The Complete Guide to Life of an Investment Banker

The majority of what your friends or others who work in investment banking say about their experience is usually a complete exaggeration. People love to talk about how their jobs are so important and how they were working 80-100+ hour weeks for two years straight.

However, this is far far from the truth and a big misperception. Yes, you do work hard at times, but you never consistently work 80+ hour weeks. 

How do I know this? Because after college I was lucky to work as an investment banker for three years at a so called “elite” firm (i.e. Goldman Sachs, Morgan Stanley, Lazard, Evercore, JP Morgan) and had a number of friends who worked at major Wall Street firms as well. Trust me, while it was a great experience for my first job out of college, it was far from the glamorous life that you may imagine when thinking of big shot finance jobs in New York City.

How would you summarize your experience as an investment banking analyst? 

Just like pledging a fraternity, it was an experience I am glad I went through, but would not want to do again. While everyone who does banking typically exaggerates the hours that they worked, it can definitely be tough at times.

There were times that were extremely challenging, but there were also times were I did basically nothing for a month or two straight. It really depends on what was going on in terms of deal flow, board / management meetings, fairness opinions, etc. 

Some weeks, especially over the summer, I was working 50-hour weeks, while other times I was working 100+ hours. The hours are all over the place.

Key topics that are discussed

If you are truly contemplating a career in banking, I strongly suggest you read this entire article as well as the other articles I have written on this site. 

Here are the key topics that will be covered in this article. Comment below if there are any specific topics or questions that I missed. 

The Basics

• What do investment bankers actually do?
• Sellside vs. buyside processes
• The difference between a boutique and bulge bracket investment bank
• Working at a boutique versus a bulge bracket investment bank, which is better?
• How do you get a job as an investment banker? 
• What is the investment banking interview process like? 

Work / Lifestyle

• How has banking changed over the past 10 years? 
• How do you stand out and become a top-bucket banking analyst?
• How much do investment bankers get paid?
• The typical day in the life of an investment banker 
• The worst day in the life of an investment banker
• Is investment banking worth it?

Life after investment banking

• Best groups to join to set yourself up for the buyside
• Differences between private equity, hedge funds and venture capital
• Life on the buyside
• What are exit opportunities after the buyside?

The Basics

What do investment bankers actually do?

Investment banks exist to facilitate deals for companies. By deals, I mean mergers, acquisitions, debt / equity financings, initial public offerings, etc. They also provide services to help companies understand their positioning globally (through what they call a “strategic alternatives” process) as well as provide activism defense in case investors in a company are pushing for change. 

They are essentially the intermediary between a company and a counterparty and help management teams / board members make strategic and financial decisions. 

Your roles and responsibilities change significantly as you progress in your banking career. 

• Analyst (Year 1 to 2): 
  • As an analyst, you are essentially doing all the grunt work associated with materials for meetings while helping senior bankers understand anything they want to know about companies, industries, trends, competitive landscape, valuation multiples, etc. 
  • You will be going through company filings / industry research, modeling financials in excel, determining valuation, and ultimately putting together presentations for management teams and board members 
• Associate (Year 2 to 5):
  • Majority of associates are post-MBA graduates who did not go through a banking analyst program. Once you are an associate, you are expected to stay on as a career banker. 
  • As an associate, you are still considered a junior banker and will work similar hours as an analyst. You will do less of the grunt work and act more as a project manager, making sure presentations are done on time and the information is accurate. Client level interaction increases as an associate. You will start to directly communicate and work together with your clients.
  • Some associates delegate everything to their analysts. Because of this, there can be some tension between the analysts and the associates as the analysts think that the associate is not pulling their weight. Good associates split tasks evenly and work together with their analysts to get projects done.  
• VP (Year 5 to 8)
  • As a VP you are considered a mid-level banker. You will spend little time in excel and more time communicating with clients and making sure your deal team is getting everything done properly. You are essentially the intermediary between the senior bankers and the junior bankers.
  • A lot of time as a VP is spent putting together an outline of what needs to get done and making sure everything is getting done on schedule. You will take more of an active role in client meetings, talking directly with clients and explaining the work that you have done for them. 
  • Your hours as a VP are a lot better than those of junior bankers. You very rarely come into the office on the weekends and no longer stay past dinner time during the week. Of course, it all depends on what is going on and if you are in the middle of the deal. I have seen a ton of VPs stay past midnight because of a tight deadline for presentation materials.
• Director (Year 8 to 12)
  • As a director, your focus becomes on executing deals and learning how to bring in new business. For the most part, you are executing deals that other senior bankers have brought in. 
  • The majority of your time is spent communicating with clients and going to various client meetings so you can start building relationships. You create the majority of the workflow for the junior bankers on your deal teams by thinking of what you want to present to your client and how you want to present it. 
• MD (Year 12+)
  • Once you have shown a proven ability to create and maintain relationships with clients, then you will get promoted to MD. This promotion is probably the hardest of them all given that the role entirely shifts to a sales role where you are competing against numerous other bankers across the street to bring in new business. Your focus is entirely on building relationships, bringing in and executing new deals. 
  • It is much much easier to bring in deals at a bulge bracket than an independent boutique firm. At an independent firm, you are solely giving advice to your clients and do not have much else to offer. At a bulge bracket, you have a financing arm that you can offer to facilitate deals. More on the difference between the two later. 

