Investment Banking Life Style

Are the hours really as bad as I’ve heard they are?

For the most part, yes! At bulge bracket banks and top boutiques, Analysts can routinely expect to work 90-100 hours per week or even more. A typical work day during the week might be 10:00 am until 2:00 am. Analysts will also typically work both days on the weekend. During a particularly busy time (working on a big pitch or at the beginning stages of deal), it is not uncommon for Analysts to work all night (”pull an all-nighter”) or even multiple all-nighters in a row. Hopefully (for the Analyst’s sake and for others), they have the time to at least go home to shower and change clothes.

Associates generally have a slightly better schedule (emphasis on “slightly”). Associates might average 80-90 hours per week with a typical weekday schedule being 9:00 am until perhaps 11:00 pm and working either Saturday or Sunday. Associates on occasion will also find themselves pulling all-nighters. At the Vice President level, the hours start to improve significantly. VP’s, if they have to work weekends or late nights, can often do so from home. Managing Directors have a much more normal work schedule, when they are not traveling. MD’s tend to come in early (between 7:00 am and 9:00 am) and leave relatively early (6:00 pm - 7:00 pm). However, MD’s are often on the road, traveling perhaps 3 out of every 5 days on average.

It should be noted also, that the hours at boutique banks can vary significantly. As mentioned above, some boutiques tend to have similar work requirements to bulge bracket banks. However, the lifestyle at many other boutiques can be substantially better.

Is the number of hours the worst thing about investment banking?

Most junior bankers will tell you that the worst thing about the banking lifestyle is not the number of hours required per se, but the unpredictability to those hours. Said differently, that you have NO control over your life, as you are expected to be reachable at all time, day and night. This lack of control makes it extremely difficult to schedule time to see friends and family. Analysts and Associates find themselves routinely having to cancel dinner plans, weekend plans and even vacations at the last minute. Many bankers, after a few months on the job cease scheduling events altogether, for fear of having to cancel.

If the banking lifestyle is so tough, what’s the upside?

First and foremost, the money. There are very few careers that pay as well as investment banking, especially taking into account the level of risk (trading or hedge fund compensation, while potentially equal to or vastly exceeding that of banking is significantly more volatile). Second, the exit opportunities. Many people treat investment banking as a stepping stone to other finance careers, including private equity and hedge funds. Third, for what you learn. Being a junior investment banker teaches you two things. It teaches you about finance and it teaches you how to work and survive in a difficult and detail obsessed environment. Both skills are likely to prove valuable regardless of future career choice. Fourth, for ego. Many people get a kick out of telling others that they are in banking and for seeing their deals on the front page of the Wall Street Journal.

How does the lifestyle differ at bulge bracket banks vs. boutiques?

It’s always tough to generalize about boutique banks because there is such a broad range of them. There are boutiques that have cultures similar to those of bulge bracket banks and there are plenty of boutiques where the lifestyle is significantly better (and some that are worse). Having said all that, there are some generalizations that can be made that will hold true much of the time. Analysts and Associates at boutiques often have the opportunity to take more responsibility than their bulge bracket equivalents, as deal teams are often smaller. Junior bankers at boutiques also tend to have more interaction with senior bankers and clients and may be invited to attend more pitches and meetings. There also tends to be less “face time” at boutiques than at bulge bracket banks, meaning fewer hours spent in the office.

How does the lifestyle in New York differ from investment banking jobs elsewhere?

Always a touchy subject, but generally, the life of an investment banker is tougher in New York than anywhere else. The other big international banking centers, London and Hong Kong, come in next. The West Coast of the U.S. is indeed more laid back, as per its stereotype. Bankers in secondary cities (often satellite offices) also tend to have better lifestyles. Having said all that, banking is still banking, and just because you may have a view of the beach from your cube, don’t expect to work 9 to 5.

As a banker, how much will I have to travel?

