by Brian DeChesare Comments (106)

Is Finance Still a Good Long-Term Career?

Is Finance a Good Career?

Starting this site during the financial crisis of 2007-2009 was interesting.

On the one hand, it was tough – I had no idea if the business would survive.

On the other hand, things were exciting – different banks were failing every day!

Much has changed in the nearly 10 years since then, but one thing has remained the same: We’re still getting panicked emails wondering if the finance industry will survive.

Here’s the latest example from a few days ago:

“Hi there,

I am currently at a non-target school, but over the last 12 months, I have been killing myself to transfer to a top university so I can get into IB after graduation.

However, I’ve heard from many bankers that pay will continue to decrease, many jobs will be cut, and that the industry is becoming less and less appealing than it once was.

I’m worried about spending a lot of time to get in, and then finding out that the industry has completely morphed. What do you think?”

The Executive Summary

Here was my response:

“Yes, the overall industry will decline. It won’t go away, but it’s less appealing than it was in 2010 or 2005.

IB may still be worth it for you if you want the access to exit opportunities that you won’t get elsewhere, or if you want to work on deals and advise companies in the long term.

But if you’re doing it because you don’t know what else to do, it’s not worth it – just transfer to a top school and work at Google or Facebook instead.”

Wait, What?

If you’re new to this site, you might be wondering why I would say this.

Shouldn’t I be convincing you to do whatever it takes to break in?

Is this a trick to get you to buy my courses and guides?

Reverse psychology to get you addicted?

Nope.

I’m admitting this truth because:

  1. I don’t care. I’ve lost interest in promotional activities. I’ve done well enough, and I don’t particularly care about making more money.
  2. I’m the only one willing to tell you the truth. Most of the other people in this market are so desperate and delusional that they never present the downsides of the careers they cover.
  3. You don’t care. Even if I said a meteor would destroy the planet if you took a job at a bank, you would still take the job at a bank.

Why the Usual Argument for Finance Has Weakened

The usual argument for getting into finance was the following:

“I’ll gain valuable skills and training, I’ll get exit opportunities, I’ll earn more than I could in any other job, and even if I don’t know what I want to do in the future, I can’t go wrong with banking for an initial career. Plus, I’ll work with smart people and gain a valuable network.”

While this statement is still partially true, each part of it is less true than it was in the past.

And there are new obstacles to getting into the industry:

Factor #1: Valuable Skills and Training

You do gain valuable skills, but there are so many books, courses, and other resources today that you don’t need a job in finance to learn many of these skills.

In fact, you might even learn the technical skills in more depth from books and courses simply because you don’t do that much modeling work on the job, even in more technical groups.

There are some skills you can only learn on the job – how to deal with a difficult client, how to persuade others that your investment thesis is correct, etc. – but there are other ways to develop those skills as well.

For example, if you went into a sales role at a normal company or a tech startup, your skills in these areas would improve.

Factor #2: Access to Exit Opportunities

If you want to work at a mega-fund like KKR or Blackstone, you pretty much have to work at a large bank first.

And even though smaller private equity funds and hedge funds hire candidates with more diverse backgrounds, you still have the best chance of winning offers if you have IB experience.

So this factor still holds up reasonably well, but the problem is that some of these exit opportunities don’t necessarily have great futures.

For example, pension funds, endowments, and 401(k) retirement plans have been allocating far more to index funds and passive mutual funds, and it’s much harder for hedge funds to justify their fees these days.

After a boom in the early 2000’s, fewer hedge funds have been launching each year. This chart from Bloomberg tells the story quite well:

hedge-fund-launches

Private equity has fared a bit better, but returns there have been approaching those of the public markets over the past decade.

Many factors explain these trends, but the main one is simple: There’s too much money chasing too few good opportunities.

Active management will never die because the markets will never be completely efficient, but many opportunities will be in smaller niches.

Ironically, investment banking might have better long-term prospects because it’s harder to “automate” M&A deals and transactions in areas like restructuring.

Factor #3: The Money

While you might earn between $120K and $150K as a First-Year Analyst in investment banking, finance is not the only option for making a lot of money right out of school.

Software engineers on the job for a few years at Facebook or Google earn $150-160K in base salary, and stock awards and bonuses make the total compensation exceed $200K (Source).

And if you don’t want to be a programmer, product managers at these companies earn quite a lot as well.

If you don’t want to do anything related to technology, sales or sales-like roles such as real estate brokerage can also pay in this range if you’re good at the job.

The pay ceiling is lower than the one in finance, but how much does it matter?

Once you’re earning pay in that range, other factors start to matter more.

But if you’re dead-set on making the most amount of money humanly possible without starting your own business, OK, sure, go for finance roles.

Factor #4: The Best and the Brightest… Really?

While many top students still go into finance, more of them now go into other areas.

At HBS, for example, 39% of students went into Financial Services in 2011, but that had fallen to 31% by 2015, while the percentage entering Technology increased from 11% to 20% in that time.

At Wharton, 37% entered Financial Services in 2015, down from an all-time high of 48% in 2008.

Sure, these are still very high numbers, but finance doesn’t have as much of a monopoly on the best students as it once did.

My anecdotal observation is that we’ve been getting fewer good questions from customers and readers and more silly questions over time.

It seems like more students in the middle of the pack are applying to finance roles, while fewer ones at the top are interested.

And the New Obstacles…

An argument like “I’ll get useful training, earn a lot, and get good exit opportunities!” contains a few implicit assumptions:

  1. It takes about the same amount of time and effort to win any job or internship, so the one with the best training, pay, and exit opportunities wins.
  2. These advantages will persist for a long time into the future, and the job/internship itself will still be around.

