How Investment Banking Helps Your Career
I chose to go into Investment Banking at the start of my junior year at Harvard. Admittedly, what attracted me the most to becoming an Investment Banking Analyst was the compensation. How many jobs offered almost 30% more than the average salary of someone straight out of college and let you work and play in New York City? The idea of it was intoxicating and the stories from the upperclassmen who came back to campus after finishing internships with Goldman Sachs, Morgan Stanley, and J.P. Morgan (and getting full-time offers with $10K signing bonuses) convinced me that the Investment Banking track was where I needed to go. I had little idea how Investment Banking helps your career but I learned very quickly.
15 years later, I look back at that decision I made as a not-quite 20-year old and have absolutely zero regrets despite all of the ups and downs in the markets I experienced when I was in the business. The start to my career in Investment Banking has proven time and time again to be the driving force behind the success I’ve had and satisfaction I now feel as a business owner and entrepreneur helping others start their own path in finance. Below are the top ten ways (counted down) that my time in Investment Banking made me a better professional, maximized my earning potential, and opened opportunities unreachable or unrealistic without it.
10. Instant Credibility
Completing the two-year Investment Banking Analyst program is a badge of honor. The value of being able to list Investment Banking as an experience on my resume, paid with the pain of back-to-back-to-back 100-hour work weeks, lost weekends, cancelled vacations, and angry significant others, has returned substantial dividends in the many doors that it opened post-banking. Employers love seeing Investment Banking experience in candidates because they recognize that former analysts can get things done, solve problems, and work well in teams. This is the positive stereotype that persists in the actual job market (but is of course never portrayed in the media) and it’s been a great thing to have work to my advantage even in the middle stage of my career.
9. Personality Management
Investment Bankers are an eclectic bunch, even in the most conservative firms on Wall Street where everyone is assumed (and wrongly so) to be a trust fund baby or Ivy League snob. At UBS, Morgan Stanley, and J.P. Morgan, I had friends who were the first people in their families to attend college, started ticket scalping businesses as high-school students to pay for school, and were artists or art history majors who also had never taken an accounting course in their lives until they started banking. The personalities I encountered were as varied and diverse as the backgrounds from where people came. Most of the people I worked with were in fact very pleasant and easy to get along with, but the individuals who were difficult, testy, and confrontational (especially when pressured to perform) were the ones who left lasting lessons and value to my career. Managing the relationships I had with my Associate, VP, ED, and ultimately MD is a skill that has translated to every role I’ve held since my days as an Analyst. Dealing with people in positions of power vis-à-vis internal office politics made me realize that no one cares about where I went to school, which proved to be a powerful reality check on what it really takes to succeed in a corporate setting.
8. Fundamentally, Investment Banking is a Sales Job
The most common misconception about what Investment Bankers do is that they pick stocks or manage portfolios of stocks. People who don’t fully understand what Investment Banking is are very surprised to find out that Investment Bankers are actually salesmen in the business of marketing & selling companies, instead of widgets, used cars, or insurance. Of course, I’m simplifying, but the fact that Investment Banking is fundamentally a sales role (especially at the highest levels) is undeniable. This realization helped my career by reminding me that no job is so difficult or complex that it cannot be simplified to its core function. It minimized the intimidation factor whenever I wanted to do something new, different, and potentially challenging, and it strengthened my resolve be unafraid of failure and take risk.
7. Perseverance, Influence & Persuasion
The recruiting process I went through to get an offer at an Investment Bank was a monumental challenge and taught me critical lessons about career commitment. The competitiveness of the people who wanted the same thing I did plus all of the unwritten codes of behavior to win closed-list invitations only “insiders” knew was very frustrating. And despite “official” bank policies designed to prevent the club-like feel of the whole process, in the end you had to play by the rules of the networking game already in place or risk getting shut out. Although the process at times felt disingenuous, superficial, and contrived, I realize now that it served a very useful purpose to the needs of the Investment Banking business. It weeded out people who were not fully committed to the industry and identified the candidates best suited to excel as a future analyst. I continue to apply the personal branding, marketing, and influencing skills that helped me earn my first offers from UBS and J.P. Morgan to win opportunities in my current endeavors.
