Is Investment Banking Worth It? The Pros and Cons of a Difficult Job

Being an investment banker is one of the best-paying jobs available today, in an outstanding fashion.

Meaning, when it comes to salary, it surpasses other jobs by far.

It’s also one of the hardest jobs possible, in every way you can think of.

You need to start your education for this job as early as high school, you need to attend an Ivy League college, finish top of your class, and participate in all kinds of internships and training afterward.

Getting a job isn’t easy either, the competition being fierce. So fierce that banks don’t even bother advertising their open positions, seeing as there are usually 10 candidates per slot.

Working hours are tremendously long, the learning process is never ending, and the list could go on and on.

All these things put the very job into balance and make us wonder – is investment banking worth it? Are there ways in which we can objectively determine the answer to this question or is it genuinely subjective?

Here are details on the pros and cons, which might make it all easier to comprehend.

Is Investment Banking worth it

Why do you want to get into investment banking? Is investment banking worth it?

Before we get to the actual pros and cons that we set out to list, it’s important you become aware of some aspects regarding this job. The first and foremost is one particularly simple, yet powerful question that you need to ask yourself. Not only that, you need to answer honestly: Why do you want to get into investment banking?

There are many answers to this question. Actually, there are as many answers as there are people interested in this field because it’s such a subjective answer. Remember the ‘models and bottles’ guy?

In case you don’t know him, he’s an investment banker who became famous a while ago, because, when asked why did he get into investment banking, he answered ‘models and bottles.’ The whole video, which you can see below, is about him partying.

This might sound good, but you’ll change your opinion when you find out he actually got fired when the HR department of the company he worked for saw this video online.

why investment banking

What can you learn from his mistake? The fact that the answer is entirely subjective. Some get into this field for the money, others for the experience, career, the chance to a truly outstanding job, doing business on a high level and so on. But you have to be true to yourself. When you have an answer to this particular question, try to see if your reasoning is worth it. What does that mean? It means don’t be the ‘models and bottles’ guy. His argument was not worth it, which is why he got fired as well.

Take the time to quiz yourself to see if all the long working hours, all the studying, and all stress are worth doing for you.

Ideally, as many investment bankers themselves put it, you should love the job, not its outcome. You should enjoy financing, investing, doing business, travelling, and meeting new and exciting people. Not money, partying or a name tag that says you’re an investment banker.

The health issue myth

Another topic that should be covered when it comes to discussing whether or not a job in investment banking is worth it is the urban myth that has always hovered around it – working as an investment banker will destroy your health.

As far as this one goes, it’s somewhat is a grey area, just like everything regarding health is.

The problem arises from the fact that an IB job is shrouded in an entirely negative vibe. However, it shouldn’t be like that. Simply because working hours, schedules, and job requirements themselves differ from one bank to another, because some people are better suited than others to perform this job, and because environments are different as well.

There are also a lot of exaggerations when it comes to actually performing this job. This is why the health issue is considered more or less an urban myth.

For example, you can find many resources online stating that, in an investment bank, you have to work 100 hours per week, which is highly exaggerated. By simply doing the math, you’ll quickly come to the conclusion that 100 hours per week would mean 20 hours per day for a 5 business day-week or approximately 14 hours a day for a 7 business day week. That’s a myth. No one will ask you to work 20 hours per day or 14 hours every single day of the week. A schedule like that is not even legal.

Indeed, working as an investment banker will mean you have to work longer hours than anybody else. But this comes closer to 60 or 65 hours a week, not 100, which comes down to 13 hours on a 5-day week and 9 hours for a 7-day week.

Investment banking working hours

In 2012, The University of Southern California conducted a study on investment bankers. They followed 24 entry-level bankers for two years and monitored everything they did. The study claimed they worked 100 hours per week all through their first year and 80 all through the second. In their fourth year of banking, they were followed up with some interviews.