Both assumptions are questionable, but assumption #1 is more problematic:

New Obstacle #1: You Need More Work Experience, and You Need It Earlier

Since you need a sequence of previous finance internships to have a shot at IB summer internships, it takes far more effort to get in, even if you’re at a top school.

Also, recruiting starts insanely early – undergraduate IB internship interviews, for example, now start a year in advance of summer internships.

Those factors mean that you need to start much earlier and commit to finance in your first year or early in your second year of university.

At the MBA level, you often need a pre-MBA internship or some work experience that’s closely related to deals: Contrary to what these programs tell you, you won’t have time to “re-invent yourself” on campus.

And as a mid-career professional, your chances aren’t great unless you’ve been working in a role that involves “transactions” of some sort.

New Obstacle #2: Will You Get Automated?

Despite all the hoopla over automation and robots taking jobs, I’m not too convinced that traditional investment banking is at risk.

Smaller and plain-vanilla deals lend themselves to automation, but once you get past a certain size and complexity, company executives need a banker to run the process.

Automation is more likely to make an impact in areas like retail banking, mutual funds, trading, and anything that’s not dependent on human relationships.

Think about this way: If you look at one of the most time-consuming tasks for IB Analysts – “spreading comps,” AKA finding financial information for companies – there are many tools, such as Capital IQ and FactSet, that automate the process.

But few banks rely on them because the process requires human judgment: Should you add back that non-recurring charge?

You might have to read the footnotes to tell, and it’s extremely difficult for computers to interpret that type of language.

If Not Finance, Then What?

This one comes down to why you want to get in.

Not what you say in an interview, but your real reasons.

Reason #1: You Don’t Know What You Want to Do, But You Want to Earn a High Income

I would recommend going to Google, Facebook, Microsoft, or another large tech company and working in an engineering or product management role if this is you.

If these companies don’t recruit at your school, transfer to a better school or work at a smaller company.

You can still earn six-figure compensation in these roles, and the work environment and hours are better.

Yes, the pay ceiling is lower, but once you’ve repaid your student loans and saved up a good amount, you’ll probably stop caring.

Reason #2: You Want the Training and Skill Set

Two words: Self-study.

Yes, you need to be self-motivated to learn the skills this way. If you need someone to tell you what to do 24/7, you’ll never get anywhere.

But if you’re not self-motivated, you won’t make it into the finance industry either.

Reason #3: You Want the Exit Opportunities

You need to take an honest look at your goals and see if banking is necessary.

For example, if you want to work in corporate finance at a normal company, IB isn’t necessary: Apply to a rotational program and move in from there.

If you want to work in a hedge fund/asset management role, IB is also less essential because it has little to do with what you do on the job.

You can also go the CFA-and-internship route and bypass IB altogether, especially if you want to work at a fund type that has nothing to do with corporate valuation (e.g., global macro).

Reason #4: You’re a Mid-Career Professional and You Just Want to Make More Money

Rather than killing yourself trying to get into IB, you should focus on building a side business or doing freelance consulting.

You don’t need to “start a company”: Start casually and see what clients are willing to pay for.

If you’re dead-set on finance, take a look at this article for alternate paths into the industry for older candidates.

Reason #5: You Like the Work and You Want to Advise Companies

And now we arrive at the one good reason to get into the industry.

If you’ve done multiple internships and you’ve concluded that you want to be a banker in the long-term, great.

My only tip is to move to an elite boutique sooner rather than later since the bulge brackets don’t exactly have a bright future.

Compensation is down, cash compensation is way down, and new regulations make it tougher for the large banks to conduct business.

And if you’re on the sales & trading side, go to a prop trading firm, at least if you want to be a trader in the long term.

Will the Industry Completely Morph?

Going back to that panicked reader email, he’s right that it’s harder to justify the time and risk it takes to get into the finance industry.

But the real problems, at least for the roles we focus on, are less about automation and more about the extra effort, early recruiting, and the future of certain exit opportunities.

If your goal is to earn a high salary and enjoy life, join a big tech company.

If you just want to learn the skills, take a class.

And if you want to make more money, start a side business.

If you like the work or you need banking for specific opportunities, then it might make sense – even if it takes a massive uphill battle to get in.

Your Turn

What motivates you to get into or advance within this industry?

Are there downsides to the non-finance paths that I haven’t considered?

Or are there upsides to finance careers that I’ve missed?

Comment away.

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. Hi Brian,

    Thanks for the response to my last question. It didn’t let me reply. What’s a good way to decide on careers then?

    Thanks

    1. Find something you’re good at which also pays well, and find a way to make it fun or interesting rather than doing the reverse.

      1. Thanks for the advice Brian. This is spot on. How do I go about finding something I’m good at?

  2. Hey Brian,

    I’ve been becoming more interested in tech lately. Which is a more conventional path to take to try both field? Tech now then possibly get my MBA to get into finance or Finance now then tech later?

    1. It’s still better to do finance first because if you do not do finance first, you pretty much *have* to do an MBA later on to get in. But you don’t need an MBA at all for tech – you could easily do finance, get bored or quit, and then move to a tech company.

      1. Hey Brian,

        I was reading your comments about how starting a business and investing are ways to make the most amount of money. Do Software Engineers ever make enough money to be able to invest?