Sellside vs. Buyside Processes

The sellside vs. the buyside can mean a variety of things depending on what you are referring to. On one hand the sellside refers to equity research while the buyside refers to private equity, hedge funds and venture capital. 

A “sellside process,” however, in the context of investment banking refers to working with a client to sell their company or raise capital. A “buyside process” refers to the opposite – working with a client to acquire another company (like through a typical auction process).

Buyside processes are close to what you would do at a private equity firm, except rather than being the client that has the capital to invest, you are working for an investment bank that helps do the due diligence / modeling and gives recommendations to the client on certain matters such as valuation.  

The difference between a boutique and bulge bracket investment bank

People usually refer to a bulge bracket as one of the big firms that offers a variety of different services, including advisory, financing, research, sales & trading, etc. These firms have a large global presence and some, including (JP Morgan, Bank of America, Wells Fargo, Citi) have a commercial presence as well where they offer banking services to consumers like you and I.

Here is the list of bulge bracket firms:

• Goldman Sachs
• JP Morgan
• Morgan Stanley
• Bank of America
• Credit Suisse
• Wells Fargo
• Deutsche Bank
• Barclays
• UBS
• Citigroup

A boutique investment bank is different in the sense that it focuses on just one aspect of the work that bulge bracket firms do. Majority of these boutique firms focus on advisory level work and do not have a financing arm. When I talk about a financing arm, I mean an ability to raise or lend capital for their clients (either through an equity raise like an IPO or a debt raise through a bond offering or loan syndication).

Given boutique investment banks focus on advisory, they are seen as independent and unbiased. Bulge bracket firms may have other motives in other parts of the firm that could potentially cause a conflict with the work that you are doing in a specific group. For example, they may try to sell a company via an M&A process, but have a “sell” rating on the stock in the equity research division (meaning the bank thinks the company is overvalued and share price will likely to go down).

Below is a list of the main boutique investment banks:

• Lazard
• Evercore
• Greenhill
• PJT
• Moelis
• Centerview
• Jefferies
• Guggenheim
• Houlihan Lokey
• Stifel
• Imperial
• Cantor Fitzgerald

Now there is a debate whether you would include a Lazard or an Evercore in this list. Given these firms have a large global presence, they do not even refer to themselves as boutique investment banks.

Now just because a boutique investment bank is smaller does not necessarily mean that it is a worse alternative compared to a bulge bracket. A majority of the boutique’s on the list above are great firms to work for.

Working at a boutique versus a bulge bracket investment bank, which is better?

You will likely get a much better learning experience working at a boutique firm.

The problem with the majority of bulge bracket investment banks is that the work is divided amongst so many different groups. Most separate their M&A and industry groups, so when working on a presentation deck for a client you will have the valuation done by the M&A group and the industry analysis done by the industry group.

I remember a few of my friends in bulge bracket M&A groups did not get any exposure to the industry analysis because all they did was work on technical/valuation/excel models. This may sound like the “sexy” work, but the modelling and valuation work is not that much of a valuable skill once you learn how to do it since everyone knows how to do it after banking. It basically becomes a commodity skillset.

On the other hand, at a boutique investment bank, all the work is done in house within one group (for the most part) and one deal team. When I was working in investment banking, the deal team sizes were around five people total: one MD, one Director, one VP, one Associate and one Analyst. You get exposure to all aspects of the deal and become extremely knowledgeable about each deal you work on. This is a major benefit in my opinion relative to only working on parts of a deal at a bulge bracket.

