I wonder how much of your characterization of banking vs. consulting (and other fields at that) is colored by the NYC-centric comparison. While finance jobs circulate around several key cities (NYC reigning supreme), large consulting offices can be found spattered about the globe. Speaking with MBB consultants at different offices, work hours and culture can vary significantly from location to location. Maybe working weekends and 80 hours per week in consulting is prevalent in the NYC office (partially due to more finance related business) whereas 60-65 hours is the norm at the ATL office. Just a thought and wanted to see if your consulting anecdotes were NYC-centric or from a broader base.

    1. Avatar
      M&I - Nicole

      I think these anecdotes can be applied to most financial hubs like NYC and HK. At other cities, working hours may be less for consultants, but working hours may also be less for bankers too. I think this also depends on the firm you are working for and its culture.

  29. IB is the first and foremost industry I plan to get into after university (attending later this year).

    But I know it is very hard to get into, so my career adviser suggested that I think of possible back up plans.

    Granted consultants don’t tend to make more than bankers- but at senior level can the salaries in the consultant department reach the six-digit figures?

    1. Avatar
      M&I - Nicole

      Depends on your performance and your firm I’d say. I don’t know the exact figures.

    2. I’m surprised to hear people think Consultants make such little money. It is definitely less than banking (and varies by country) but it certainly reaches six-figures in either your first or second year.

      For a bit of benchmarking for consulting based on the country I’m in (assume it would be similar in the US, and the below is in USD):
      1st year analyst: 90-100k total (inc bonus)
      5 years in: ~150-250k for consulting. The range is wide because it varies based on your performance in those 5 years.
      As a partner in consulting: You get a % of what you sell. So if you sell $10 MM worth of work per year (good partners will do this) then you earn $2-5 MM a year

      1. Avatar
        M&I - Nicole

        Thanks for your input!

  30. Is it advisable to include management consulting internships on the resume when applying for an IB position? Will it make me look unfocused? I go to an Ivy, am an economics major, and have a 3.5+ GPA.
    Thanks and thanks for your site!
    (sorry in advance if this is not the best place to ask this question)

    1. Avatar
      M&I - Nicole

      Not necessarily. If you don’t have other better experience to fill your resume, you should put your consulting internship there. Try to spin it as banking oriented as possible

  31. Find the picture very offensive, well not really its a bit of a joke.

    But for fairness sake have the guy knocking out the girl for once.. More realistic and Im getting sick of the constant P.C thing :P

  32. Hi,
    My ideal career path was to go IBD at a BB, go to bschool, and enter a HF/PE/VC. But seeing as many 2nd year IBD analysts go to the HF/PE straight after (w/o bschool) I wanted to see if doing IBD pre-MBA would give me a huge advantage for HF/PE/VC recruiting. As in, if I am going to business school anyway with the intention of entering a HF/PE/VC, is the IBD experience really worth it (besides the learning)?

    In other words, would it make a big difference to HF/PE/VC recruiters if you did IBD pre-MBA, S&T pre-MBA, or consulting pre-MBA? Or something that is none of those three, perhaps a corporate finance full-time at a Fortune 500?

    1. Avatar
      M&I - Nicole

      IBD pre-MBA would give you an advantage. You might want to do a HF/PE/VC internship pre-MBA though – having an internship directly in that field would help

      I don’t know if S&T/consulting pre-MBA would help PE/VC that much. Perhaps trading in an IB would help if you want to break into HF but not PE. PE firms would like IB experience though.

      Another source you might find useful if you want to break into VC – http://blog.guykawasaki.com/2006/11/the_venture_cap.html

      Corp F500 – not so sure if it helps.

  33. Venture Capital. All the dealing of Investment Bankers, with all the consulting thrown in.

  34. Hi,
    I wanted to know – if I join an investment banking firm, is it easier to switch into consulting later or is the switch easier the other way round? (What I mean by “easier” is if they are likely to hire you when you apply.)

    1. Avatar
      M&I - Nicole

      I think it might be harder to switch from consulting to IB these days given banks are going through a v tough time and IB spots are limited. https://www.mergersandinquisitions.com/consulting-to-finance/

      1. Thanks for the advice!

        I’ve always been interested in consulting, but the order of placements in my grad school is uncertain, hence I applied for the first companies that came and have received an offer from an investment bank! I’m not sure whether I should take it up, but can’t take the risk of rejecting it and then not making it through another good company (the competition is tough). Hence I’m planning to take up the offer – and after becoming an investment banking analyst for 2 years or so hope to move to consulting…? Keeping fingers crossed that this switch will be practical…please do let me know if you think otherwise!

        Thanks for all the help! And btw this website is the best introduction to investment banking I could hope for…It helped a lot when I was giving my interview. :) (though in retrospect I’m not too happy I’ve made it when I didn’t really want it!)

        1. That sounds feasible – good luck and thanks for your comments!

  35. Hey,

    Quick question about graduate schools. I started my own online company, and was making bank. However, nowadays my money has trickled to a fraction of what it was making. This was basically all passive income.

    This was while I was in college. I traveled a lot, bought a new car, basically shat all my money out.