        1. Potentially, yes, but generally only the ones who stay at large companies (FANG etc.) for a while and advance in the hierarchy, or ones who start out really early at a startup that becomes a huge company. The biggest obstacle is that most engineers are just not that interested in investing and are unwilling to learn a new way of thinking. They tend to think everything in the world is rational and can be reduced to a math problem, not realizing the role of uncertainty, irrational outcomes, and tail risks.

          1. Hey Brian,

            I believe Senior Engineer is the terminal level at FANG for most people since most people don’t pass this level unless they show leadership. Will a Senior Engineer at FANG have enough money to invest?

          2. Sure, but again, I think that’s a bad way to decide on careers because as I said above, the interests/skill sets/personalities are very different, and most engineers have little interest in investing.

  3. Hi Brian,

    You often recommend getting into the buyside, investing, starting a business, or time traveling back to 2004 to join facebook. For someone looking to “making the most amount of money humanly possible,” what could be a good short term and long term approach? I believe finance would be a good short-term approach since the minimum starting salary is 100k all in. It could also be a good long-term approach since you could possibly create a billion dollar fund. On the other hand, Big 4 tech company (apple, amazon, facebook, microsoft) starting salaries are 200k all in and it’s a 40-hour job. This could be a good short-term approach because of the high starting salaries and also could be a good long-term approach since you have time to start a business or invest while keeping your job. If you become a successful investor or build a successful startup you could end up in the deca million, 100 million, possibly billion dollar range if you are extremely successful. One thing is that swe salaries are all over the place, ranging from 60k to 200k starting salaries compared to IB minimum salary of 100k. And also it’s harder to get into the big 4 tech companies than to break into IB. What do you think is the best approach?

    1. For maximum short-term compensation, finance still wins because you won’t earn nearly as much as an engineer in tech at a smaller company. In the long term, the way to make the most amount of money possible is to start your own business or become an investor once you have enough money to do so.

      I don’t really think it’s harder to get into the top tech companies than it is to get into IB. But it is true that you need to be more of a technical person to do it.

      Finally, I think you’re thinking about this backwards because money has diminishing returns past a certain point, and most people will never even get to $100 million, let alone $10 million, regardless of the path they pursue.

      1. Hi Brian,

        Thank you very much for the detailed response. What’s the best way to think about this since I’m thinking about it backwards?

          1. Thanks for the link Brian. Just read it again. Is there a specific amount you can earn that you start seeing diminishing returns?

  4. Hi Bryan

    Understand you have mentioned that “you might even learn the technical skills in more depth from books and courses simply because you don’t do that much modeling work on the job, even in more technical groups”.

    1) May i know which finance role within a Corporate is best to train up your financial modelling? Is it FP&A or Management accounting?

    2) Or is it always best to join an M&A group within an investment bank to train up financial modelling?

    Let me know. Thanks

    1. 1) Neither one, corporate development is best.

      2) You will learn more about transaction modeling in M&A. But even there, you spend a ton of time on administrative work and things like following up with buyers and sellers.

  5. Hey Brian,

    Love all your articles! I just can’t seem to shake off the feeling that, being at a non-target school with an average GPA while completing my sophomore and thinking about going into finance, that I won’t be able to make it in the field.

    The lower growth rates as you mentioned as well as shrinkage in the field overall, I’m questioning myself as to whether or not business, or even finance, would be a good field where I can make good money. It’s too late to switch over to any other field (unless I win the lottery), so my question is, which business major do you think can make it taking into account job growth or at least minor shrinkage, as well as over 150k-200k pay?

    I was thinking something along the lines of IT as it relates to the technical field, but your take would be appreciated.
    Thanks!

    1. Yes, IT is the best field if you want that much pay and stronger growth opportunities.

  6. Brian –

    First off thanks for what you do. I recently purchased the fundamentals course and am finding it to be very clear and thorough.

    After graduating in 2014 with a finance degree I took a sales job in the industrial distribution/supply business. It became apparent the software systems and tech infrastructure used by my company were antiquated. Were I a computer programmer/ web developer, knowing what I know about my industry, I would start a company tomorrow to try and automate certain parts of the business and attempt to sell it to companies within similar industries.

    The problem is that I am not a computer programmer, and fear getting too far downwind were I to make the expenditure of starting a company, only to have problems gaining traction. It would be a high risk, high reward type situation, one that I’m hesitant to commit to at this point.

    I’m interested in capital markets, particularly in the technology space. I think the ability to value technology/ automation tools has lots of upside given our environment. I’m 26 and attended a non-targeted state school only because I received a baseball scholarship and wanted to play professionally pretty much my entire life.

    Are there any boutique investment banks that specialize in financing software companies, or might help raise capital for corporations looking to improve their IT systems? Are there any firms you know of that could potentially benefit from my idea if they determine it to be viable? I did a private equity internship during my senior year where I practiced modeling. IT/ automation is something I am extremely interested in, however I want to be involved in the financial side instead of the development side. Any help you could provide in connecting the dots would be greatly appreciated.

    Thanks,
    Kevin

    1. I don’t know about boutique banks that specialize in something that specific, but there are tons of tech/TMT boutique banks. Code Advisors, Signal Hill, FT Partners, Allen & Co, AGC, Vista Point, and those are just off the top of my head. You can do a Google search to find others. I’m not sure you’re looking for a bank, though – if you want to finance these companies, you should think about venture capital or some type of buy-side role such as growth equity (which, admittedly, often requires IB first).

  7. James Stevenson

    Hey I’m not sure if I’m interpreting your article correctly, but it sort of seems like your advice is you should only pursue investment banking if you’re actually interested in investment banking.

    Is that correct? Because I haven’t heard that line of reasoning before.