Shockingly enough, researchers found that the persons they followed suffered from insomnia, heart palpitations, eating disorders, bad temper, and alcohol and medicine addiction. Building on the shocking premise, the study also shows how, when interviewed in their fourth year, the 24 investment bankers suffered from sleep deprivation, but actually blamed their bodies for not letting them work as much as they would like to.

Going even further, some of them had, apparently, developed diseases because of this hectic lifestyle, such as psoriasis, rheumatoid arthritis, thyroid problems, and Crohn's disease.

Everything seems excruciating and, after reading this, you might wonder why would anybody do this to themselves. However, before you jump to any conclusions, this all has to be looked upon objectively and, more importantly, debunked.

First of all, the study only focused on 24 bankers, out of the millions out there. Simply put, the ratio is far too little for this study to have any relevance. It’s almost like conducting a study in France on drinking coffee. France has some 66 million inhabitants. Finding 100 who say they don’t drink coffee doesn’t mean the entire population doesn’t drink it either.

Second of all, there’s the 100 hour-week idea, which we’ve already covered. This, according to many investment bankers, is a crude exaggeration. Even if it were true, again, just like in the example above, doesn’t mean it happens on a regular basis.

Thirdly, it’s difficult to believe people would go to such extreme lengths so as to blame their bodies for not letting them work as much as they would like to. There might be some people out there who have this kind of work ethic, but it definitely does not happen on a regular basis.

And, last, but not least, some of the diseases listed have nothing to do with working long hours or anything related to this aspect. Rheumatoid arthritis, for example, is an autoimmune condition. This means that your body’s immune system attacks itself, leading to this disease. There is no known reason yet why our bodies do this. Therefore, blaming it on long hours seems a bit of an overstretch.

Crohn's disease is another autoimmune condition that has no known cause. Scientists believe it has something to do with food or bacteria that render intestines prone to inflammation. How exactly has this study linked this disease with long and hard working hours is not exactly clear. Of course, one might advocate that it all comes down to bad eating habits, but this has nothing to do with your working schedule. It’s an entirely personal choice. Even if an investment banker works long hours into the night, he or she could still eat a salad and drink a healthy smoothie.

Therefore, taking all this into consideration, it’s imperative that you take all health studies with a pinch of salt. This is the exact reason we have referred to the ‘health issue’ as a myth. Conclusive studies that can link investment banking jobs to substantially poor health are yet to appear.

Testimonials and personal experience

Another aspect worth considering in the ‘is investment banking worth it’ debate is testimonials and personal experience of investment bankers who have published work on this. Some have written articles, others have spoken out in interviews while even more have written books on it.

One example is Polly Courtney, a Cambridge graduate who had a really dreadful time as an IB and decided to write about that. In short, here are a few things she had to say about her experience as an investment banker.

  • At first, the company she worked for used to send her and her fellow entry-level colleagues to all sorts of parties and gatherings, such as cocktails, wine-tastings, and pub crawls. All this effectively stopped when they started working seriously.
  • She was made to work some 14 hours a day while her colleagues spent, even more time at work than she did.
  • The working hours were completely unpredictable, which led to her being woken up in the middle of the night and called into the office to work.
  • She would get projects late at night with the deadline being tomorrow morning at 7 AM.
  • She saw her colleagues doing drugs so that they could stay up and be able to work longer hours.
  • There was a fierce competition around who worked more or who worked the best, which lead to exhausting over time. There were actual bonus points awarded to people who could surpass their colleagues.
  • They were promised business trips abroad, but when this came around, they were actually sent to the company’s data center, which turned out to be a server room in the Netherlands.
  • Their vacations were being constantly cancelled because they were needed at work.
  • She had to deal with sexism because she worked in an almost all-male environment. This lead to inappropriate comments directed towards her, her colleagues viewing her as a secretary, and implying she used ‘womanly’ means to get ahead and not actual work. She was also never invited when her colleagues went out. That’s because they were all men and usually ended up in ‘gentlemen’s bars’.
  • She witnessed romantic relationships between her colleagues.

Although some of these allegations are bad, such as sexism, inappropriate comments, working a lot more than she had been contracted for, and being called into work in the middle of the night, others should be viewed objectively.