6. “Trial by Fire” Presentations
Being able to present coherently in front of an impatient audience with minimal to zero preparation remains one of the most crucial skills that I learned from my time in Investment Banking. All of the last-minute, on-the-spot presentations I had to make in front of members of my deal team conditioned me to continually organize my work product in a way that I could communicate key messages to people quickly. The “trial by fire” feel to the more important presentations I had to lead led to unfortunate mistakes, some quite embarrassing (e.g. when 2+2 equaled 5 on a slide that I prepared) but even those moments were lessons on how to admit imperfection and re-focus a broken conversation to “bigger picture” conclusions. I learned how to be in complete control during a presentation and adaptable to unexpected errors. This is a key example of how Investment Banking helps your career.
5. Decision Training
My Investment Banking experience taught me how to make better, more calculated decisions. Bombarded with endless choices each and every day as an analyst, I knew that each alternative I chose would have a downstream impact on my overall well-being professionally and personally. I had to measure what the impact would be on the quality of my work (should I build my own model or ask research to send me theirs?), my work-life balance (if I turn this document one more time, how many hours of sleep am I sacrificing?), and my relationships to co-workers and friends outside the office (can I run downstairs for a quick drink without self-sabotaging getting home at a reasonable hour?). I constantly weighed pros and cons in ways I never had to up to that point. As a result of dealing with all of the information overload, I respect opportunity cost far more than I would otherwise, I know when to say no to be more productive, and I am more accepting of the decisions I do make, leading to a more positive disposition and better work quality.
If there is anything you will get drilled into your head and learn in Investment Banking, it’s valuation. The discipline and methodical approach you need to make to defend the strategic reasons why you think Company A is worth X billions of dollars to Company B is not a joke. Banking insiders may outwardly express derision about this process (it’s the hours and iterative nature of getting it right) but performing a proper valuation is a hard, calculated, and tangible skill that not too many people know how to do properly. The hard, as Tom Hanks’ character said at the end of “A League of Their Own,” is what makes it great. Knowing how to put a price tag on something big and unique that the market has never seen before in a clear and defensible way has carried forward for me beyond banking. On a much more modest scale, the valuation skills I gained helped quantify exactly how much my time is worth as a consultant and where I need to allocate my own personal resources (like my 401K) for maximum return.
3. Quantitative Comfort
The ability to express complex ideas quantitatively is something I never learned in a serious way at Harvard (I was, after all, a History major). Investment Banking took care of that straight away. Every analysis or presentation to our MD or client always came back to the key multiples, EBITDA, enterprise value, cost of capital, and CAGRs derived from our models. I never took accounting until I went through my analyst training at UBS (with Training the Street) and I was definitely at a disadvantage to my peers from Wharton, Stanford, Duke, and MIT. Over time and through continuous exposure, I became better-versed in in all of the accounting concepts that vexed me at the beginning, and speaking in quantitative terms became second nature. The fluidity required to express important metrics and concepts (essentially a memorization exercise) translated to the CFO / Investment Banking management track I pursued in the years after I left the sell-side.
2. Financial Modeling 101
As an Investment Banking Analyst I built lots and lots of financial models. Unfortunately, not all of my models actually worked (someone always had to fix my revolver), but for the most part they got the job done. Even though I would rate my own modeling skills as plainly (and for me, painfully) average, this is the second most important skill that I learned during my time in banking. The Excel coding, spreadsheet formatting, and overall construction process to create a dynamic and functional model is something that is not easily forgotten. Indeed in every post-banking job I’ve held, my dexterity in Excel elicits praise and astonishment that I don’t always fully understand but do appreciate. This skill demonstrates the power that being able to build working financial models with fully integrated balance sheets, income statements, and statement of cash flows can have on other people in the corporate world.
1. Wall Street Efficiency
Hands down, the number one lesson learned from my time in Investment Banking that has helped my career the most is the concept of Wall Street efficiency. Getting things done in fire drill after fire drill, solving problems no matter the cost, meeting multiple outrageous deadlines for client meetings at the 11th hour well into the early morning, etc. etc. built me into a fiercely competitive professional willing and able to take on and handle anything anyone threw my way. Literally. Workers who apply Wall Street efficiency to other industries lay waste to their peers in terms of productivity. I’ve been in a non-banking position where my manager gave me an assignment that he conservatively estimated would take five days to complete. I finished it in 3 hours. 20-page valuation presentations that you’d need to pull together in less than 12 hours as an Investment Banker? These kinds of projects and assignments can take a lesser-trained professional months to do, and most likely it will be littered with errors. I hear stories of the same ilk all the time from former colleagues and friends from my analyst days who report the same phenomenon. Learning Wall Street efficiency is the number one reason to enter finance and the most eye-opening example illustrating how Investment Banking helps your career.