Investment banks reined in hiring at the start of the pandemic because they thought the impending recession would limit deals activity, he said. When deal flow and the IPO market boomed, thanks to the Federal Reserve's response to the pandemic, banks were caught understaffed. The companies resorted to hunting for junior bankers in unusual places including among consulting and accounting firms, offered perks like free Peloton bicycles and raised base salaries.
The motivations of the JPMorgan analyst recalls a phrase from an earlier era on Wall Street, showing that some things never change. In earlier decades — when investment banks were more likely to be staffed with the well-connected offspring of wealthy families — young, hungry outsiders were known as PSDs. The acronym stands for Poor, Smart, with a Deep desire to become wealthy. If anything, rising levels of student debt owed by recent graduates have made them more risk-averse and less likely to gamble on careers that might not pay off financially, according to some of the bankers.
CNBC withheld her name and the names of the other junior bankers in this article because their employers prohibit them from speaking to the press. That is Wall Street-speak for the types of careers that await after a successful stint at investment banking, whether it's in private equity, hedge funds, fintech, consulting or venture capital.
While she considered roles at technology and venture capital firms as well as graduate school, the Citigroup analyst ultimately placed her bet on investment banking because it offers the most exit opportunities, she said. Another first year, this one at Goldman, reiterated that sentiment. Many of her peers are motivated by the cachet of the firm and the possibilities it opens up, she said. Young employees like her join Goldman not necessarily out of an innate interest in finance, she said, but for the security of knowing she will have opportunities at the end of her two-year program.
Still, others were attracted to banking itself and its proximity to the powerful. Those who make it past the analyst and associate levels can begin doing more substantive work, and managing directors are often tasked with bringing in multi-billion dollar deals, basking in glory when a merger closes. He and others said that while technology jobs like coding also pay well, they often have relatively limited career ceilings compared to banking. Most of the analysts said they were aware of the industry's reputation for grueling work, an assertion backed up by the University of Pennsylvania's Hewitt: "They know it's going to be a lot of work for a couple of years," she said.
In recent years, banks have begun recruiting as early as freshman year, probably due to competition for top students from big tech and other firms. They have also begun leaning on testing and interviewing software platforms to help pull from a broader array of schools as part of the industry's diversity push.
Many students prefer the security of knowing where they will land after finishing their expensive educations, according to Emma Rasiel , an economics professor at Duke University who mentors finance students. The two-year analyst program often leads to interest for two- to three-year stints in private equity, she said.
Demand for investment banking among Duke students has stayed at roughly the same level for most of the past decade, Rasiel said. But being courted by banks so early in their college tenures can lock out other possibilities and contribute to peer pressure to join finance, according to another Goldman analyst. Why would anyone want to work those hours? In the aftermath of the Goldman junior bankers' survey, banks declared a renewed push to set boundaries, enrich analyst programs and develop technology to automate the more mundane aspects of the job.
But few junior bankers are under the illusion that the core nature of their jobs will have changed. And it's amazing, anecdotally, how often you see college seniors deciding between making huge money on Wall Street or making almost nothing with Teach For America.
It really suggests to me that this isn't nearly as much about the money as people think. KR: The lesson of that is you don't have to pay people a ton of money to come to your program after college if what you're giving them still offers prestige and structure and the sense that they're not signing up for something forever.
Teach for America has really approximated the banking model without the money. If what you're seeking is short-term rewards there's no way you'd choose teaching in the Mississippi Delta over working at Goldman Sachs but there's something calling people to do work they find meaningful.
EK: Wall Street seems particularly good at both valuing the skills and managing the fears of liberal arts majors. A lot of kids graduated with a degree in sociology or English literature and feel they don't know any skills that will help them get a job. Wall Street both seems to see the value of that kind of learning and see how to position themselves as a kind of continuing-education program.
KR: It's amazing. They have turned investment banking into this two-year bootcamp for adulthood. They teach you to make powerpoint slides and Excel spreadsheets. But if you ask the banks what's interesting is they see this as a labor advantage: they can get not only the smartest econ majors but the smartest history majors. Lloyd Blankfein was a history major, for instance. And they view this as a source of prestige.
They're not just getting finance-minded kids but they're getting the smartest kids from all fields. That lets them broaden their intellectual inputs. A history major might have different perspectives on a trading desk than an econ major. EK: Does Wall Street have data on which majors end up working well for them? KR: In my experience, when I was following these eight people, the ones most likely to wash out were the ones without clear reasons for being there in the first place.