    Naturally, I got a physical office job as as a buyer / seller analyst(40k) for a big retailing company. The pay sucks, but the area is cheap… so really id be saving the same amount of money…

    The question is I want to get into a top MBA school. I know this job is going to do shit, so should I in my resume just highlight my own company? I made over $200k+ over 5 years through it, which isn’t much for you guys, but a lot for a college student. Do you think that my work experience would be sufficient?

    Is a good plan to do good on the GMAT (700+), work for a few years, then apply to MBA school? And if i get lucky enough to get interviewed, just talk about my own business I ran on the side.

    Also does my GPA hurt me, its a 3.38 at a top 10 undergrad business school.

    Thanks for the help.

    1. Probably split experience and write about both, maybe emphasize the company a bit. Yes working for a few years and then MBA can work but really depends on your goals, much easier to get in sooner rather than later, low GPA hurts you but won’t necessarily keep you out

      1. Similiar question, i had a 3.6 GPA in from a good but not top tier undergrad school in US and then graduated a very prestigious graduate school but with not so high GPA? What are my prospects for a good MBA program? Thanks a lot

        1. Kiril, in good MBA programs admissions look at the “whole package”. Part of that – is whether you properly demonstrate all the usual stuff – if you are poor (hungry for knowledge), smart and motivated. Look at the description of the personality that Business Schools look at on EssayEdge.com

  36. Hi,
    I am working as a software developer for the past 20 months and what I have observed is that the number of hours here too are around 60 hours a week! However, there isn’t any traveling.

    I want to make a career switch and get into Management Consultancy. I am 23 and don’t mind long work hours for about 5 years more. Do management consultants with 3+ years experience(in the field) travel 5 days a week? When does this traveling binge reduce?

    1. You might want to ask Kevin on Management Consulted, I’m not sure about those points. http://managementconsulted.com/

  37. Hi Brian,
    This may not be the most appropriate place to put this message but here goes… I’m from Australia and just got offered a job in assurance for Ernst and Young. I told one of the guys who I was doing my internship with that I would prefer to be in investment banking. He said that staying at a big 4 accounting firm for a few years and getting your CA is a good way to break into an investment banking. Would you agree?
    Thanks
    Michael

    1. Not really… better than doing something unrelated but you are better off transferring to TAS within that firm.

  38. Brian, where’s Round 2?

    1. No consultants ever responded with a rebuttal – I guess they just realized that their profession sucks

  39. Hi!

    My question is that wht are the chanes of stating own Private equity buiness after spending substatial years in managment consultency business. My ultimate goal is to run my own private equity firm please tell which profession would be better? consulting or investment banking

    1. You need 10-15 years of PE experience to do that. The chances of starting your own PE firm after doing consulting are 0%. No one will give you hundreds of millions / billions to invest with no track record. Do IB –> PE.

  40. Thank you so much for this blog and this article. I just started in management consulting so thankfully you confirmed my choice was the best for me. Not that I ever really considered iBanking (too much stress) but after reading some of your day in the life, I was thinking “Hey this sounds similar, pitch books, briefing books, running numbers, binding, juggling multiple projects, plus much more data analysis! Maybe I could do iBanking?” But oh god no, the hours, the lack of sleep, the yelling, jacked up on coffee, the lack of other fellow women….

    Sure, doubling my salary sounds great, but I like my weekends, my casual friendly work atmosphere (we chat for 20mins on end some times, go to lunch together, coffee, etc), not having a blackberry, 3 weeks vacation, and getting to see my family and leaving NYC (gasp!) for some weekends. I may not be home by 7:15, but on good weeks I leave between 7-8 and on occasion I stay later when needed. I’m at a smaller consulting firm so I don’t have to travel as much (only a few times a year); MDs do all the traveling. I’m definitely not interested in iBanking if you spend all your money away as you described in other posts – my strategy would be cash stashing, but if that doesn’t work forget it.

    And yes, I would freak out if you took my mouse away ;) (I mean seriously, you can’t run powerpoint using keyboard only, well as far as I know).

    Glad you made it out of iBanking alive!

    1. Admittedly you do need the mouse a bit more in PowerPoint than in Excel, I’ll give you that one….

  41. I’m a top 1% engineering/econ grad at one of the top 3 institutions. Is it possible to make 1M+ doing something which requires a high degree of thought, and not spending a majority of one’s time doing largely repetitive work that any half-smart kid who has been trained like a dog could do? I’m talking about right out of school.

    1. Yes, but only if you start a business on your own, whether venture-backed or bootstrapped / smaller-scale (like this site). Otherwise you will never make that much money if you just follow what everyone else is doing.

  42. Hi Brian,

    Just wondering- I might not get a BB full time offer. I might get an offer from Bain.

    Should I consider staying for a 5th year and doing a summer internship this summer (in my 4th year now), or should I accept the offer from Bain and do consulting for atleast a year?

    I really want to break into a megafund PE or big hedge fund after banking.

    Is it easy to lateral into a BB from consulting, or would a boutique firm be better with regards to lateralling, or should I just stay for a 5th year and shoot for an internship at a BB.