    Can you comment please?

    Best,

    James

    1. Yes, that is the simplest way to think about it. But I would expand it a bit and say “…or related fields where you need IB first to enter, such as private equity.”

  8. I’m a computer science engineer from a mediocre university in India. To be honest I got thrilled about finance after watching the movie “Wolf of Wall Street” and opened up Wikipedia as soon as I reached home. I made contacts and started researching about it, got in touch with people who were in finance but never worked in IB or PE and aspired to work in those sectors, just like me. Finance interested me so much that I made a project in my final year called “Stock market predictor”, in which I used machine learning algorithms to predict stock values of 9 major companies which no major fluctuation in their stock price. The project wasn’t ground breaking but it wasn’t easy too, given the knowledge I had as a 19 year old studying in India where machine learning is still a very new concept. After my graduation I moved to Dubai (U.A.E.) and got a job in finance at a hospital where finance equals accounting, nothing else. I prepare MIS reports representing growths, projections and hospital statistics and revenue evaluation. To be honest, this job doesn’t interest me but I wanted some kind of experience in finance, so that I could apply for MSF in a good university and get into IB after completing it. But after reading your article I feel like I should make the correct decision in order to pursue a good career. Marketing interests me too, that’s why I’m unable to decide if I should do MSF, get a high GPA, work for some years and apply for an MBA in the top colleges and work in IB or PE or should I do masters in marketing, get into product management, get experience and then do an MBA in Marketing. I’m in a big dilemma, please help.

    1. You’re asking questions that are inherently impossible for me to answer. I think you should try more of those jobs, such as marketing, in your part time first, and see what you enjoy the most over time. If you’re not sure whether or not you really want to do IB, it’s not for you.

  9. Can confirm.

    The friends that I would consider among the “best and brightest” from undergrad (I.e. GS TMT, McKinsey New York) have almost all made a move to established tech companies (except for the Silver Lake guy, dude just loves finance)

    If people on this forum are looking for a new tracked oath to greatness, I can rep operations at Uber, strategy and ops at Salesforce. For the more technical people Microsoft, Google, and Oracle all have strong up or out engineering programs.

    Last but not least, the Sales org at Salesforce is just a brilliant place to start a young career.

    Side note: Brian I want to learn value investing properly. I don’t think ill find that here, but can recommend a course of action?

    The Big Shorts Michael Burrys recommended Intelligent Investor, common stock and uncommon profits, buffettology, and what makes stock go up and down…. 4 books! No accounting no econ….

    1. Maybe see the recommendations here: https://www.mergersandinquisitions.com/hedge-fund-case-studies-part-2-research-structure-stock-pitch/

      The Intelligent Investor, Margin of Safety, and Competitive Strategy, Financial Shenanigans. You can also look at Damodaran, but he is quite theoretical sometimes and does things you won’t see in real life.

      You can’t “learn” value investing just by reading books. You have to start researching companies, valuing them yourself, making recommendations, putting your money to work, and see how they perform (search this site for “stock pitch” for many examples).

  10. Hey Brian,

    Having read your M&I story over the past few days, I’d like applaud your commitment to this website despite soul-crushing waves and troughs. You possess true grit and determination.

    I am a 30 year old who went to a top 40 school, majored in business and earned a decent 3.6 GPA. I regretfully spent the first five years of my career in technical recruiting, and the past two in software engineering with unknown companies.

    My long term goal is to work at a VC, but I know the odds are heavily stacked against me without an MBA – I believe I missed my opportunity to get into business school I dont have the resume for a top 10 school.

    Yes, my resume doesn’t look great but I want to look forward. What options are available for me given that I have held over 7 jobs at relatively unknown companies and don’t want to be a Software Engineer?

    If I were to pursue a job, I’d like to get into product management, but I am battling the classic chicken/egg problem as I don’t have product experience and companies won’t hire someone without product experience.

    Im contemplating starting a digital marketing agency in order to amass a large amount of money and then boostrap an edtech company. After that, I’d try to get into a VC.

    What do you think? You can be, and I expect you to be, brutally honest.

    1. Thanks. I don’t think you have a good chance at getting into VC unless you get a top-tier MBA. So it’s either that or start your own business and try to move into VC afterward. I would not assume that you can’t do product management, as companies like Google and Facebook frequently require technical people in those roles.

      1. Thanks for the quick reply!

        Do you think that getting an MBA would be a good decision?

        1. Depends on how much you want to get into venture capital… given the randomness of recruiting at that level, an MBA is probably not a great idea unless you are dying to get into VC and cannot imagine doing anything else.

  11. Nathan Clyne

    Hi Brian. Thank you for your great work and an honest opinion.

    I would like to ask you for a short advice. I am a pre-penultimate student. I received an offer from a PE equity firm for a summer internship. I also applied to Asset Management company which is my priority. To boost my chances I emailed the asset management company as you suggested in one of your articles and said the following:

    ”I have received an offer from Private Equity firm and I must make a decision soon. However, your firm is my priority. Could you please advise when I will receive results or whether it would be possible to speed up the process?”

    I got the following reply:

    ”As our application process does not close until 20 November, successful candidates will only be invited for interview week commencing 28 November. May I ask when your deadline for your alternative offer is?”

    I have not received any deadline to accept or reject the PE internship offer. How would you respond if your priority was the asset management firm? Thank you and keep up the good work ;)

    1. You should probably not use your full name in comments here unless you want people to be able to find your comments via Google searches…

      Just tell the firm that your offer deadline is in the next 1-2 weeks. It doesn’t really matter what you say as long as you pick a specific date (e.g., November 7th) instead of saying something wishy-washy, as a vague response will indicate that you’re lying.