The people with pragmatic reasons, like having lots of student debt to pay off or having immigrant parents and wanting to build a better life for them, tend to stay. The kids who got into trouble were the ones who did this as a kind of cultural drift. So I think it has less to do with what they study than with their basic motivations. EK: The recruiting model is smart but it also seems to require Wall Street's massive profit base. I'm sure the Washington Post or the New York Times or Vox would love to hoover in dozens of top Ivy League graduates and pay them huge salaries knowing that most will drop out pretty quickly but journalism doesn't quite have the business model to make that possible.
Being a Rhodes Scholar doesn't make much of a difference when you're a young banker. KR: I think to a certain extent consulting firms can do that and now you see tech companies like Google and Facebook emulating the recruiting model. But most industries can't. It doesn't just require money but also stability in your business model. The secret of young Wall Street is these people are essentially commodities. The banks care less about their qualifications than their work ethic.
More of it is being willing to stay at the office for hours a week. EK: This is something your book goes into really great detail on. Being a young banker seems like an incredibly miserable existence. The people you follow are beyond unhappy. Putting aside the ethics of the workload, it seems like a dumb recruitment practice.
In your book, the most talented recruits leave for jobs they like better. It seems off to put so much energy into recruitment and then drive the best recruits out. KR: It's a terrible labor practice and the banks are getting wise to that. They're seeing their attrition rates going up and their recruitment going a bit down and they're trying to limit the hours junior bankers are working. But until the last four or five years the hours weren't really a problem. The banks had this social contract with young people: give us two years of your lives, don't see your friends, chain yourself to your desk, but we will give you this glorious life where you're making many times what you could ever imagine.
But now that contract is being broken. But your book argues that Wall Street really feels like a different place to the people on it. The salaries are still high by any reasonable standard, but the insanely good times feel, to the participants, like they're over. KR: You could argue at a systemic level that not enough has changed.
But on a cultural level it's just not the same place. You could talk to people who've been on Wall Street for years and they'll all tell you it's very different from before the crash. People just don't believe things will ever get back to where they were before the crash. They don't think the banks will ever make the kind of money they did before the crash. So what you're seeing now is banks are making themselves smaller and safer.
Barclays is shedding its investment bank. Morgan Stanley has gotten into safer lines of business. Prop trading is going away among the big banks. So the young people have had to resign themselves to this being a safer and more austere place to work. I should also say that I think the bigger factor in causing disillusionment among young people is the rise of Silicon Valley and other parts of the economy growing much faster than Wall Street.
Google now has that in a way the banking industry doesn't. It's the place where everyone envies you for getting to work. KR: College students basically want a couple of things out of their job. They want money. They want structure. And they want respect when they tell people where they work.
And Google now has that in a way the banking industry doesn't. There's a lot of risk aversion in that. You get the sex appeal and allure of the tech industry without taking on the personal risk of starting your own company. KR: Yes, I love it. But the part it gets wrong is that if you look at who actually works in Silicon Valley now, the geek contingent - the stereotypical socially awkward hackers - is no longer the dominant phenotype of SIlicon Valley.
Now it's people who are well adjusted, good looking graduates of elite institutions. It's gone from weirdos in pocket protectors to the guys who used to go to Wall Street. I talked to one guy who's a former Goldman Sachs guy who left to go to the tech industry who said the adage in the tech world now is "be wary when the pretty people show up. EK: So after writing this book, what would you say to a college senior thinking of going to Wall Street?
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Conversely, those who bought at the peak would have seen their investment make huge losses 8 February. It is nigh on impossible to time the stock market, and knowing when to sell is only obvious in hindsight. Social media is a blessing and a curse. It provides a platform to share opinions and there is some good material out there to help people on their investment journey. However, more generally we have seen concerning social media posts and it is important to use trusted sources when doing your research.
The financial pages and websites of the national press are good places to start, and investment platforms also publish lots of educational material for beginner through to experienced investors. Always take investment advice on social media with a pinch of salt and always check the credentials of those giving the advice. It is easy to get caught up in the excitement of the potential of making a decent amount of money by investing.
It should about strengthening your financial position. This involves being invested in a way that suits your individual needs, diversifying your investments and minimising investment costs. Understanding investment risk is the cornerstone of successful investing over the long term. Risk is an inherent part of investing — and it is not a bad thing.
But it is important that you are aware and comfortable with the different types of investment risks. Stocks, funds and investment trusts are the main forms of investing. You can cherry-pick companies that you believe will rise in value to add to your portfolio, while putting money into a fund or investment trust gives that responsibility to a fund manager who will spread risk in a broad spread of companies on your behalf.