    Keep in mind I am in California

    1. I would go for a 5th year – it’s almost impossible to move from Bain to a mega-PE firm or hedge fund.

  43. A statistic number would be better for the picture.
    Anyone knows the percentage of fresh graduates is doing IB and the percentage doing consulting? What is the percentage of people switching the two, say after a year or two?

  44. Hello. My ultamite career goal is to become an executive (doestn have to be CEO, but maybe a coo or CFO) of a fortune 500 media company like viacom, time Warner, or new Corp. I hear these positions pay 8-15 million each year.

    Currently, I have 2 job offers. 1 from Goldman Sachs, and 1 from McKinsey (NYC for both). Which job should I ya

    1. Which job should I take that gives me the best chances of becoming executive?

      1. Either one, but McKinsey is probably better if you’re set on doing operations.

  45. Nice article! Actually I’m struggling whether to accept the offer from a top tier consulting firm. I started my work in a 1/2 tier ibank as M&A analyst and then a 2/3 tier one during the financial crisis. Am wondering whether getting into a top consulting firm will help me to move to BB ibank/ PE or it’s better to stick with my current job and wait for better opps. Thanks!

    1. Probably about the same either way, but jumping to a consulting firm may hurt you because it looks like you lost interest in finance if you do that

      1. Thanks! But what if that’s the CF arm of top consulting firm, does it make any difference?

        Given the current CV, it’s not easy to land on top/2nd tier ibank as Associate.

        1. Not really, it’s still probably better to get the best name on your CV

          1. How easy/ difficult will it be to move from the CF team (Associate) of a MBB to ibank (Associate)? Given that I wish to be a sector banker instead of pure M&A if possible. Thanks.

          2. I honestly don’t know there, you may want to ask on Management Consulted as I don’t know much about those transitions.

  46. Im not sure if you’re still answering questions here, but I also had a question about culture in consulting vs. I-banking. I worked in Ibanking for <one year as business analyst and really did not like the culture . I wouldn't mind working longer hours than the average 9-5 job but I was just wondering how the environments differ as I am looking into consulting but am wondering if I even should be considering my experience at the BB bank.

    Thanks in advance!

    1. Consulting is a bit “softer” than IB in that people are nicer / less crazy – it’s still business and much different from, say, marketing or working at a non-profit, but overall people are more sane.

  47. Great read! And so true also-I have both Ibankers (crazy workoholics, slave style) and mgt consultants as friends (crazy workholics slave style, who travel as well)

    I am beginning to think the mgt consultants are having the last laugh, the bankers are too busy worrying abt bonuses (so they might start earning less than the cnsultats soon.)

  48. Avatar
    confused

    Really sorry for this question, i know this site is strictly for investment banking but I have this burning question regarding consulting. SO BBs are pretty big on choosing brand named schools. I can understand that its probably similar for the big consulting firms, but are they as strict as the banks or is it equally bad if you are from a non-target?

    1. It’s also difficult if you’re from a non-target – I really don’t know how much more so, though. You may want to ask Kevin on Management Consulted.

  49. Avatar
    confused

    i have a really subjective question. which one would you personally say is better for women? I mean, i understand the long hours but I have heard a lot of notorious things about how bankers are scarily chauvinistic (something i haven’t come across for consultants). infact, one of my investment banker guy friends, who works at a BB, once heard his associate say something like “why would any guy want to be with a woman who does investment banking?” lol.

    1. Consultants usually treat women better / it’s a more friendly environment for women. Some regional offices of banks are better, but overall bankers are strange creatures.

    2. I know a couple of women in IB (I wanted to know the same things as you) and they didn’t say the environment is as bad as people make it out to be.

  50. Avatar
    Aussie Bain post-MBA

    Hi M&I,

    Just found your site (recommended by friend, great site). Had to comment on this post.

    Disclaimer: I work at Bain and I absolutely love it. Yes that makes me crazy but most of your readers are crazy for not only wanting to work 100 hour weeks but also spending hundreds of hours to get the interview in hopes of working 100 hour weeks. But I digress.

    Consulting is good for a few reasons:

    1) Nature of work. At the post-MBA level, every day is completely unpredictable, you do everything from meeting with clients to taking operational tours to facilitating workstream discussions, you name it. Sure, you spend time with excel, but with consulting you get enormous variety. Most eventually get burned out, but it’s never from boredom.

    2) People focus. Consultants actually get to interact with PEOPLE, who become a proportionally large part of your day relatively quickly on the career path. Sure, they might sometime be tough to work with, but generally clients are nice and willing to help you if you show some interest and don’t talk down to them. Which brings me to…

    3) Culture. Most of the top firms are really collaborative (at least in Australia). Moreoever, bosses / managers are generally nice because of our 360 feedback system (most firms use something similar). Also the up or out helps the culture, I think, as managers are almost always scary high ability. Also most consulting firms invest A LOT in personal development because they don’t hire nearly as many people mid-pipeline.

    But it goes back to a point you made before: If you’re passionate about finance, do it. I think any other motivation might not be enough — the hours, stress on personal life etc. are just not worth it. PLENTY of people become CEOs etc from industry and plenty more have random jobs and love their lives because they can actually see their wives and kids. And I think that’s the point, right? Life is too short to give it away months and years pursuing ‘the path’ to greatness (great slide by the way).

