About money, drugs and sex: life of an investment banker
Everything you’ve wanted to know about life of an investment banker
Have you ever watched the movie “Wolf of a Wall Street”? If you haven’t yet, do it. It’s quite amusing. Basically it is a perfect picture of how people imagine life of an investment banker to be. You wear an expensive suit and tell CEOs what to do. You fly all around the world and take on high profile cases. All the gorgeous girls just can’t wait to date you. And yes, you earn loads (LOADS!) of money. Awesome.
Well, hate to disappoint you – life of an investment banker is far from this picture. Especially after 2008. After markets meltdown regulations tightened, compensations changed, perks disappeared, and everything got just a little bit more complicated. If you are serious about getting into investment banking – you have to know what is waiting ahead. I have to tell you the hard truth of what to expect behind the shiny doors of top investment banks.
Stereotype #1: I will earn a lot of money.
Truth: Forget it. You will earn above average salary. After a few years of your career it will be a number you can boast about. Before that your pay per hour won’t differ much from your university friends. Here is a basic calculation: as an analyst in IB London you will earn around £45,000 per year (more in New York at about $85,000-$100,000). Cool? Not exactly. Subtract taxes. You will be left off with less than £30k. Now divide by the number of weeks you will work and you will get to around £600 per week. Expect to work at least 70 hours per week (if you are lucky), which means your hourly pay will be below £9. With living expenses in London and New York that won’t leave much money to save – not alone to get rich.
But wait – there is a bonus, right? Yes. But the bonus amounts have decreased significantly in the last years. As a first-year analyst don’t expect anything above 30-60% of your base these days. And way too often in the recent years bonuses have barely accounted for 15% – with tough financial markets very few firms could boast strong performance.
Stereotype #2: Girls love investment bankers.
Truth: They do, quite often. But there is a reason why most junior bankers I know are single (even if they are not, it is usually a temporary condition). They don’t have time. Actually, they don’t even have a desire to meet anyone. Because they work really, really long hours. Because most of the time they are exhausted. And when those pretty girls are waiting to meet bankers in the bar downstairs they’re just starting to work on a new model – that will likely to carry on to the weekend.
Stereotype #3: I will be buddies with major CEOs.
Truth: Not in the first two-three years of your career. Investment banks is where hierarchy rules. Your job as an analyst is to sit tight and draft those nice slides. And then redraft them. And again. And again. And then watch them being tossed away. And start anew. The CEOs will have to wait until you reach associate level (or more realistically, VP level) – and trust me, even then they won’t be too friendly.
Stereotype #4: Despite working long hours I will have a lot of fun and live like a king.
Truth: Everyone just loves stories of investment bankers partying. They come to the club, buy the most expensive champagne, have drugs in the bathroom and leave in a limo with three gorgeous girls. Perfect attire and cocky face.
Truth to be told, bankers do have really great nights out. I know I did. On those rare occasions when they are out of the office, they also spend a lot. However, the stories rarely go beyond drinking. And after all, most junior analysts don’t have enough money to party often. They live in central London or New York – but share an apartment with a roommate or friend to split the costs of accommodation. They do spent money on expensive restaurants and clubs – but they don’t enjoy too much of a posh lifestyle overall. And they can barely save anything in the first few years of work. Just getting your expectations straight.
Stereotype #5: At least I will have cool perks.
Truth: Perks are overrated. You will have free cab rides home after 9pm and free meal (dinner and weekends) in the office. That is mostly it – at least for junior bankers. And after two months you’d wish you could leave office early, walk home and have a meal with friends. You will be given a blackberry – but at some point there will be people dumping it in the swimming pool. On purpose.
What I am trying to say is simple: life of an investment banker is not as glamorous as it may seem.
If you are thinking of getting in because of the money or status – think again. No such hard work is worth it. You will be living in a office, you will look terrible, and you will be stressed – all the time. The real perks of the job will only be evident after a few years in investment banking. High bonuses, client meetings abroad, maybe even some free time – will probably materialise once you reach at least associate level.
Your reasoning, at least partially, should go beyond money and status:
– I want to learn quickly things, that would take years for others to learn
– I want to work on large high-profile deals
– I am interested in finance and markets (doubt anyone is, but still)
– I want to quickly acquire new skills
– I want to work with super smart and talented people
– I want to make right contacts and build a wide network of top professionals in finance and industry areas
– I am prepared to suffer terrible hours and stress as I want to exit investment banking in a few years to a high profile firm
If these are your reasons – write them down (they will come handy in your interviews later on). And start drafting your application. You are in for a long run. If you just want to have some fun insights on investment banking lifestyle – check out the most hilariously offensive Goldman Sachs conversations on Wall Street.