Most people ask the wrong question when they think about getting into investment banking. They see how competitive the field is and the first thing they ask is “How do I get in?” Chances are that this is the question you were asking when you landed on this page. However, if you want to make the most of your investment banking experience or if you want to last until you reach the hallowed ground of being a Managing Director the question you actually want to ask is: Why do I want to be an Investment Banker?
There are a few right (and many wrong) answers
When I talk about right and wrong answers, I’m not talking about the ones that you give at interviews: those are different answers altogether. I’m talking about what you tell yourself when you’re researching banking at 1am in the morning, or considering signing up to excel tutorial classes so that you can put it all on your resumes. So…without further ado here are the only two ‘right’ reasons for doing investment banking:
- You love corporate finance and you love the idea of being a banker long term
- You only want to be an investment banker in the short term and leverage the experience into another career in a defined period of term
That’s it. No more. Those are the only two reasons you should become a banker. And it may sound like I’m covering the field (i.e. I want to do it long term or I want to do it short term) but you may be surprised how many people have not thought about the question at all and who, consequently, approach banking in the wrong way.
You want to do banking long term
I’d argue that most people think they fall in this camp when in actual fact they don’t. They look at the prototype senior investment banker and drool. This is what they want to be. But I want to stop you right there. Don’t look at the money and don’t look at the lifestyle. When you are thinking about doing banking long term ask yourself these questions
- Do I love corporate finance?
- Do I love the idea of doing deals and making multi million and multi billion dollar transactions happen?
Before you answer ‘of course’ straight away let me just tell you my experience. I saw the cash the junior and senior bankers were making and I thought “this is the industry for me…I can work hard, make it to the top and live that lifestyle”. I survived for 3 years before I came to the realisation that, even though I could work hard enough to do it, I just wasn’t that interested in it. I was much more interested in investing in companies…not in ‘doing the deal’. If you want to do investment banking long term you really do need to fundamentally enjoy what the industry is and what it does. If this doesn’t float your boat…that’s not a problem either. You can still go into investment banking in the short term and do very well out of it
You want to do banking, take your experience (and cash) and run
A fair amount of people entering the banking industry do so knowing they aren’t going to be in it long term. This is not a problem at all. The investment banking industry is an amazing training ground for future financiers. You get an incredible amount of training and experience in a very short period of time and you get paid incredibly well at the same time. After you finish a few years in banking most employers are vying with each other to get their hands on you. Wanting the training and experience but do not wanting to stay in banking long term is also a perfectly valid reason for doing banking. But if you do make sure you have thought about what you do want to do long term. Work out what interests you and how banking is going to help you get to your goals.
Make sure you have thought about these questions before you enter banking
The fact is that once you enter banking, you have so little time to think about your own career plan and path. You need to slow yourself down before you enter the industry and think about what you really want to do…and then stick to your plan. It would probably surprise you to realise how many bankers only really start to think about this 2 – 3 years into their career. I mentioned above that there were a few right reasons and many wrong reasons to enter banking. I will do a separate post on this in the coming weeks however just to name a few bad reasons to do banking: you want to earn lots of cash, you want the prestige that comes with being an investment banker, you like investing in companies, models and bottles. What is your reason for doing banking? Are you thinking of doing it long or short term?
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