The only downside is that you will likely work longer hours given that deal teams are small and the responsibility is higher at the analyst level. You may think that this is a huge negative, but your early 20s are the perfect time for you to work extremely hard so that you can learn as much as possible and set the foundation for your career going forward.

How do you get a job as an investment banker? 

The path is pretty simple as long as you start early and plan. I was fortunate that I had a mentor who was a few years older than me. He went through banking and started guiding me through the process towards the end of my freshman year in college.

To get a job at an investment bank, the playbook is as follows:

Now I have definitely seen people who were able to break in without being at a top college or having a 3.5+ GPA, so do not give up just because you do not meet the traditional mold. You just need to network harder to land those first interviews.  

What is the investment banking interview process like?

I won’t go into much detail here on the interview process as there are a number of other sites out there that do a good job explaining. Just know your basic finance / accounting / valuation / technicals and be able to explain your background clearly.

Usually you start by applying to job postings on your school’s OCR (On Campus Recruiting) sites early your junior year. This is your best bet on landing an interview. Applying on a company’s website will lead to nowhere unless you have a connection at that company who will pull your resume.

The process begins with 30 minutes to an hour phone screen or an in-person interview on campus. Then, you are invited to come up to NYC or wherever the company is located for a “superday.” A superday is basically a half day of back to back interviews, usually with five to eight people.

If you got the offer, you would hear by the end of that day or the very next. 

Work / Lifestyle

How has banking changed over the past 10 years?

Traditionally, investment banking had a reputation where young professionals fresh out of college would be forced to work around the clock on deals and basically dedicate their entire lives to banking. Free-time, hobbies, volunteering, essentially anything outside of work were nonexistent. Long hours weren’t just due to live deals either. MDs would view analysts as a resource to crank out pages and pages of materials for their own benefit during marketing meetings with potential clients.

Investment banks were able to easily get away with treating their junior employers poorly back in the day because there were no good other alternatives to make a ton of money early on in your career. Nowadays, the competitive landscape has changed significantly with the growth of tech-related careers that pay high six figure salaries straight out of undergrad with other amazing perks.

This forced investment banks to adapt to retain talent over the past five years.  Nowadays, the lifestyle of an investment banking analyst is not as bad as it used to be. Banks have cut down on meaningless marketing materials that MDs forced analysts to do and have implemented other policies such as protected weekends to improve the analyst lifestyle.

Of course, you will still be working long hours if there is a live deal going on, but the amount of BS that senior bankers used to make junior bankers do is cut down significantly. That said, investment banking is one of the worst finance careers in terms of work life balance.

How do you stand out and become a top-bucket banking analyst?

It is extremely easy to stand out amongst your peers in any job. You simply just need to show that you actually care about the firm and the work that you are doing.

My #1 piece of advice to anyone that is starting a new job is to consistently arrive at the office ~30 minutes before everyone else. Unless you had a late night at work, you should always show up before your partners and fellow analysts come to the office. As simple as this sounds, it is the best way to stand out and be recognized.

To be a top-bucket banking analyst, there are a number of things you can do. I wrote about this in depth in 10 Steps to Being a Top Bucket Ranked Banking Analyst, but just read the list below if you want the sparknotes:

1. Highlight all mark ups
2. Always have a positive attitude
3. Print and check every document that you hand to someone else
4. Do more than just the excel work
5. Be the first in the office
6. Always respond to emails within 15 minutes
7. Do not take weekend vacations away from the city
8. Be a team player and offer to help others if you do not have much on your plate
9. Communicate about deadlines
10. Do not bullshit or lie

How much do investment bankers get paid?

Banking is lucrative because each year (at least until you are a Director / MD) you get a significant pay raise in the range of $20-40K and get an even bigger pay raise when you are promoted to the next level.  

Straight out of college you make over six figures as an analyst then your compensation increases to the point where you are making $400-500K in six years as a VP.

If you would like to read more in detail about compensation across different finance careers, then read Investing Banking, Private Equity and Hedge Fund Salaries and Bonuses.

The typical day in the life of an investment banker

After being in banking for three years at the start of my career, I realized that the hours that people in banking said they worked were extremely exaggerated. For some reason, people straight out of college love to boast about how long or hard they work at their jobs. Luckily after a few years this quickly fades as you realize that nobody cares how much you work. This causes people to think that as a banker you consistently work 80 to 100-hour weeks, which is completely not true.