  12. confused banker

    Brian,

    I have two work related issue. I am a new post MBA associate and I am working with an associate (he is an analyst promote) and a new analyst. The new analyst made a mistake and the associate emailed the whole deal team criticizing the error. Is it a common practice at banking? I may be naive but what I learned from MBA leadership is that the manager should always take responsibilities…Does it apply in banking?

    Secondly, as I just started and I have no finance experience, when I am working with a senior analyst, should I do all the grunt work or shall I review his work? I am not 100% confident to get everything correct, but as an associate, I don’t want to be doing analyst work all the time. Also, sometimes when I am having calls with client, I am not sure how to respond. Does it sound weak if I say I will check with my MD and get back to them? Does associate make any decisions in the deal process?

    Thanks!

    1. No, that is strange. There is no reason to do that. You should offer to do the grunt work for the senior analyst and just say something like, “I know I’m new, so I’m happy to do any grunt work that saves you time. I’m also happy to review what you’ve done and do whatever you think is most helpful.”

      It depends what the client is asking, in some cases you should check with the MD and respond, but if you’re talking about more minor issues (e.g., how to break out revenue or expenses in a presentation) you should give an actual response.

  13. Bankingassociate

    Hi Brian,

    How can an associate add value to a deal besides checking everything and making sure everything is right?

    and how to improve communication skills???

    Thanks

    1. Aside from bringing in deals, nothing. For your second question, you could start by writing in complete sentences, such as “And how can you improve your communication skills?”

      You should also spend more time reading and listening than talking or writing. Find authors who communicate well, see what they do, and imitate their style. See:

      https://www.mergersandinquisitions.com/investment-banking-communication-skills/

      1. Bankingassociate

        Thanks Brian. Are there any authors/speakers you would recommend to imitate their styles?

        1. No. I hate everyone.

          1. Damn, I miss reading through these boards. Brian’s the best

          2. I try. Actually, I don’t try; the cynicism comes naturally.

  14. Hi Brian, I heard that sales and trading is a dying industry, and is about to automated soon. Does this mean that the sales jobs and trading jobs could possibly be (almost) completely obliterated in the near future, or does this mean there will be a significant decrease in these coming years? (I would like more specifics on the APAC region, if possible).

    Also, can you elaborate on the exit opportunities for sales side in sales and trading?

    Thank you.

    1. I would say that claim is exaggerated. Yes, some S&T jobs will be automated, but there will always be roles for good traders and sales people. If you want to do S&T, you should go for more technical and complex products that can’t be automated as easily (e.g., avoid cash equities). Also, gain technical skills in computer science to make yourself adaptable. You can’t replicate what a good salesperson does with a computer because it’s based on human relationships.

  15. Hey Brian,
    I’m currently a high school entrepreneur in Charleston, South Carolina. I own my own freelancing business, and attended Dan Pena’s QLA Seminar this summer in Forfar, Scotland. At the seminar, I learned the theory behind growing a company solely through acquisitors, which Dan Pena did in the 70s. You basically recruit an amazing board with people with great reputations, raise capital, and then buy large numbers of businesses in fragmented industries (healthcare, telecom) with the intent of merging them together and taking them public. Apparently, if you follow the steps, you can make many millions (10-50 million) in 5-7 years time.
    My question for you is, do you think a job as an investment banker for a few years would help me before I start growing a company through acquisitions? I feel that learning about how to value companies (in this sense, private companies) would prove invaluable if I want to become a deal maker. Also, If I fail right now, I will have no skills to get a job paying more than 40k a year.
    What do you think I should do? I applying to Upenn ED, I think I’l get in. I hope to leverage their alumni database to build my board, and start from there (this or IB)

    Thanks!

    1. Yes, investment banking might actually be helpful in your case, but I’m not sure you “need it.” You can easily learn how to value companies without actually working in banking. You do learn valuable negotiation skills, but the problem is you don’t learn much of that side at the analyst/associate level. IB is a decent back-up plan if your other efforts don’t work out, but you have to get started really early to make it work.

      1. Thanks for the response!

  16. Also what are your thoughts on Lincoln? In terms of exit ops, prestige, deal flow etc

    1. It has a good reputation, but I’m not sure how well analysts do in terms of exits. I haven’t seen many of the analysts from there at the biggest PE firms, but I assume other exits are plausible.

  17. What are your thoughts on mm lenders like antares capital(formerly GE capital) compared to traditional IB lev fin? Also have you heard of suntrust and tm capital? Curious to hear your thoughts on the firms.

    1. Well… what do you want to do? If you want to move into traditional PE, joining a LevFin group at a large bank is still a better path. If you don’t care or you just want to stay in lending, those places are fine. It is quite difficult to get into PE from a direct lending role, which is why LevFin is usually a better bet.

  18. Hi Brian,

    Now everyone is talking about tech and I understand this is new money. Unlike you, I don’t have a background in computer science or engineer, can I teach myself about data science at least? If so, do you think it worthwhile to take online courses? Any recommendations?

    For product manager positions, normally people need to have either operations or marketing experience, which I only have finance background. Any advice on how to break in?

    Any interviews on product manager positions?

    Thanks!

    1. Yes, you can teach yourself data science. I don’t know what courses are out there, so I don’t have specific recommendations. But you can potentially also learn programming from online courses and in-person training, so I wouldn’t rule that out.