Funds and investment trusts offer are a great way of spreading risk. Their value, and the income derived from them, can rise and fall so and some investments will perform better and some worse over time. It is important to understand your attitude to risk. So, you might be happy to embrace double digit returns in the good times, but can you take the rough with the smooth? In consulting , you are a manager from day 1. The top performer is usually the best in leveraging , not necessarily the one with the best analytical mind.
Communication is a weapon for consultants. Working around with people requires your advanced proficiency in this area. How do you make the client work for you even when they naturally hate you from day 0? How do you navigate through a complicated political scene with so many diverse stakeholders?
You will i nteract with all possible types of people , from front-line employees and security guards to directors and C-level people, from your peer colleagues by your side to the industry expert sitting million miles away.
For investment bankers , they mainly communicate with their teammates for projects. They do meet clients but solely from financial departments, not from various functions like consultants. You can still get away without excellent communication. Consulting works with all sorts of problems, from strategy, operation, governant, to sales and profits. Bankers typically only work on one or two types of problems: how to push through this deal.
Consulting spends almost half of their time working on the quantitative side of things. They win this one easily. Those analyses are often very diversified. For example, in a cement project , I had to analyze how different levers would affect the bottom line. So one day I was calculating the clinker factors to cut down cost. Another day, I was making a model on how boat transportation would save logistic cost and by how much Read this article to understand what a consultant does.
This differs from investment banking as analyses there are mainly deep finance oriented. All in all, consultants tend to be generalists while investment bankers are specialists. Consulting trains you on all fronts while Banking turns you into a finance superman.
Frankly speaking, both management consulting and investment banking give you precious opportunities to develop more than any other title. Make full use of your time there, as it is a life-changing experience. Almost everybody quits Management Consulting and Investment Banking at some point. If you want to stick with the Finance world, no job better prepares you.
Private equity, hedge fund, venture capital, etc. Regardless of the above, money will never be a problem. Your income will keep skyrocketing for years to come. For consultants , the exit options are much more open. You can join the clients, taking high positions. You can join those hot unicorn start-ups. You can join Venture Capital. Or you can start your own businesses which I did. Income level can be higher or lower than a peer exiting banker, depending on your will, capability, and some luck.
Both have great exit options. But management consulting gives you a little more flexibility. For this, I give consulting a close win. Both fields teach you so much. In Banking , you will become a number-savvy staff, a modeling Jedi, and above all a super performer who always delivers triple ordinary output in every situation. In Consulting , you will learn a little of many things: how to talk to people, how to convince someone, how to organize big messes , how to write sharp sentences, etc.
But above all, the most vital skill is: learning how to learn and make things work without knowing too much. With this skill, a consultant can basically do anything in life. Depending on which field you are steering toward, Consulting or Banking can be slightly more helpful. But all in all, both are really good for Resume.
Both fields allow you to work with exceptional people within the firm. Regarding the networking with the outside world, Consulting offers a slightly better package. In general, consulting work requires you to interact with more types of people in more situations. With that said, the actual key to good networking is your own proactivity. For this, both fields provide you with equally good brand names you can leverage to meet pretty much anybody you want to meet.
If you are a good networker, you will make it work from both fields. If you are not, being in one rather than the other will not help. The highlights of Investment Banking culture are endurance and hardwork. Alex Song , a former Morgan Stanley said this beautifully:. Everything there is about structure. Thoughts, charts, models, lectures, talks, etc. I sincerely expected to hear smooth and flowing speeches, seamlessly transitioning from the beginning to the end.
But every single one follow this awesome ritual:. Learn about the career tracks and opportunities at 10 of the top management consulting firms in this article - McKinsey, Wonder how much consultants are paid? This article has a comprehensive list of salaries at top management consulting firms, updated Lost your password? Consulting vs Investment Banking — Overview. Consultants have better income-per-hour, but the absolute income of consultants is lower than investment bankers.
Consulting is more open and offer wide-ranging learning opportunities; investment banking recruits almost exclusively from target finance schools to work in a heavily-financial environment. Consultants have better work-life balance than investment bankers, with shorter hours and protected weekends.
IB is arguably the best job you can get out of business school. Big 4 accounting and big 3 consulting are great too, but IB gives you more of an. Everyone knew someone that worked inside the department or close to their hiring manager. I got hired. It's mostly data analysis and I don't use. I am currently a prospective student matriculating into university this year and am How easy is it to get a job as an investment banker?