Yes, there are weeks when you work 80-100+ hours, but this is not the norm. It entirely depends on what deal you are working on and the deadlines associated with that deal. If there is not a deal going on, then you work closer to 50 to 70-hour weeks.

Here is an example of a typical day in banking:

Morning:

8:45am to 9:45am: Depending on what time I went to bed the night before, I get into work around this time frame. If I was able to get a full seven hours of sleep, then I would show up earlier than the rest of the office at 8:45am. Most do not do this and show up around 9:15am. If I had to work late, I would sleep in and show up around 9:45am. 

9:45am to 12pm: Once settled in, I work on spreading my comps before catching up with my associate / VP at 11am to finish pitch book materials that we are doing for this meeting in a week. We go over new slides / analysis, changes to existing slides and a bunch of formatting changes.

Afternoon:

12pm-12:20pm: Go downstairs to get some lunch and bring back to the office. Typically, I eat at my desk if I am somewhat busy – otherwise eat in the kitchen with some other analysts. Today we have to finish materials before meeting with the MD at 5pm, so do not have time to mess around much.

12:20pm to 4pm: Work back and forth in excel and powerpoint with the associate on the changes to the pitch book before meeting with the MD. The pitch book contains a number of items that I need to finish, including quals (i.e. deal tombstones), industry / company analysis, valuation pages, etc.

4pm to 5pm: Print out a copy of the presentation and look over in detail to catch and fix any errors / typos.

Evening:

5pm to 6pm: Meet with the MD to discuss progress and basically show the output of all the analysis we have been working on thus far. He wants to add in a few accretion / dilution slides on a potential merger with a competitor and merger rationale.

6pm to 10:30pm: Work on the new merger analysis and order some Seamless with the other analysts for dinner. Pitch meeting is not till the end of the week so do not have to stay late. Can finish up in the morning before discussing with the associate.

10:30pm: Take an Uber home.      

What I outlined above characterized a day that was somewhat busy with no pressing deadlines or calls with management / board members.

The worst day in the life of an investment banker

Below is an example of one of the worst days you can ever have as an investment banker (this is a true story and not an exaggeration):

For context: this was the last week of a $10Bn+ sellside deal where we were preparing two fairness opinions for a board meeting later that week. For those that don’t know, a fairness opinion is essentially a valuation deck describing if an offer to buy a company is fair or not for shareholders. We were running two fairness opinions at the same time because the board did not know at the time which deal was the best. This was towards the end of an eight-month strategic review process.

8am: Arrive at the office. Had three hours of sleep the night before and running on a ton of caffeine to keep me awake. Been working 90+ hour weeks for the past three weeks to get this deal done. Had to get in early today because we have a 9am meeting with the MD to discuss the fairness opinions. Have to go to fairness committee the next day, so this is the last day to make any changes to the board deck.

9am: Deal team (analyst, associate, VP and director) meets with the MD to discuss the board deck. MD furious because there were still parts of the deck that were not yet completed. In my mind, he is out of his mind because we had less than a week to do two full blown fairness opinions. We have a special committee update call with board members later in the afternoon, so need to finish materials for that as well. Luckily it is only a few pages of merger analyses, but MD is stressing out big time.

10am: Start working on some changes for the special committee call. Thought we were pretty much finished with this deck, but the MD is not happy with the output.

12pm: Director swings by desk and says “what the hell is taking so long.” I give him the death stare as I am working as hard as I possibly can with very little sleep. We have a call in an hour and the senior guys are starting to stress out.

12:55pm: Finish making the changes. Director takes a quick look and tells me to send across to the board committee members. Nobody had a chance to really check the analysis, so I become extremely anxious hoping that everything was done correctly.

1pm: Special committee call starts. So far everything is going well and I have not noticed any mistakes in the materials that were sent across.

2pm: Thank god the call is over. Go grab my 5^th cup of coffee because now we have to finish these fairness opinions before the internal fairness committee meeting tomorrow. Tonight is going to be another late night unfortunately, but no time to complain as there is too much work to finish.

3pm to 10pm: Work on the fairness opinion deck. It is about a 50-page presentation with a bunch of cool football field charts and backup of all valuation analysis (DCF, comparable company, precedent transactions, accretion/dilution, has-gets etc.).

10pm: Deal team meets with the MD to go through the latest draft of the presentation. There are a few mistakes that he caught, but luckily, he is not upset about it. He wants to make some more changes to an existing analysis. Inside I am fuming because this is like the 10^th time we are making changes and I am extremely tired.

