Monday, June 25, 2007

Consulting versus i-banking

Now that I am a Kellogg student, I have the privilege of choosing between a career in consulting and investment banking. It feels a bit like deciding between becoming a pop star or an astronaut, but when it comes to making a decision, it's not so easy.
The problem is that if you want to go into banking, you pretty much have to make up your mind before you come to business school. Unfortunately, you can't browse the shop for two years, try some stuff on, and buy what looks nice. Companies are looking for passion and commitment, so you'd better take the right classes, attend the right recruiting events and join the right clubs.

On their "Investment Banking and Capital Markets" career path website, Kellogg's Finance department puts it like this: "Students who are interested in pursuing a career in these competitive areas must plan their academic program from the moment they begin classes at Kellogg, in order to be prepared for crucial summer-internship interviews that take place in the winter."
In other words, if you want to become a banker, your job hunt starts pretty much when you arrive at Kellogg.

Fortunately, I'm not the first person deciding between banking and consulting, and Kellogg's consulting and i-banking clubs have created a great resource about differences and similarities between the two career paths. Take a look here. [Update: site is limited to Kellogg students. Sorry. I'm trying to make some of it public.]

Here's a short personal analysis.

In i-banking, the corporate finance side (advising companies on M&A and on issuing stock/debt) appeals to me for the high-level advice you are giving to high-level people, but the infamous workweeks that can easily go up to 110 hours per week are truly intimidating. I don't shy away from hard work, but if you realize that this translates to 15 hours per day for 7 days straight, only to start a new workweek the next day, images of delirious insomnia a la Fight Club start to pop up.

Then you've got Sales & Trading, which has the same outrageous pay, but condenses the 100+ hour workweeks into extremely intense 7-5 workdays. S&T does not get you into boardrooms, but does make you an expert in global capital markets, which is fascinating enough. I-bankers look down on traders as neanderthals, but traders think i-bankers are idiots for sacrificing any form of social life for essentially the same pay. They have a point. I could live with less boardroom exposure, but the big downside to S&T seems to be that these skills are less transferable to outside the banking industry.

Then, on the other side of the spectrum, you've got consulting, which has less extreme hours (late nights instead of all-nighters and generally free weekends), but heavy travel. The work is sometimes described as 'advising company leaders on challenging strategic questions', and sometimes as 'being locked up in a poorly lit room in Bumblefuck, Idaho, crafting endless Powerpoint presentations that tell clients what they wanted to hear in the first place.'

But once you start scratching the glamorous surface of consulting and worry about the underlying dirt, you'd have to do the same for i-banking. Liar's Poker and Monkey Business both do an excellent job in showing that for every Porsche and cocktail party there's a year of verbal abuse and endless nights of mind-numbingly boring work.

So, after a couple of months of reading up, I still have no idea.

Any career counselor would probably tell me to ignore the preconceptions and go for what really excites me, but the problem is that both fields genuinely interest me. Sure, the prestige and pay are nice, but between M&A advice, trading stocks on Wall Street, and advising Fortune 500 companies on strategy, I honestly couldn't tell you what I'd enjoy more. It both sounds, well... kind of fun.
I'm still exhilerated about having this problem of privilege, but even those problems need solving.

10 comments:

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Anonymous said...

I am an MBA applicant applying for Fall 2008. I too am trying to choose between consulting and I bank. I am currently in consulting but have a true passion for finance. This is why I am really setting my goals on I banking. Consulting is great, but the traveling takes a toll on you.

TheLC said...

Hey MBA Dutchie,

We're practically on the same boat! Am a Kellogg admit this coming fall and am eternally torn between ibanking and consulting. I still have no idea where I want to go.

Also got invited to a McKinsey dinner here in my country. Am hoping that I could get further insights from there.

Drop me a line on my blog: www.ladieschoicemba.blogspot.com

MBABlogger said...

Exactly on the same page :) have been struggling to make up my mind as well and even after reading Monkey Business, Liar's poker and some more stuff I am not 100% sure!

Anonymous said...

Hi. I'm in the I banking industry and like being here but dread the trader experience. After a lot of thinking I thought of a middle path. Why not join the Financial Services and IB consulting group of a consulting firm. I don't know if you have an option to make a choice while applying for a job but firms like McKinsey, BCG, Gartner etc have Financial consulting divisions which cater to the I Banks. Wot do y guys say?

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