Want to make $7,500-$10,000 a month with no full-time work experience, straight out of college? That’s the amount of money you would makee as an entry-level consultant or investment banker in a top firm, if you can make it. That being said, the world of management consulting and investment banking are in many ways similar yet vastly different. Let’s find out more about the two jobs:
What is investment banking?
An investment banker is a professional working in the revenue-driving “front-office” that engages in advisory-based financial transactions on behalf of his or her client, which can be individuals, companies or government entities.
Traditionally, an investment banker would know about financial aspects, including knowing how to raise capital via underwriting or acting as the client’s agent to issue securities. Common terms include mergers and acquisitions (M&A) or market-making.
The most prestigious roles in investment banking belong to the “Bulge Bracket Banks” which comprise of the world’s largest multinational investment banks. The investment banking clients of these gigantic banks are often big corporations, governments and institutional investors. According to the 2020 Corporate Finance Institute List, the “Bulge Bracket Banks” are as follow:
- Bank of America Securities
- Barclays Capital
- Credit Suisse
- Deutsche Bank
- Goldman Sachs
- JPMorgan Chase & Co.
- Morgan Stanley
While there is some contention as to what defines a bulge bracket bank, working as an investment banker at any of the firms above can command a certain amount of respect in the industry. This is because employers are aware of the workplace rigour and capability required to thrive in these firms, and the competition a candidate would have to compete with to secure such a full-time position.
Why would you want to become an investment banker?
Starting as an analyst in investment banking easily puts you as the highest-paid university graduate of your class. Entry-level analysts in investment banking for bulge banks can easily rake up to $10,000 or more upon graduation. With the best salary also comes the longest hours as investment bankers are known to work 80-100 hours per week. In the modern-day, the bank management has been trying to cut the number of hours to attract their investment bankers to remain at the firm while promoting efficient work hours given its popularity in the tech industry.
Extreme challenge and steep learning curve
Employers know that investment bankers are incredibly motivated workers, capable of clocking in long hours for demanding work. These attributes can make you a desirable candidate when you apply for any other positions in the future. Additionally, skills such as knowing how to negotiate, enter deals and also handle customer transactions with discretion are also skills which are required across any industry.
How do I prepare myself for a career in investment banking?
Entering investment banking is no easy task, especially if you do not have any connections that can get you through the back door. Expect to do a lot of internships in smaller private equity firms or boutique banks to obtain the necessary skills before applying for an investment banking position in a bulge bracket bank.
Excellence in Microsoft Excel
When investment banking positions require proficiency in Excel, they really mean it. On top of Visual Basic for Applications (VBA), you are expected to know how to memorize all necessary keyboard shortcuts. Learn how to navigate Excel without a mouse, as this will speed up your processes in the long run when you carry out financial analysis using only the keyboard.
What is a consultant?
A consultant is a professional that provides expert advice in various fields of work, including engineering, business, operations. Management consultants help business improve performances, solve problems and make decisions for the benefit of the company.
These fields of expertise that these consultants possess are not limited to the private sector, as many are also experts in the public sector, helping governments to think of different ways to alleviate their problems.
The Big 3, namely Mckinsey & Company, Boston Consulting Group and Bain & Company are the most prestigious firms in the management consulting industry and are the industry leaders by revenue. These firms pay top dollar for the most inquisitive, resourceful and forward-thinking students straight out of graduation and expect them to be put in the field, attached to companies and learning how to deliver top-notch consultancy services.
Why would you want to become a consultant?
Variety of work
Exposure to nearly all kinds of industries, including finance, IT or even government, ensures that consultants become capable of adapting to the business climate. As a consultant, you will be working on a variety of projects, with a myriad of clients and colleagues. Additionally, the opportunity to continually travel to meet with clients is one of the most exciting aspects of the job, which you will either grow to love or hate.
Nearly all consulting firms offer a well-structured graduate programme, support and opportunities for learning and development. The velocity and pace of the work that you will be engaging in will ensure that you learn a lot on the job and continue to develop these skills throughout your career.
Salary and specialization
Top-notch consulting firms can easily pay you above $6000 to 7000 SGD per month, straight after graduating university with no work experience. However, you must be aware that high-growth industries with good salaries often come with expectations that you must give the absolute best to your work, even if it means working ungodly hours.
How do I prepare myself for a career in consulting?
A student’s first glimpse into consulting often comes from case competitions, whereby participants compete to create the best solution to a business or educational problem within an allotted time. Case competition participants often compete in teams comprising two or more individuals and their cases will be judged by experienced professionals in the industry.
Completing an internship at any of the Big 3 consulting firms will carry a tremendous amount of weight, as the programmes are well-structured and designed to test if you have what it takes to become a capable consultant. This is often the best way to prove your interest in the consulting business and an internship will enable you to see if you would enjoy the work as a consultant.
Ultimately, both careers/jobs are highly rewarding if you have the motivation for it. Consultancy focuses more on breadth as you solve problems faced by clients from various types of industries. In contrast, investment banking focuses solely on finance and the financial aspect of the clients you are serving. Investment banking pays significantly better but requires longer work hours and limits your exposure to the financial world.
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