    Anyway I said my piece, great work with the site and keep up the good work.

    1. Avatar
      Aussie MBB

      Aussie Bain,

      I have been offered a position in Australia at one of the other MBBs, and I have been looking for insight into the consulting culture in Australia and how it differs from the US. Do you know what the primary differences are? Certainly your post is much more positive than many I have read about consulting in the US, and I am curious to know if this positive view is specific to you, Bain, or MBB in general in Australia?

      I do not want to diverge too far from the topic of this article, but any information you could provide would be fantastic.

      Cheers

  51. Hey Brian,

    Was looking to do IB but with the down economy, I took a job doing Management Consulting at Accenture. How do you feel this positions me for business school/ breaking into IB?

    1. Consultants go to business school / go into IB quite frequently so you’re probably fine.

      1. How do you go into IB from consulting? And how important are internships for getting a job as a consultant?
        I wanted to go into IB after graduating from my Masters programme but I don’t have IB internships as that’s not quite possible for undergrads in my country (I’m going to the UK for my MSc).

        1. Networking, networking, networking. Internships are still important for consulting but they don’t need to be consulting internships… a wider variety is fine as long as you made substantial contributions.

          1. Thanks. How much chance does someone with no IB internships have of getting a grad job, if at all?

          2. Low, but a bit higher in Europe since internships are not quite as common there.

  52. Thanks a lot for your valuable advice.

  53. Thanks. This happened because when i passed out of college, these top notch IB and MBB companies were not in India. Almost all my friends landed up in software or core engineering jobs. Now all IB and consulting firms are in India but due to extreme competition getting into these firms becomes impossible without a top MBA degree like one from Indian Institute of Management.

    There is different environment here in India. Unlike US B schools,that offer BBA degrees at UG level, Indian B schools have no place for undergrads. Everything starts at MBA level only. How can I make US B schools understand these facts when I apply next year?

    If i manage to get into top US B schools next year, what can I do to maximize my chances of getting into IB or consulting? I see a clear problem that I’ll be competing with those having pre MBA experience in these fields. How can I make a room for myself in that situation?

    When I see web sites of top US MBA programs, they claim that more than 50 percent students do MBA for career change and hence most of them join industries in which they had no prior experience. If that is true, transition from one industry to other should not be an obstacle as that is the main reason of candidate to pursue MBA.

    1. I’m not an expert on business schools – if you’re looking for more advice there, you may want to ask on a business school site / ask an admissions consultant. It’s tough to say what you can do to boost your chances because again, the best way to boost your chances is by doing something unique outside of work and I don’t know what your background looks like.

    2. I did my UG in India as well and it’s impossible to get an internship with an IB unless you’re doing an MBA.

  54. Hi,

    Looks like a very nice site so i saved it in my favourites.

    I have future plans in my career. I am from engineering background, had a GPA of 3.6 in undergrad and 3.5 in MS, both in engineering. I have been working in technical support and sales since 5 years and presently hold regional technical manager position. My gmat is 690 and i am 32. i am in india at present.

    what are my chances of getting into top 10 heavy weight MBA programs from where consulting and IB careers become a reality?

    if i start in IB post MBA, which designation will i most likely get? analyst or associate!

    1. It’s hard to say because top 10 programs place a lot of weight on what you did outside of work / your other accomplishments. Most people in top 10 programs have done something like banking / consulting or have done something more “creative” like volunteer work, starting a company, etc. In that respect you’re at a disadvantage because your work experience doesn’t fall into one of those categories. Post-MBA you would be an Associate.

  55. Avatar
    motorboat

    Great post and great site. Was almost certain that I wanted to get into management consulting, but there are some very good arguments for IB.

    But what is so terrible about IT-consulting?

    1. Limited advancement opportunities, i.e. you will not be going into a management role at a company, a top business school, or PE after doing it (at least in most cases).

  56. Avatar
    jankynoname

    Nice write-up…

    there’s a branch of consulting that offers the best of both worlds tho, and I think is worth a look for ppl wanting to avoid the 100hr weeks. I’ve spent 4 years in litigation consulting – it’s finance intensive, you do a lot of valuation work/modelling, but you also get a fair amount of industry research, product research, market sizing, etc. so your skills aren’t as constrained as an IB analyst. I’m willing to bet a large amount of $$ that my excel skills are better than most IBs, since we’re often dealing with massive databases produced as part of the litigation. Hours are reasonably good – typical week is 50hr with maybe one week a month of 70-80 depending on when your case has a report due, goes to trial, etc. Almost zero travel – maybe one trip a year at the junior level. Pay at the boutiques can be quite good – base of around $100k and bonus of $40-50K with 3-4 yrs experience pre-MBA. That said, it can be extremely stressful around depositions, trials etc. But for me the concentrated periods of stress are worth it. Exit opportunities are basically business school or HF/VC. Don’t know of anyone who’s made the jump to IB without going back to b-school…

    1. That sounds interesting. I never thought litigation consulting would involve finance concepts. Could you elaborate more on how you obtained such position, and more on its work? Thanks.

