Wall Street Mastermind

The TRUTH About Investment Banking

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Sam Shiah

May 7, 2024

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Investment banking has long been one of the most popular jobs for some of the smartest and brightest students at top schools across the country.

There’s the extremely high pay of $150-200k+ even for entry-level positions, there’s the prestige, and of course the “exit opportunities” that everyone talks about.

But what the heck does an investment banker actually DO anyway, and is it a job that you would actually enjoy?

In this article, I am going to talk about what investment bankers ACTUALLY do.

Is there any truth to this?

In this article, I am going to talk about 1) what investment bankers ACTUALLY do, 2) what does this actually mean in terms of the day-to-day, 3) examine whether investment bankers truly work 100 hours a week, 4) one secret downside that no one ever talks about, and 5) I’ll give you my honest opinion on whether investment banking is worth it.

So first, let’s talk about what investment bankers actually do.

When most people hear the term “investment banking” – they assume the job has to do with either investing in stocks, or managing money for wealthy people.

But it actually has nothing to do with that.

Instead of advising high net worth individuals, investment bankers advise companies, institutions, and governments with raising money, and also advise companies on mergers and acquisitions, which is a fancy way of saying the buying and selling of businesses.

When it comes to raising money, there are typically two ways for a company to raise capital from investors.

You can either borrow the money and agree to pay it back with interest, which would be a debt capital raise.

Or you can also sell a % of your business to investors in exchange for their money, in which case you don’t have to pay them back but instead let them participate in the future upside of your business.

Investment bankers help advise with both ways of raising money, which is very important because without any capital, most businesses would not survive for long.

As for the mergers and acquisitions side of things, also known as “M&A”, the easiest analogy to understand here is the real estate agent you use when you want to buy or sell a house.

The agent will help you find the right property, give you advice on how much the property is worth, help you structure the terms of the transaction, and negotiate with the other party.

When a company wants to buy or sell to another company, they hire an investment bank for the same role – finding the ideal buyer/seller, valuing the company being sold, structuring the terms of the deal, and negotiating with the other party.

It’s very similar – except instead of dealing with a property that may be only worth 6 or 7 figures, you’re buying or selling an entire business that could be worth upwards of tens of billions of dollars, and also impacts a lot of people including its customers, vendors, and employees.

In other words, these transactions are highly strategic, but can also be extremely complicated.

So now that you understand what investment bankers do at a high level, let’s talk about what investment bankers actually do on the day to day.

The day-to-day

At the most junior level, which is going to be what’s relevant for those of you who are reading this, you spend most of your time working in either Excel or PowerPoint.

You use Excel to build financial models that project out the future performance of the businesses you’re doing a deal for, and assign a value to that business.

You might also try to model out what two different companies might look like if they were to combine, and how the combination might affect their future financial performance.

Once you’ve finished your analysis in Excel, you will summarize your findings and transfer the outputs over to PowerPoint, where you create very pretty presentations that usually have lots of charts and graphs – these presentations are then used by senior bankers to present your findings to C-level executives for the clients you’re advising, as well as their Board of Directors.

Basically – all of the major decision makers at these companies will be making decisions based on the advice that you give them.

Now, to be able to work on something that’s so consequential at such an early age in your career, that’s pretty cool right?

So what’s the catch?

100 hour work week

Well – let’s talk about that 100 hour work week.

If you read enough of the headlines in the media, you’ll often see how sensationalized it really becomes… people would have you think that investment bankers regularly work 100 hour weeks, which if you do the math implies that you work more than 14 hours a day, 7 days a week.

Imagine working from 10am to midnight everyday, 7 days a week, without ever taking a day off, even on weekends.

This obviously wouldn’t be sustainable in real life and is very far from the truth.

Do investment bankers pull 100-hour work weeks every now and then?

Yes absolutely, especially when there’s a live deal that is about to cross the finish line, there can be a lot of work in that final stretch before the deal closes.

But there are also lots of slower weeks mixed in between as well.

If you look at the actual AVERAGE based on survey data, most of the top investment banks out there average somewhere between 65 to 80 hours a week.

That’s 20-35% less than what the media would like you to think.

Furthermore, you might think that if investment bankers are working so much, it must be because they have so much work to do that they must be heads down, working super hard the entire time when they’re in the office.

This is just not true.

As a junior banker, you spend a lot of time sitting around, waiting for comments from your senior bankers on the work that you’ve done the previous day.

During the day, the senior bankers are out of the office, meeting clients and trying to win business.

So often times, you won’t get your feedback until late afternoon or early evening, at which point your work really starts.

That’s also why you end up staying in the office until so late, because a lot of times you aren’t starting to do the real work until most of your friends are already getting off work.

But the first half of your day is usually a lot more chill than the second half, that’s for sure.

So if the hours aren’t actually as bad as people say they are, what is the ACTUAL downside to investment banking that you’re not thinking about?

Well – it’s actually not the hours itself, but the unpredictability of when work will pop up.

What do I mean by this?

Well – if I told you that you had to work 80 hours a week, but you knew exactly WHEN you’d have to work – let’s say you work from 9am to 10pm Sunday to Friday.

