Investment Banking is not the ideal career for everyone. Perhaps you love finance but doing M&A and ECM doesn’t appeal to you. Or perhaps the idea of the incredibly long hours just sounds mental to you and you’d rather not do it. Or perhaps you would rather be involved in a business than be an advisor.
You don’t have to go into investment banking (even if you can get in). There is an odd sort of peer pressure that exists (especially for undergraduates and college students) to go for the ‘best’ option and all too often the best option is defined as the most prestigious and best paying option. However unless you really like corporate finance and want to do it long term or have a goal to use investment banking to advance your career in the short term you may want to do something else.
Here are 5 alternatives to investment banking that you should consider. I will do more detailed posts on each of these options in the future.
- Equities Research
Equities Research analysts research listed companies to invest in. They are typically part of larger investment banks (which also have M&A divisions) but have a completely different focus. They are not transactional focussed and are not constantly pitching for deals and trying to get deals across the line.
As a research analyst you will typically focus your efforts on one sector and get to know it really well. Research analysts do not invest themselves but rather provide their advice and investment recommendations to clients of the investment bank. If you love researching companies and investing in them then this is a great option.
- Funds management
At the most basic level, fund managers invest money their clients give them in a prescribed set of investments. Equities fund managers will invest in stocks, Debt fund managers will invest in debt and infrastructure fund managers will invest in infrastructure investments.
As a fund manager you are constantly assessing different investment options and trying to make money for your clients. If investing is what gets you going then this is something that you should definitely consider. Occasionally fund managers will hire staff straight out of college or university but it is also very common for them to hire Equities Research Analysts
- Private Wealth Management
If personal finance and helping people achieve their financial goals is what interests you the most then investment banking is definitely not for you. You will only ever be dealing with corporations and large transactions. Private Wealth Management helps individuals with their own financial situation. It can be with regular mum and dad investors through a financial planning type agency or it can be for millionaires through the Private Wealth arm of a large institution.
If you love helping people with their personal financial situations then this could be the very thing you are looking for.
- Institutional Banking
Your regular retail banks often get ignored by students and others that are interested in getting into the world of high finance. After all…you don’t want to be lending money for mortgages do you?! But they often forget that a lot of the institutional lending done is also done by these banks.
Institutional banking involves developing relationships with and marketing banking and other financial products to a range of businesses and institutions (some small and some large). These include basic debt products that institutions need but can also include foreign exchange services, interest rate swaps and other exotic products that an institution may need in its day to day activities.
If you love finance but hate the idea of just having transactional relationships with your clients…then this may be an option for you.
When I was at university, the idea of working for a corporate seemed like the craziest thing in the world. Why would I want to work at a manufacturer / oil & gas company etc. when I could work in investment banking?
However if building something (even if it is not your own) is what gets you up in the morning then perhaps working for a corporate is a good option for you. You can combine this with your interest in finance by working in their corporate M&A or treasury functions or whatever else takes your fancy.
Many of my ex investment banking colleagues now work at corporates and get paid far less than they did in banking. However they tell me that they get a significant amount of satisfaction and value from helping build a company and products that people on the street actually know about and use every day
I will cover each of these options in much more detail in future posts but just know that there are a wealth of other options out there and these just scrape the surface. Investment banking may be for you but if it isn’t I’ve dedicated a whole section of this blog to other finance careers that you may want to consider.