  57. I mp3ified that video, played it in my car,
    while my consultant gf was sitting in the passenger’s seat

    1. oh i forgot the word * accidentally *

  58. I am beginning my job with RBC CM as an investment banking analyst in July upon graduating from business school. I was wondering what type of level of financial/valuation modelling skills would be assumed, if any, when first starting. Nothing was mentioned throughout the recruitment process about my ability to do modelling, however I know this is a crucial aspect of the career, and therefore am concerned that I will not know enough. Should i be concerned? Will I be trained upon arrival? Is there any other things that I can prepare to assure I will be the best that I can be? I appreciate any insight you can give me as I am still nervous even though I already landed the job!

    1. I don’t know much about RBC but I would expect at least some training. Less than Goldman Sachs, for example, but more than small boutiques. You can consult with books, ask friends, or go through training programs like the ones offered on this site if you want to learn more.

  59. Avatar
    Non-Target

    Could you do a piece on the spectrum of jobs in IB, i.e.: Sponsors, M&A, Industry groups, generalists, LevFin, Cap Markets, S&T, etc.? A lot of us have to specify which we are interested in when applying for internships and FT. An insider’s perspective would be nice…

    1. Will see what I can do – there is already an article on M&A here and Restructuring but working on more for next year.

  60. So in terms of banking vs consulting a lot can be said!

    In my opinion operational consulting is much more tangible as you are the one continuously implementing and bringing changes. there is constant pressure to prove delivery and hence justify their investment in you.

    Strategy consulting is different though!

    In terms of money, well the base salary is similar as you mentioned before but its the bonus that makes the difference. What you are forgetting is the commission consultants get for bringing in more business, which i can assure you is a significant amount. Atleast 0.5% on lets say a 4 or 5 million (minimum) project! the question how many projects you can sell like that in a year! (any good consultant can sell 3 or 4 without much work).

    Lastly in the work life balance argument, it can be just as bad but it depends on which phase of the project you are in. so once in a while you do get a month or two of 7 to 7’s or sometimes even less!

    1. Right, but at the junior levels no one gets commissions… and the same can be said of banking.

  61. I received an offer to join the debt capital market team in a BB. The team works on asset-backed securities, convertibles, restructuring, etc.

    And I have another offer to join an equity research team of a smaller firm.

    I have two questions:

    1. What are my exit opportunities if I join debt capital markets? Similar to M&A?

    2. I have been told that equity research is more intellectually challenging, more fun and offers better exit opportunity. I am not sure. What do you think?

    1. Not as good as M&A because you don’t work on actual M&A transactions, but you could still go to PE for example. I would definitely not take equity research over DCM – exit opportunities and pay are not better, and “intellectually challenging” is a joke in finance.

  62. What do you think of the actuarial profession for work/life balance and compensation? Once you pass your exams, you’re sitting on a comfortable six figure salary while working 45-50 hrs/week max.

    I’m curious as I am interested in investment banking, but I have some actuarial internships on the table already. Is it worth giving up these offers to try to recruit for an investment banking internship? I don’t think I’ll have another chance to see if I’d enjoy/could handle investment banking before I graduate.

    1. Actuarial work is a little slow I think, but it’s not a bad option. I wouldn’t give up the offers unless you have to – the main advantage of banking is the long-term earnings potential is higher.

  63. It seems like the best bet is to work for a few years at a less stressful job out of undergrad that still makes you a good candidate for B-school, and then just go directly into a hedge fund if you can get in, and if not, then go into banking for a year, make a cool $2 or 300,000 your first year out (while working less hours then an IB analyst), and then try to get into a hedge fund. thoughts???

    1. The problem is that it’s hard to get into a top business school with a stress-free job, and it’s almost impossible to get into a hedge fund with no finance experience.

      Of course, there are always other options… but this site is strictly about finance.

      1. Understood. I guess if you didn’t do finance but you want to get into a hedge fund then it’s best to try to got to business school and land an IB associate job for a year or two and see where it takes you. I’ve heard that associates typically have a marginally better lifestyle than analysts, and that those extra 10 or so hours per week are crucial to your sleep/health. Would you agree with this?

        1. Sort of but not really. Yes it’s incrementally better but your life still pretty much sucks.

          1. Avatar
            alexinwonderland

            Not worth it despite the money?

          2. Everyone’s different – some people are willing to kill all their family members and burn down houses for extra money, whereas other people won’t go that far. Once you get to a certain level of income incremental increases don’t make much of a difference.

  64. Banking is retarded. Not quantitative at all. Very little impact as a junior member. Life sucks.

    If you have balls or like math be a trader.

    If you like thinking be a consultant.

    If you’ll work as hard as it takes to get the cash money banking is for you.

    Simple.

  65. Thanks for the reply. I’m planning on taking the CFA because I’m currently something of a “stock jock”. I invest/trade all the (little) money that I have while at school, follow the markets and am genuinely interested in the subject. At first I thought I wouldn’t go into investment banking because it is mainly grunt work not dealing with actual purchase of securities. I liked investment banking because the pay is fairly certain to be high as long as you land a job (and dont screw up). This is important.