      For product manager roles, if you only have finance experience maybe focus on fin-tech startups and say that you know a lot about the industry and can contribute that way. We don’t have any product manager interviews, but hope to add something soon.

  19. STARTUPDREAM

    Brian,

    Did you hire lawyers when you started this business? How did you register the company? Did you do all the paperwork youself?

    1. You don’t need any paperwork to get started with U.S.-based businesses.

  20. Hi Brian, I really, really would appreciate your advice if you happen to come across my comment, thank you so much in advance.

    I currently have 2 offers for my junior year summer internship – one at a fixed income desk for sales (within sales and trading) for a major bulge bracket bank, as well as a software engineering internship at a tech firm in silicon valley (the tech firm’s reputation isn’t that of Google/Facebook, but its decently-sized).

    I am leaning towards the sales and trading one because of the prestige of interning at a bulge bracket bank, but I am really hesitant given the shrinking demand for sales and trading, and I’m not sure what exit opportunities there are for sales and trading (especially within the sales department), and whether it is worth it. I heard that there is a lot of automation going on, and the sales people will be the first ones to get axed.

    Would you think that having a sales summer internship in a bulge bracket on my resume can serve as a springboard into other industries such as consulting or even software engineering (given the dying industry), or should i just pick the software engineering internship instead?

    I am a math major with a CS minor, and I’m equally interested in both industries (because I haven’t been in either before). my main goals is a stable, strong career progression with decent pay, plenty of exit opportunities in case i need it, gaining valuable skill sets to make myself more indispensable for the future.

    Thank you so much!

    1. I think if you’re uncertain, it’s still better to take the S&T offer because it will be easier to move from S&T at a bank into tech than it will be to do the reverse. There is so much demand in tech that you can tell almost any story and get in, whereas in finance they want to see more of a progression of internships. And if you’re a math major with a CS minor, you could probably get a tech job without even having a prior internship anywhere.

      I don’t necessarily think sales will go away, but yes, S&T is at more risk from automation than IB is.

  21. Brian – are you a billionaire? Did you start M&I while working in banking??

    1. I think you can answer those questions via the Search function, About page, and common sense…

      https://www.mergersandinquisitions.com/how-i-started-this-site-part-1-2007-2008/

      This is a ~$10 million / year market, and most of the revenue goes to in-person training offered by Training the Street. So after you factor in a smaller market share, expenses, and taxes, do you think it’s plausible to become a billionaire after running a small business for 8-9 years?

      1. I actually finished really all the five parts of your story and really enjoyed it! Are you still thinking about the drug dealer?

  22. Hi Brian,

    I’m a senior liberal arts major. I decided late in my college years that I wanted to do Investment Banking but couldn’t get an internship in my junior year. I’ve completed my prereqs for Masters in Management programs to get another shot recruitment programs and most prereqs for Dental school. Being a senior, I don’t know if I can transfer to top schools to do Software Engineering. Dental school tuition and cost of owning a private practice got me disinterested in dentistry. What do you suggest?

    1. Sorry double post. Thought my post got deleted

    2. Like I wrote below, I would suggest short shadowing/internships or a coding bootcamp to see if software engineering is for you… it costs money, but it’s far less expensive than a Master’s degree and should give you a quick answer on whether or not it’s a good path for you.

      1. Which one do you think is a better return on investment? I would love to get a job at Google, Facebook etc, but it’s competitive. I might be coming out of a state school since i’m a senior. Not sure if I can transfer. I might be able to do a MS in Software Engineering though at a top school, but some schools that i looked into so far require software engineering experience.

        Or go the dentist route, pay 200k-500k tuition with loans. Then might opt in to go into private practice which is another loan of ~$450k.

        1. I don’t know enough about dentistry to say definitively. But if you have to spend at least $500K, and probably closer to $1 million, it sounds like it will take a really long time to pay off, especially given the cost of hiring a staff, buying equipment, etc. So I think tech companies probably have a higher ROI.

  23. IAN PLUMMER

    Hi Brian,

    I’m a Senior psychology major. I became interested in Finance late in my college years, so no IBD internship or anything finance related. I was Pre-Dental before. I’ve taken most of the prerequisites for Dental school and all the prerequisites for MMS programs. I became less interested in MMS programs since they have a low rate of Investment Banking offers students get. Now you mentioned tech but since I’m a senior I may not be able to transfer. I could go for Masters in Software Engineer at a state school though or I can continue on my path on become a dentist. Most top schools want you to work before getting a Masters in Software Engineering degree. And it’s hard to get a 2nd bachelors at a top school.What do you suggest if I have no idea what I want to do?

    Ian

    1. Can you do an internship in one of those fields (or shadow a dentist for a while) to get a sense of what’s involved? I think that’s the only way you can tell for sure since they’re so different. Maybe try a coding boot camp to see if it’s for you, and see if you can get short work experience from that.

  24. Hey Brian,

    You mention in this article that working for a tech company as a developer or product manager you can reach a six figure income but that the ceiling is lower than investment banking. I live in the Bay Area and have had conversations with friends who are convinced that earning $250,000 or $300,000 as a developer is fairly achievable, even in a non manager track job. It seems to me that you would have to be a technical superstar and exceptionally lucky to make that much in a tech company, especially outside a management track job.

    Do you have any information on salaries in tech and what is required to achieve them, especially coming in without a CS degree? Or do you know any sites which would have this information? I understand it is not your core competency/background, but thought you might be able to point me in the right direction.

    I’ve been learning programming to help in my own business and am curious what I could make if I got a job.

    Thanks for any help you can offer!