For example, she complains about not being sent to enough parties after she was employed or being sent to the company’s data center in the Netherlands. But, when you look at it, this is what business trips actually involve. Data centers are not located on sunny islands, and the fact that this is what she had expected does not make it the job’s fault.

She also complains about not being invited to ‘nights out.’ However, it’s difficult to accommodate everyone on such an occasions and, being the only girl, plainly advocates for that. Also, it was a private night out, which meant it was not organized by the company. Her not getting invited is, again, not due to the job she had.

This is the main reason personal experiences and testimonials should not be viewed as objective information on the quality of a job. The fact that they are ‘personal’ utterly keeps them from being entirely relevant.

The pros and cons of being an investment banker

Now that we have analyzed some of the crucial aspects that come with this job, you can look at the pros and cons of being an investment banker in a completely objective way. Here they are.

Pros:

  • The training you receive is extensive and will never end. This means you have a real chance at getting better and better as time goes by not only at your job but in other fields as well. As an investment banker, you will get the chance to develop an entire array of skills, starting from accounting and financing and ending with networking and people skills. This will prove efficient and highly useful even if you decide to change your line of work at some point.
  • This job opens doors that others simply cannot. If you are lucky enough to work for a big investment bank, then you will meet some truly interesting people. These banks usually have huge accounts, consisting of either large companies or very wealthy individuals. You will get the chance to relate to them on a personal level and construct a network of connections others only dream of.
  • The compensation is absolutely outstanding. For any type of bank you might be working, be it a big one or a so-called ‘boutique’, the salary will exceed your expectations. On top of it, you will also receive starting bonuses and performance ones. They will up your amassed winnings to a grand total.

Cons:

  • The long working hours are, indeed, a con worth taking into consideration. Even though they might not be some 100 hours per month, you will still be required to do overtime and basically be on the job whenever you are required to. This means in the evening, in the weekend, during holidays, and your vacation. If this is something you don’t think you can put up with, then a job as an investment banker is not for you.
  • Sexism is another major con. As you have seen above in Polly Courtney’s case, it is ever present. Investment banking is no different than any other male-dominated field, so sexism is not this job’s fault per se, but it is a problem nonetheless. You should be aware of the fact that you will be paid less and not seen as being equal to your fellow male colleagues. Sexual harassment in the office and romantic linking are also a threat.
  • Never ending competition is a very real thing when it comes to investment banking and you need to take into account. Bankers are expected to compete as part of their daily routine. This, however, can be very damaging to the individual. A working environment that is not stable and doesn’t make the employee happy is not beneficial or productive at all. It will also be extremely stressful always to have to ‘look over your shoulder’, just in case someone is performing better than you and you will be sidetracked. Prepare for fierce competition and understand you have to be the best.

Conclusion

Is investment banking worth it in the end? This is a question many people in the field have asked themselves routinely. Although it’s an excellent idea to question everything you do and especially your daily work, the bad thing is that this question, as you might have noticed from all the aspects we detailed above, doesn’t really have an answer. Or, if it does, it’s entirely subjective. What can you do? Read our article as closely as you can and decide if a job in investment banking is worth it for you.

Is Investment Banking Worth It? The Pros and Cons of a Difficult Job 1
Is Investment Banking Worth It? The Pros and Cons of a Difficult Job 2
Next Classroom Batches in India
- Classroom Course with Placement Assistance: Our Full-Time Financial Modeling Investment Banking Course (6 Weeks) starts on 16 September, 2019 and 2.5 Months Weekend Workshop starts on 27 September in New Delhi, India and on 16 September, 2019 in Gurgaon, India.

- Online Course with Placement Assistance: Join our Online Financial Modeling Investment Banking course with Placement Assistance from anywhere in the world.

- CFA Level - I: 16th November, 2019

- Big Data: 29th June, 2019

- Financial Modeling Investment Banking Weekend in Gurgaon: 27 September, 2019

- See Testimonials.

Only a few seats remain. Interested candidates can contact me.

Leave a Comment