That’s roughly 80 hours.

Well, you would still be able to make plans with your friends or significant other, to go out late Friday night after you’re off work, or all of Saturday when you know you don’t have work at all.

This is how it is for most people who work a regular 9 to 5 job; they know exactly when they have work, and when they don’t.

But because investment banking is a client-servicing business, and because your clients are very important people who are very demanding, as they should be since you’re advising them on some of the most important transactions their companies will ever work on… well, you basically have to be at their beck and call.

If your client’s CEO asks you for an analysis on Friday night and wants to see it first thing Monday morning, chances are you’ll have to cancel whatever weekend plans you had.

In the beginning you might still be enough to make plans with people you care about – but after having to flake on them a couple of times, you’ll quickly start to realize that you can’t ever fully commit to any plans until the very last minute.

If the people around you don’t understand this, it could mean that you stop getting invited altogether.

So that’s why I said – the actual hours worked is not the worst part, it’s actually the unpredictability of the hours.

Why investment banking?

So with all of that said, is investment banking worth pursuing as a career?

Now I will obviously say this – I am biased when it comes to this, because not only did I do investment banking myself, but currently my life’s mission is also to help as many people break into investment banking as possible.

And I obviously wouldn’t be doing this for a living if I didn’t believe in it.

But I will say this – investment banking is NOT for everyone.

If you don’t enjoy working with numbers, or you don’t find it interesting to analyze and work with some of the most successful companies in the world, and learn how they operate in the process, then this job is probably not for you.

And if you can’t function on very little sleep, or you don’t handle pressure well and tend to make lots of mistakes when you’re in a highly stressful environment, this job is probably not for you.

If you aren’t really willing to sacrifice your work-life balance for a couple of years while you’re still young and don’t have a ton of obligations yet, then this job is not for you.

But if you don’t have any of these issues, then you have to ask yourself – how is it that the top investment banks in the world are able to hire just 1-2% of their applicant pool each year?

Well, the reason they can be so selective is that a lot more people want these jobs than there are actually jobs available.

So then OK, why do so many people want to work in investment banking despite the long hours and the unpredictability that we’ve talked about?

Well, there are several reasons – the first is the extremely high pay.

You can make between $150 to $200k+ as a 1st-year analyst, right out of college.

That’s 3-4x more than what the average college grad in the United States makes today, which would be $55k.

So that’s obviously very appealing.

But it’s also very prestigious, because again it’s extremely selective, so if you are a part of the 1-2% of the people who are able to break in, that signals to future employers that you are really the cream of the crop.

Speaking of which, that prestige then sets you up with amazing exit opportunities – there are actually even higher paying jobs than investment banking out there – in industries like private equity, hedge funds, and venture capital – these are industries that hire almost exclusively from investment banking.

In other words, you aren’t even eligible for these jobs unless you’ve already done investment banking before.

So in other words, investment banking is one of the best stepping stones you could have to improve your career trajectory massively.

And we haven’t even mentioned the amazing network you will develop from working in banking, where you get to constantly rub shoulders with executives and board members while working with highly intelligent and ambitious colleagues, most of whom will go on to be very successful in their own right.

And the skill development – whether it’s hard skills like analyzing companies, or learning how to think like a professional investor, to soft skills like work ethic, time management skills, being a team player, and performing under pressure.

My honest opinion

Speaking from personal experience, I can honestly say that I have benefited from all of these things, and if I hadn’t spent the 3 years I spent in investment banking at the beginning of my career, I wouldn’t have been nearly as successful today.

Starting my career in investment banking literally changed my life – helping me go from someone who grew up in an immigrant family that didn’t have a lot, to now achieving financial freedom and being able to provide for my wife and two kids without ever having to worry about money.

It’s not an exaggeration to say that investment banking changed my life – which is why I’m so passionate about helping other people break in as well.

So I hope this article helped you learn more about exactly what investment banking is.

It’s not anywhere close to being as crazy as what Hollywood and Leonardo DiCaprio want you to think, and like any other job out there, it comes with its own set of tradeoffs.

But without a doubt, it is one of the best career options out there for the hardworking and ambitious students today.

So if you ever need help breaking into this extremely selective industry – please don’t hesitate to reach out to our team.

Otherwise, if you found this article to be valuable, thanks for reading, and until next time.

Need help navigating through this process?

If you’re someone who’s struggled to break into investment banking on your own but you’re still holding out hope, I hope I gave you more clarity on some of the different paths you might want to consider.

If you ever need help navigating through this complicated process — please don’t hesitate to reach out to our team here: wallstmastermind.com/apply

Wall Street Mastermind, Banking on Success Event NYC 2023

About me

As a former Morgan Stanley banker, my mission through starting Wall Street Mastermind—the original and premier Wall Street coaching program since 2018—is to help our students secure the highest-paying, most prestigious jobs on Wall Street.

Connect with me

📍Linkedin www.linkedin.com/in/samshiah/

📍Youtube www.youtube.com/@SamShiahTalksFinance/

📍Instagram www.instagram.com/wallstreetmastermind/

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