    1. For $250K to $300K, yes, you would have to be quite good or more senior. But less than that is achievable. I’ve had plenty of friends who were not that skilled technically (in my opinion…) who earned $150K total. I don’t have information beyond the sources I linked to in the article, but it would be tough to win these roles without a CS degree or some math/engineering degree from a top school. This site has salary data:

      https://blog.step.com/2016/04/08/an-open-source-project-for-tech-salaries/

  25. Thanks for your honesty and objectivity!

  26. Hi Brian,

    I’m an undergrad student on a West Coast target school. What would be alternative paths to Venture Capital if not Investment Banking (or strategy consulting) that you would reccomend?

    And even if there are alternative paths, would you still recommend the IB path for at least these couple of years?

    1. You could potentially get into VC by working in product management or business development at a startup and then applying to VC roles, or doing an MBA and then applying to VC roles from there. But you still have a better shot with IB or Consulting experience, or IB and Consulting + Startup experience. So for VC roles, I would still recommend at least some amount of IB/Consulting experience.

  27. This article and the one recently that discussed the exit opps about IB (an update from an earlier article) functions as a time warp for my career in finance to date. It been is absolutely engaging following the articles on this site and utilizing the tools from a few years ago when I had to still tell other students at the time that M&I was a great resource.

    Also, been interesting tracking the development of the site given where the finance industry is and how it has come to effectively track the changes in the field.

    Anyways, as always, a great read that more people should really consider about wanting to work in finance.

    1. Thanks! Glad to hear it. Yeah, I’m surprised how much things have changed over time (one reason why I caved and sort of added dates in the new site design…).

  28. Hey Brian – thanks for the article. I couldn’t agree more with what you said. I like your point about starting your own business if you want to make money. as a current banker who wanta to do his “own thing”, am I pretty much limited to consulting type work? You never really develop an “operational” skill set as a banker. Maybe starting your own real estate LLP is feasible given that you understand how to model cash flows and take advantage of leverage, but outside of that what are some of the main businesses bankers start?

    1. One option is to go back to your personal interests and start something related to those. For example, if you played sports, start a sporting goods company or e-commerce platform. I’ve seen quite a few also start food/restaurant businesses. There’s an interesting list here…

      http://news.efinancialcareers.com/uk-en/119568/want-to-become-an-entrepreneur-ex-bankers-explain-what-its-really-like

  29. Hi Brian,

    I started as an associate back in August and I haven’t had great experience so far. I’ve already started thinking about moving to another bank or tech company. However, given I just started and have only worked on pitching book, do I have a chance to change a job? Or shall I start networking aggressively right now?

    In addition, I am in NYC but I want to move to SF. Isn’t possible to do so in the next few months?

    Also, I did financial advisory with one of the big four prior to my MBA. Does this experience still relevant when I start looking right now?

    On the comp side, as banks request ppl to return signing bonus if leaving in one year. Is it really worth it to change job in a year?

    I have been only working on pitching work so far and I don’t like being not involved in communications and just do whatever senior bankers ask me to do.

    Thank you and I really appreciate your insight and advice.

    1. I’m not sure I would recommend leaving right away if you haven’t much real experience – it’s probably a bit better to wait and get at least 1-2 real deals to speak to.

      You can potentially move to SF, but it tends to be tough unless you have a lot of free time to travel back and forth for interviews (I guess that’s more plausible as an Associate if you’re not busy right now).

      Yes, the Big 4 experience is still relevant.

      The fact that you may have to return your bonus is one reason why it’s not a great idea to quit right away.

      I would at least wait to work on a real deal or if nothing comes up, put in a request to work in a different, busier group.

      1. Thanks Brian. I worked on two closed transactions over the summer and feel comfortable talking about it. Do these 2 transactions count as “real experience”?

        1. Yes, those count as real experience if you feel comfortable discussing them.

  30. Hi Brian! I’m from India and have learnt financial modelling through your video tutorials in BIWS and M&I articles. I had also developed a knack for M&A strategy and am specializing in finance from an Indian management Institute where a couple of bulge brackets come to recruit. I was recently taken aback to realize that the guys there valued likability and a couple of other subtle aspects more than core finance skills. Obviously I could’nt make it and one of the guys there said my skill sets and interests were meant for a PE role. In your article you had mentioned that it’s almost impossible to venture into PE without an prior IB experience. I know I want a role in IB/PE but opportunities here are limited given the recent turn down. Should I re-consider my career options and be open to more fields other than finance?

    1. Yeah, bankers value soft skills and sociability more than technical skills in many cases, partially because a lot of what you do in banking isn’t very technical. You can get into PE without doing banking first, but in India it’s very tough because of the size of the industry (https://www.mergersandinquisitions.com/private-equity-india/). Your best shot is to do something related, such as working at a Big 4 firm or in some type of role where you advise on debt deals or other transactions, and move in from there. You’ll also have more luck if you can apply for these roles in a place where the industry is bigger (such as Europe or the U.S.).

  31. The student

    I loved this article! I have been very conflicted between pursuing an IB role and something less demanding but also pays well (less well) such as corp finance.

    As an older student I’m not sure I want to spend the next several years or longer working like a slave.

    I think you are on point when you say that past six figures income ranges becomes less relevant.

    Great article! Thanks!

    1. Thanks! Yeah, the ridiculous hours get tougher to justify as you get older (even I’m slowing down a bit in my old age). And there are plenty of finance roles that don’t require IB-style hours.

  32. Brian,

    I appreciate your analysis but I disagree. Growth rates and interest rates are low, this impacts the finance industry in a negative way. Overall, I believe the industry is holding surprisingly steady given the climate.