Senior bankers tend to travel a lot, perhaps being out of the office on average 60% of the time. Most of the travel for senior bankers is spent marketing and pitching. Sometimes Analysts and Associates will be invited to go to pitches and sometimes not. The majority of a junior banker’s time will be spent in the office. However, junior bankers may have a significant opportunity to travel when they are working on live deals. For example, when working on a sell-side M&A transaction, often the Analysts and Associates will spend a significant amount of time at the client site, especially at the beginning of the engagement. As the process progresses, the junior bankers might continue to travel to the client’s headquarters to oversee (babysit) management presentations or to travel to oversee (babysit) due diligence site visits by the prospective buyers. Working on an Initial Public Offering (IPO) will likely require significant travel during the roadshow process.

Is it true that as an investment banker, I get free dinner every night?

Yes, at most banks if you work past 8:00 or 9:00 at night (though you don’t necessarily have to wait until that time to eat), you can have dinner delivered to you on the bank’s tab (generally up to about $35). Since Analysts generally have no lives, and expect to be working far past 8:00, they will often congregate together in a conference room to eat and relax for a little while. Associates, more often eat at their desks as they may still have the hopes of getting home before their loved ones or friends are asleep.

Taken from http://ibankingfaq.com/category/ibankinglifestyle

A Day in the Life of an Buy-side Investment Equity Research Associate

7:00 a.m.: Arrive at the office.

7:01: Read The Wall Street Journal and Financial Times, paying particular attention to articles about the industry you follow.

7:30: Listen to morning call voice mails from sell-side analysts. (“Each sell-side firm has a morning meeting, and the highlights are sent via the institutional salesperson to their asset management clients.”)

8:00: Attend the morning investment meeting. (“Most firms have a daily meeting where all analyst and portfolio managers gather to relay new information, initiate stock recommendations and discuss current market changes.”)

9:00: Listen to a company’s investment conference call (“particularly during earnings reposting season. These calls usually include updates from the CEO and CFO on operating performance, strategic initiatives and future company expectations.”)

9:45: Open the stack of reports in your inbox. Study the latest industry press and investment literature to identify new trends that may impact the companies you follow.

10:30: Phone industry analysts and company management with follow-up questions.

11:00: Meet with your research associate to discuss potential changes that need to be made to financial models and investment recommendations based on new information gathered during the morning’s activities

12:00 p.m.: Eat lunch while attending an industry conference or a meeting with sell-side analysts. (“These are great ways to gather new insights and meet with industry players in a less formal setting.”)

1:30: Continue working on the written investment analysis of the company you are going to initiate coverage on the next day. (“This is the culmination of a two-week process in which you met with management of the company, visited the two largest manufacturing facilities, spoke with large customers of the company and conducted surveys on the demand expectations of their new product line.”)

2:45: Take a phone call from a senior portfolio manager who wants to discuss in more detail the investment report you issued last week on XYZ Company. (“Specifically, he wants additional support for why you believe earnings will fall 12 percent when the company has stated they expect only a 6-8 percent decline.”)

3:15: Sit down to write the final recommendation summary for the company you will initiate coverage on the next morning.

4:00: Review the day’s trading activity to see how your industry performed, again paying particular attention to the company you are initiating coverage on. (“If the investment team likes the idea, they will be paying close attention to the recent trading performance of the stock.”)

4:30: Meet with your research associate to put the finishing touches on the PowerPoint presentation that you will use to pitch the new stock the following morning. (“You identify a few changes to the slides and decide to cut out a few pages, remember that portfolio managers do not want to be inundated with information; they only want the necessary facts and the pertinent details that support your recommendation.”)

5:30: Check the newswires and first-call notes for any after-hours company news.

6:00: Head to the gym (“for a quick workout to clear your head. Hopefully there is a workout facility in the building.”)

7:00: Return to the office to run through the final PowerPoint slides and to make sure the initiation report is on the top of each portfolio manager’s inbox.

7:45: Leave for home.