    I’m willing to work as many hours as it takes, but I would be more interested in equities. What kind of out of college finance jobs are available that have similar pay scales to IB? Isn’t trading infinitely harder to land a job in and also much more individual work, and solely performance based?

    I know this isn’t the main focus of the site but you have been very helpful, and anything you can say will help. I’ve learned tons from this site, and will definitely send people here.

    1. I would do trading instead, and yes it is more individual and performance-based

  66. Damn…. there goes another profession I was aspiring to do go down toilet. I thought the travel involved in consulting was just exaggerated. But I was wrong. I heard from kevin that consultants at McKinsey travel 50-75% of their time. I’m sorry but I just can’t handle. My only other alternatives are PE and HF. How are the hours and travel like for each of those professions. I’m praying that at least these jobs don’t fuck up my life…

    1. Let me just put it this way: if something pays you a lot of money, it’s either a. Very stressful / long hours b. Risky or c. Illegal

      You don’t travel as much in the fields you mentioned, but you are never, ever going to have a “normal” life and 40 hour per week job in PE / HF… that’s just not how it works, at any level. While it’s better than banking, you will still be working more than the average person.

      1. I am willing to work more than the average person. It’s just that I want to work less than an IB analyst does without travelling as much as a consultant. Somewhere in the region of 60-70 hours (maybe 80) would be ideal. Any jobs that meet these requirements?

        1. Ok, maybe the ones you mentioned could work then.

          I would suggest doing some more thinking about what you really want to do first, though.

  67. I’m a 3rd year undergrad student at a decent business school in a state university in New England, and in the “what the fuck should I do with my life” mode. I looked into consulting, but after many people telling me just what this article says I don’t want it anymore. I know I could pull off investment banking, I don’t sleep, I’m into business, markets and analysis. Some of the people here seem pretty well versed, might as well throw out some things I’ve been thinking.

    Should I go for an MBA right out of undergrad if i want to get into Ibanking? I’ve got a high GPA, and enough internship experience to get into (hopefully) some good programs. I’m already being awarded a scholarship to take the CFA level 1 from my school, is that enough?

    Also I could take a 1 year full time MBA from my state school…its decent, not top 100.. But i could finish it in six months because I’m already so far ahead. I would use 2 years at a Stern or Columbia.. how important is an MBA from a high level school?

    What kind of competition for jobs in the next 5 years do i face from all these laid off Ibankers recently.

    I could go on all day but this is getting long, i need to meet with an analyst and pick their brain.

    1. No, MBA right after undergrad is useless. The CFA is also similarly useless.

      You need at least 3-5 years of solid work experience to get into finance from an MBA program… you’re competing with a lot of really accomplished people.

      And yes, an MBA from a top school is really important, anything less than that is pointless because banks won’t recruit there

  68. So from what I can see, sales and trading is the best of both stereotypical worlds i.e. the great pay from IBD (okay, thats stereotypical for a reason) and a supposed work – life balance from consulting?

    1. Sort of, although there are other downsides i.e. you don’t have as many exit opportunities.

      1. Avatar
        alexinwonderland

        What are the exit opportunities like?

        1. Trading or hedge funds

  69. Avatar
    Johnny Marr

    what are you guys whining about? at least you’re not an auditor.. i work in a big four in south east asia and i could tell you that i do exactly the same hours with the salary only a fraction of what IB could offer.
    ..Actually, my last close encounter with an IB guy (an Indian from Citi Hong Kong) in a client’s right issue left me rather unimpressed.. My client is a bank and the Citi guy didn’t know shit about repurchase securities deal and kept on asking me about the presentation in the balance sheet and stuff. Is it normal for an IB not to know about this? judging he’s a CFA level II and all..

    1. That sounds pretty odd but it’s not unexpected… ability/knowledge vary widely in some parts of the world.

  70. when was this written?

  71. IBM has opened my eyes to the fact that we’ve ALL been sold a dream when it comes to corporate America! I can’t live my life knowing some corporation owns me…if I’m going to bust my hump everyday, I want it to be for ME! I’m starting my own business and NEVER looking back! If you’ve read the first 10 pages of Rich Dad, Poor Dad…you know exactly what I mean.

    1. I agree with you in principle, but keep in mind that starting a business is not for everyone. Yes, if you want to be financially free you have to be an investor or a business owner… but not everyone wants to take the risk, despite the rewards it can potentially bring.

      1. I disagree. First of all, you don’t have to own a business or be an entrepreneur to get rich or have financial freedom. If you stay in a corporate position for some time, you could easily bring home 3 million if not more a year.

        Second of all, even though I banking might pay more at first, in your later career, consulting is what will make you rich. My uncle worked at McKinsey for some time (made 100k to 700k each year), and after 6 years, he made partner. At partner, he was making around 1.5 million every year, and you call that not being rich?? Then, he went on to become director of strategy at a fortune 500 and made 4 million each year. I was just reading about how hard it is to make partner at an I bank, even if you do, the next year you won’t because they don’t want to grow their partnerships.

        Sure, I banking can set you up for million dollar salaries at HF and PE firms, but in my opinion, exit ops for consulting is a lot better, and it’s much easier to become partner and become filthy rich.