    It comes down to personality. Do you want a 9-6 job and steady pay? Or are you the more intense personality that pursues athletics, banking, medicine, or the military?

    There is a price to pay for any route. Anxious type A people tend to flock to prestigous or intense careers.There is no right or wrong industry just different interests, personalities, and callings in life.

    1. Yeah, that is a good point. You could easily get bored working at a big company, even if it pays well. I know I’d jump off a cliff if I had a boring job that didn’t require much work each day.

      I agree that the finance industry has actually held up better than expected, given the environment…

      1. So are you saying banking is boring? I used to want to do banking, but not anymore. Never got the opportunity to break in and even if I did now, I don’t think I would do it. Most jobs become dry after a while. Had a friend who did FIG, then Corporate Development at a start-up and a pharma firm and he didn’t enjoy it. Now hes a staff aug firm, making 150K, but his life is 9-5 and has a lot of downtime. I’ve realized I would rather have a decent pay with a 9-5. Hell I think at times going for a gov’t job.

        Also, is it true that most analyst will don’t work on models? I was talking to a colleague who’s brother worked at BB and a lot of the models were cookie-cutters.

        1. Anything gets boring after a while. I’m bored running this business, but I still have to do it. Yes, most analysts do not work on models, or if they do, they’re very simple ones. You’d probably get more modeling exposure from looking at a few of our YouTube videos than you would on the job. Some groups are more technical than others, but even in the highly technical groups analysts spend well under 50% of their time on those tasks.

  33. How abt middle market investment bsnks?

    1. They’re fine, but some of the compensation restrictions may still exist (depending on the bank). But you’re still better off in other ways (e.g., smaller teams, more autonomy, etc.).

  34. Love this! Very relevant.

  35. Another reason that people want to join might be prestige..

    1. I dunno, it seems like that one is less of a factor in the post-financial-crisis world… but I guess so.

    2. dONALD tRUMP

      I’m currently interviewing for corporate finance roles outside of financial services, and internet at a BB. It impresses some people a lot, others not so much.

      Honestly, outside of NYC you tell a chick that you work in banking, and they’ll assume you are a bank teller. Those “in the know” aren’t so impressed by it, either. The prestige factor is eroding, and frankly, you’ve got some people who will think less of you because you work for “the banks” who “rigged the economy.”

      1. Yeah, exactly… it’s almost like you have to be reluctant telling people exactly what you do now. I don’t even mention “investment banking” if anyone asks me, I just say I “run an online education business.” And then they usually think it’s porn, which is still better than finance.

  36. Brian, I’ve started as a post MBA associate – when do you think I should network my way into elite boutique? I am also consider tech product management roles but i don’t have a technical background. Do you have suggestions for me? Also, do you provide advisory/consulting on my career planning?

    Lastly I would love to see an article on how to find a co founder and start up ideas. Thank you!

    1. It’s tough to say because it depends on your long-term goals, but if you want to stay in banking, I would move over sooner rather than later because you’ll start feeling the effects of lower cash compensation once you get to the late Associate level. So maybe spend a year or two where you are and then move to an elite boutique. For tech product/management roles, yes, a technical background helps but it’s not necessarily essential… for example, maybe you could do that at a Fintech startup since you have the right background.

      We do have coaching services, but more so if you have a specific goal such as getting a job offer in Industry X coming from Background Y.

      Thanks for your suggestions, we hope to cover more on startup ideas soon.

      1. Brian…

        I need an article on how to find what my long-term goal is. I have been thinking of elite boutique, PE, VC and corporate development and start up, but still no idea…

        How can I find my passion?

        1. That is a tough one – maybe think about your past work experiences, make lists of the elements you liked and didn’t like, and use that to decide. So if you liked working in a team and didn’t mind some politics, and you also want a clear progression/path, the elite boutique is the best option. If you don’t want or don’t like working in teams quite as much and prefer to do your own thing, even if there’s less of a clear path/progression, VC/PE might be better.

          1. Thanks Brian! Is it realistic to aim for being the MD of a elite boutique while starting a company and making it IPO? I like advising companies and working in teams but I also love to start my own thing and work on it.

            Thanks again. Also, any suggestions on how to reach out to elite boutique once I am on the job? I’ve started this summer and I want to recruit at elite boutique. However, I don’t have any many alum working in those firms. Is cold email a good idea?

          2. ??? Are you asking if you can be a senior banker and also start a company at the same time? No, that is not realistic. For networking with other bankers, find their names on LinkedIn and email them or try to get referrals.

  37. Hi Brian,

    Great article! What kind of side business can I start if I have a full time job? Something like freelance consulting?

    1. Yes, start with consulting in an area you know something about. Ramit Sethi has an Idea Generator Tool for side businesses that you may find helpful. But if you’ve been working full-time already, chances are that the best idea is to take what you already do and apply it to a different type of client or in a different market.

  38. Hey Brian,

    I’m currently at a BB based in HK and was definitely considering lateralling to elite boutiques, but it seems that they are doing worse than BBs in this part of the world. Part of the problem is that Asian clients in general do not like to pay for what they cannot tangibly see (i.e. pure “advisory” players would have a much harder time justifying their fees than BBs that can provide acquisition financing). I want to stay in Asia, but what do you think the prospects are like out here?

    1. That’s a good point, it depends on your region as well. For Asia, the BBs will still be the better bet as long as most deal activity is ECM/DCM-related. So in HK, you’re better off where you are now. The elite boutiques would be better in Europe or the U.S., though.

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