- Taken from http://equity-research.com/a-day-in-the-life-of-an-investment-research-associate/

What Can I Expect From a Career in Investment Banking?

So currently you are an undergraduate or graduate student pursuing a degree in finance, accounting or some other variant. The term “Wall Street” is used commonly in business, but it doesn’t clearly define the numerous careers paths available to new graduates. As a result, we felt it prudent to highlight a few of the alternatives available in the world of finance.

Investment Banking:
Considered to be one of the tougher industries to break into, investment banking consists of financial firms whose primary role is to assist companies with one or any combination of the following services:

Sell Side Advisory- When a company is looking to be sold, they will typically hire an investment bank to (1) locate buyers, (2) give them an opinion of the company’s value, (3) handle negotiations, and (4) provide advice on the effects the sale will have on other portfolio companies they own (if applicable).

Buy Side Advisory- When a client is looking to purchase a company, typically they will hire an investment bank to (1) formulate an opinion of value of the target company, (2) identify any synergies (savings) that can be realized by purchasing the company, and (3) conduct due diligence of the target company’s management, operations, and financial statements.

Capital Raising- In a capital raising role, an investment bank will be hired (“engaged”) to raise capital and also provide advice as to which type of capital structure will be most effective in accomplishing the client’s goal (i.e., purchasing a company, funding a project, refinancing existing debt). This typically involves the use of financial models built in Excel to get a picture of how each different capital structure affects the company’s key ratios.

Valuation- Companies who may need to issue stock options or are thinking of selling their business will engage an investment banker to conduct a business valuation. This process involves (1) extensive research of the company’s industry, (2) creation of financial valuation models, and (3) identifying all inherent risks for the company looking forward.

In investment banking, the hierarchy is pretty well defined and structured, and even more so in large institutions like Goldman Sachs or Morgan Stanley. The titles and roles are as follows:

Analyst- The core of the execution activities fall on the hands of the analyst! As a first or second year analyst, you will be responsible for (1) creating all projections and financial models (this will comprise the majority of your day), (2) creation of all pitch books or investor road show presentations, (3) creating lender, buyer, or investor databases for each deal, and (4) many other ad hoc tasks delivered last minute by your superiors. Being detail oriented is key to the success of being an analyst.

Associate- While still involved on the execution side, the associate will typically manage the execution activities being done by the analyst. This involves double checking all of the analyst’s work for errors, coordinating conference calls, and relaying communication with the client. While the associate has more responsibility and less grunt work, the downside is that all the blame typically falls on the associate for the analyst’s errors should they go unchecked.

Vice President- The vice president is typically an individual who has worked for 3-4 years as an associate. The vice president’s role has more concentration on relationship management than on the pure execution of each deal. In short, a VP will typically lead and handle all calls with the client, screen and source new deals, and manage the “work in progress” of multiple ongoing projects simultaneously.

Managing Director- The managing director is directly responsible for bringing in new engagements. As a relationship manager, the managing director spends the majority of his/her time on the phone or on business trips with lenders, clients, and investors. Most likely, as an analyst you will not get much exposure to the managing director unless you are working for a small boutique firm under 25 people.

And for the next issue (a big issue for many), is making the pay grade in investment banking—is it worth it? Well, to some, most definitely! As an investment banker you’ll be working anywhere between 70-100 hours per week. Get ready for late nights finishing an investor presentation due at 8:30 AM the next morning (and not knowing you had to complete it until 6:30 the night before).

Also, investment banking compensation is divided between your base salary and the bonus. As a first year analyst, you can expect to earn a base salary of between $55,000 and $70,000 to start (with higher salaries achieved at larger firms) and a bonus of $15,000 to $50,000...or more...the bonus all depends on how active your firm is. In short, the more deals closed, the nicer your bonus will look. It has not been uncommon to see bonuses of 1 to 2 times (or even 3 times) your base salary. The pay grade basically goes up from here.