11pm: MD goes home while the rest of us stay to finish the presentation.  

3am: Finally done with the presentation. Just have to print and check slide by slide to make sure there are not any mistakes.

4am: Noticed a few mistakes and need to make some more changes. Luckily nothing major.

5am to 6am: Print the presentation again and we all sit down and check it one last time. Everything looks good, so we send it down to the print center to make 15 bound copies.

6am: Associate thinks it is probably best that we just stay at the office. The fairness committee meeting is at 9am, so do not want to risk oversleeping and need to make sure the print center made the books correctly. I take a nap under my desk and wait around for a few hours for the print center to finish the books.

8am: Print center calls and says they are done. I go down to pick up the books and bring them back up. Associate and I flip through to clean the books of paper clippings and check to make sure the pages are all correct.

8:30am: MD arrives and asks for a copy of the materials. Everything is set to go for the meeting.

9am: Fairness committee meeting starts. 10 minutes in I start falling asleep in front of all these senior bankers of the firm. Associate nudges me to stay awake.

10am: Meeting ends. We all check in with the MD and he tells us good job and to go home for the day.  

11am: Arrive home and go straight to bed.

The above sounds inhumane, and it absolutely is! But at the time that this happened, it was extremely thrilling and ended up being a really cool deal when all was said and done. I am glad I am no longer a banker though because don’t think I can put up with days like that anymore.

Life after investment banking

The majority of people who choose to go into investment banking after college do not end up staying on after they finish their two to three-year analyst program. Prior to around 2014, most investment banks did not have a formal associate promote program where you can stay on full-time after being an analyst. This has changed to where banks now prefer good analysts to stay on after their analyst program, but still a majority of people choose to leave for the buyside, corporate development, or other roles.

If you think about it, why would someone in their early 20s stick to just one job for their entire career? How would they know that that is the best job for them? In my opinion, if you stayed at your first job out of college for the rest of your career, you will always have someone in the back of your mind saying “what would have happened if I did something different?”

Learn more about investment banking exit opportunites.

Best groups to join to set yourself up for the buyside

If you are thinking about going to the buyside after banking, I would recommend joining a group that is not specialized so that you can keep your options open. Real estate, energy/oil&gas and even healthcare groups can silo you into that industry post banking.

Now I am absolutely not saying that you can’t get out of those industries if you end up in those types of groups. I know many analysts who were able to get out of a specialized industry vertical post banking, but they just had to work a little harder at it. Another option is to do a third year in a different group if your bank allows it (if you are good, they most likely would).

Differences between private equity, hedge funds and venture capital

Like I mentioned before, buyside recruiting (at least for private equity) starts within a few months of starting your first job out of college. I still do not understand how you can really know what you truly want to do after banking after just a few months of working in the real world, but private equity recruiting is a competitive process and these firms do not want to miss out on the best candidates.  

Even though these buyside paths are similar because you essentially become an investor in companies / securities, they are completely different in the sense that the analysis you do varies. The investment style, time horizon, asset class focus and compensation structure are completely different.

If you want to learn more about these key differences and figure out which path is best for you, then I suggest you read the article on Difference Between Private Equity, Hedge Funds and Venture Capital.

Life on the buyside

As I have said numerous times on this site, life on the buyside is not that all cracked up to be. It sounds like the promise land because people think you work less, get paid more and get to work on more interesting things.

Some of this is true, but it really depends on where you go. If you choose to go the private equity route, life can be very similar to banking, especially if you go to a mega fund. You must truly like the work if you think you are going to stay in private equity or any other buyside roles for the long run. I worked at a multimanager hedge fund for just a year and quit when I realized it was not for me, despite the potential to make $500K / year.

Most of my friends who choose to do private equity after banking did not stay after their two years as an associate – most just realized that finance in general was not for them longer-term. However, I do have a select group of friends that did decide to stay and are doing very well financially. They of course had to sacrifice a lot of free time, but that is what it takes if you want to be well off and successful from a career standpoint.

What are exit opportunities after the buyside?

Exit opportunities after private equity can be a lot different than those after working at a hedge fund. There are different skillsets that you learn in private equity that are applicable to other career paths while the hedge fund skillset is more specialized. I suggest reading Exit Opportunities at Hedge Funds vs. Private Equity if you wish to learn more.

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