        1. So then go be a consultant. Income from a job is active income. If you have a business that runs itself or investments that don’t require involvement, those are passive or semi-passive income, meaning you’re not trading hours for dollars. Consultants trade time for money. They might make $3 million per year, but they will never have freedom to do what they want vs. working constantly. The same applies to any corporate job…

  72. I’m a consultant for IBM and let me tell you…..the hours are ridiculously long (absolutely NO work/life balance) and the pay is garbage compared to comparable careers. Any time you have IBM wants to suck it up, including your weekends and nights. Don’t let them know you’re single and/or childless, they will work you like a Hebrew slave! I wish I had gone into banking! I’m 28 with NO personal life whatsoever…thanks IBM. I can’t wait to leave this hell hole!

    1. And you’d have a personal life in banking? :) I guess the pay is better…

  73. Why do many students from target schools choose consulting? Going by this analysis, it seems that consulting has nearly the same hours as i-banking, but inferior pay and training.

    Or is consulting seen as a pathway to something better, like the VC and Corporate Dev/Strategy positions analyst 3 mentioned, with few people sticking with a firm for long? Post MBA, I cannot understand why anyone would choose to work for ~$120k rather than ~$250k.

    Is choosing consulting the result of misinformation/good recruiting, or am I missing a major aspect of consulting’s appeal?

    1. Some would argue you that it gives you a broader set of options with fewer hours… although I don’t really think that’s true. A lot of liberal arts majors also think they can do consulting but not banking since it involves less math.

  74. I am amazed you went as far as to break down the satire that is leveraged sellout. As alway, M&I, you always seems to amaze me.

    How’s the entrepreneurship going? Glad to be out of the banking world pre-the near collapse?

    1. Thanks.

      Yeah, things are going well. Think my timing was definitely good, though I wasn’t planning to continue with banking anyway even back when things were good.

      It’s definitely a different kind of stress – it’s less about getting 100 orders a second from an annoying VP and more about being self-motivated and getting stuff done with no external pressure. But I’m having a lot of fun so far, so we’ll see what happens.

  75. I’m at a 2nd tier consulting firm (i.e. booz, monitor, mercer) and I completely agree with this analysis. It was a terrible mistake to turn down my BB IBD offer for this job. We have crappy work life balance once you include travel (I can’t even join a gym in NYC because I have to travel so much), the pay sucks, and the worst part is that I don’t get the financial valuation skillset that all the PE and HF firms want.

    If you have your mind set on consulting, go to a top tier firm (McK, BCG, Bain). Otherwise, it’s incredibly difficult to move onto a PE/HF firm and your only “good” option is to go to grad school.

    1. Straight from the source, ladies and gentlemen…

    2. i thought Booz was “top-tier.” are they not?

      1. Usually McKinsey, Bain and BCG (MBB) are considered “top-tier.”

    3. Same experience as Dan, and I completely agree – should have taken my BB IBD offer.

      I’d go so far as to argue that a ‘basic’ BB IBD is better than McK, Bain, BCG if you want to enter HF/PE, as your options are limited to a handful of funds (even as a top tier consultant) – I can only think of Bain Capital and Golden Gate Capital off the top of my head.

  76. Does the transition from a middle of the road consulting firm to PE or VC happen much? I am looking at some firms like Deloitte, IBM, and CRA and am wondering about the best way to get to PE is as the ibanking route isn’t possible for me.

    1. See Dan’s response below – it seems unlikely. I would say b-school may be a better bet for you.

  77. Are you an insomniac or something?

    1. Yeah, pretty much.

      1. So are there any healthy/ normal people in banking?

        1. Not really, no. Maybe a few, but most of the bankers I came across have been deranged in some form or another.

          1. Are you serious, lol?

        2. If you’re being serious, this is quite sad. You should put up this warning somewhere on your site. LOL.

        3. There already is a warning – see my Day in Life / Week in Life articles.

        4. It seems to me like if you want to make a lot of money in this world, you have to be mentally ill in some way. Normal people wash out and go back to 9-5 normal people world.

          Law seems to attract people with mood disorders, leading to high alcoholism (self-medication) rates. A hystrionic personality is an asset in a courtroom. (I thought it was totally appropriate that Tom Wilkinson’s character in “Michael Clayton” had bipolar disorder.)

          Finance seems to attract people with narcissistic personalities. Think Bateman.

          Software (which can be very lucrative for those who are sufficently ill) favors those who fall on the Asperger’s/autism gradient.

          Our Maker, in his infinite wisdom, saw fit to give everyone equal ability. However the proportion of ability within each person is not the same, and those who are wunderkinder along some axis can make a lot of money if they nurture their malady. The tradeoff is a life of loneliness and alienation.

          1. Avatar
            Valeria

            You nailed it.

        5. That’s kind of depressing. I do well while still having a life and great family/friends… internet business is the way to go. :)

  78. When you were a banker, could you handle the hours?
    Is it tolerable for an average person?

    1. I could handle the hours, but I frequently pulled all-nighters from middle school onward. I still only sleep an average of 2 hours a night.

      The average person cannot handle it.

