Investment Banking Culture
Is this how you want to spend your life?
I have been out of the investment banking business for over a decade now and I am sure many things have changed since I left the business in 2009. But one of the things which appears not to have changed (or improved) is the Wall Street culture regarding the long working hours of analysts and associates. If what I read in the press and hear from students is correct, it is still not uncommon for young bankers to work 80-hour weeks. And much of the work they do is not particularly challenging or rewarding. Those of you who have spent many sleepless nights putting together “pitch books” will know exactly what I mean.
I spent 25 years as an investment banker but I did not personally go through this sort of hazing. I became a banker in my late 20's but I worked in a small investment banking office in Chicago and I never worked in New York other than for three months of training, which was truly horrible. I regularly worked 10-12 hour days, but I caught an early morning train into the office and was often home for dinner with my wife and three young children. My business travel consisted mostly of day trips to see clients, and travel days were often shorter less rigorous than days spent in the office. I did some work on weekends, but not a lot.
In moving from corporate law to investment banking at the age of 28, I more than doubled my pay and cut my work hours considerably. I also learned a lot about finance and the capital markets, which was new and exciting for me. But this was the 1980s, when investment banking was perhaps somewhat less competitive than it is today, and I was working in Chicago with a handful of mostly well balanced people who also had families and personal lives outside of work. My New York colleagues did not generally have this same experience, and I could never understand how they put up with it. (Many of them were single and perhaps the office was nicer than where they were living, which was not true in my case.)
There are many good reasons to work in investment banking, but work-life balance is not generally one of them. For this reason, many bright young finance students decide not to pursue IBK careers or to jump off the Wall Street treadmill after just a few years. This is the subject of an article in today’s NY Times, “Rookie Bankers Sour on Wall Street’s Pitch of Big Pay and Long Hours”, which I encourage you to read here.
And yet many people still find this career path appealing, as do many of you perhaps. Yes the hours can be horrific, particularly as a young banker, but they pay is great and the learning curve is steep (which is a good thing, if you are not putting together pitch books). But many young bankers eventually find that while their pay keeps going up, they have little free time in which to spend their hard earned savings, other than on expensive apartments in which they are able to spend very little personal time. As far as I can tell, this aspect of Wall Street culture hasn’t changed very much over the past 40 years, at least not in New York.
Is investment banking the right career path for you? For some of you it may be; for others not so much (or not for long). The good news is that there are lots of great jobs and rewarding career paths for finance students outside of investment banking and outside of New York. For those of you who are interested in investment banking, I encourage you to talk with your friends and colleagues who work at investment banks and try to get the lay of the land before you lock into this highly competitive career path. Keep in mind that there may be significant differences in the culture between firms, particularly between large and small firms. And even in the big banks, there are many different types of rewarding jobs and career paths, all of which have their own work-life tradeoffs. The lifestyle of a corporate finance banker may be very different from that of someone working in sales and trading, operations, risk management or corporate strategy. And while you may envy the highly paid senior bankers who leave the office before you do (often to attend a client dinner), you may not fully understand the stresses and challenges they face or the personal sacrifices they too have had to make along the way. Being an investment banker is not easy, for anyone.
You don’t need to know at age 20 what you want to do for the rest of your life, and you can always change course later on. But you should not go into investment banking (or any other job) without understanding what will be expected of you personally and professionally, not only in your first few years but also as your career progresses. If you really can’t see yourself working 80 hours a week for the next several years (or longer), then becoming an IBK analyst or associate might not be the right job for you, regardless of how much it pays or how glamorous it seems from the outside.