      1. An AVERAGE of 2 hours? Hyperbole much?

        I thought ~3-4 hours/day over an extended period of time was the threshold for hallucinations/ insanity, drugs notwithstanding.

  79. Avatar
    analyst 3

    I think consulting at the big 3 (McK, BCG, Bain) may be tougher to get into just because there are fewer firms than there are bulge brack banks–well at least before the recent fallout. My sense is that they hire almost exclusively from Ivy League/target schools, so there seems to be some cache to spending some time at these big 3 firms. In that regard I think if you look at exit ops beyond LBO firms such as VC and Corp Dev/Strategy, while BB analyst might have a little extra coin in their pocket, your long-term earning potential is similar. (Who knows if you’ll even have extra coin in your pocket after “having to” spend on models & bottles to blow off steam after your 100 hour week.) So yes, I agree that investment banking may give you a better core financial modeling toolbox after doing time as an analyst, but it terms of looking at the wider range of opportunities, it seems consulting vs. banking is roughly similar.

    1. True, although I do think the only thing that beats finance in terms of long-term earnings potential is entrepreneurship, but I would argue both consulting and banking are extremely poor preparation for that (having done all 3 in my life so far).

      1. Avatar
        analyst 3

        In any situation where you own substantial equity in a successful company, your earning power is greatest–that could be as an entrepreneur or as an investor. Those positions also carry the most risk, but also offer the potential for great reward. Acting as a 3rd party advisor (whether advisor or consultant) your earning power is going to be limited by the structure of your role since someone else is writing your paycheck. That said, I think it’s still possible to be entrepreurial within a field, i.e. opening your own firm.

        1. Oh no need to remind me of that one. I’m well-acquainted with the Cash Flow Quadrant. :)

      2. Hi Brian,

        As this is my first post, allow me to thank you for the quality coverage of IB.

        Given my unique background – working with a non-profit that has a strong relationship with McKinsey in East Africa for 2 years – I believe that consulting may be a better bet for me. With that said, I haven’t made up my mind 100% on which to choose. If you wouldn’t mind, I am very curious to hear why you think both IB and consulting are poor preparation for entrepreneurship. And, which is the lesser evil of the two if entrepreneurship is my eventual goal?

        Cheers,
        Z

        1. Because both of them train you to take orders from stupid people. MD: “Please do this waste-of-time assignment for me, have it on my desk by Monday morning k thx bye.” There is little/no independent thought. Going to a top university like I did just trains you to be other peoples’ minions your whole life and to never think independently. Consulting is probably better if you have to choose just because you get exposure to non-financial aspects.

  80. how would you compare the lifestyles, exit opps, and pay IN GENERAL of BBs in LA, SF, and in NY?

    thanks

    1. NY is generally best. For LA and SF lifestyle may be a bit better but you will be more limited to buy-side firms on the West Coast rather than NY + rest of country. Pay is about the same at major banks regardless of where you are, but obviously smaller regional places pay a lot less.

  81. Avatar
    Tiger2010

    How do you feel about BigLaw? Is that a viable option in this market?

    1. BigLaw is getting hurt by the recession quite a bit as well. A friend of mine at MoFo (Morrison & Foerster) said there were a bunch of layoffs there recently.

      As with consulting, it’s less affected by the economy than banking/finance is… but given that it takes 3 years of school to get into, it’s a less viable option for most people.

  82. […] & Inquisitions weighs in on the bankers vs. consultants debate. Now if you can just get an offer from […]

  83. Any one else feel like the guys in that video sound like total douche bags/ nerds ?

    1. Yeah, but it’s still better than AJ from the Models and Bottles video…

      1. Avatar
        Fabrício Almeida Negrão

        For me they sound arrogants…

        Like, they have to prove to themselver that they are betters…
        That´s a sheet..

        Nomatter where you are.. just do your job, try to learn, and spent your money….

        The reasons to get a job is to live happy.. not to say to other that you´re the best…

        I´m in a Investment Banking now… in Spain… and let me say, the people over here is preatty much arrogant and that makes me want to quit….

        They fell like they are more important than other just becouse they are at M&A….
        but gues what…
        They are the same people as everybody else….

        1. Keep in mind that it’s satire.

          But yes, it’s true that no one in the real world cares that you’re in finance.

  84. it would be nice to have a comparison on the mba level where consultants are making a “living wage”.

    1. Even at the MBA level, consultants don’t make too much – base salaries might be $100-$120K with small ($20-30K) bonuses. Associate bankers, by contrast, would probably be pulling at least $200-300K, and it only goes up from there.

      1. but is it possible to start or have a relationship as a banker? it seems difficult but possible as a consultant since you should get most of your weekends, but as a banker, it seems like you get no weekends whatsoever. unless of course, you dip the pen in company ink–which seems like a bad idea in general, especially in an industry were you spend so much time with your coworkers.

        1. It’s hard to start a relationship in either one. That’s one of the reasons I left. :)

          1. After how long did you leave and what do you do now?

          2. See the About page

  85. would agree…

  86. Excellent, as always! Management consulting is by far the dullest job I can imagine. (I’m not a banker, whatsoever)

    Cheers

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