ReeHart - Blogging from the Heart

Posts Tagged ‘investment banking’

#3 SKILL DEVELOPMENT

I’m biased, but I received the best business training possible in my years at McKinsey. Intense and thorough exposure to textbook business principles and practices. In addition, the team-based model leads to mentorship opportunities with managers, partners, and coworkers. Finally, you have close client interaction which develops “client skills” - from managing client teams to leading meetings to learning how to navigate diverse corporate cultures.

Having said that, here’s a quick list of what you can expect to learn in both industries:

To clarify - by “hard skills”, I mean software tools (ie Microsoft Office Suite), analytics (eg, financial valuation). By “soft skills”, I mean the interpersonal skills to influence and work effectively with clients, coworkers, and managers.

CONSULTING

Hard skills:

1) Microsoft Powerpoint - you will (and have to) become a master at this, and will eventually have the ability to produce presentations quickly, concisely, and meaningfully

2) Microsoft Excel - you’ll get less exposure than in banking. Still, “modeling” is a big component of any consultant’s work. Note - “financial modeling” in consulting projects is not identical to financial modeling at investment banks

3) Business expertise - you’ll get exposure to different industries and functions, and begin to develop specializations if you are interested. This expertise may be as broad as “market entry strategy” and or specific as “benchmarking for consumer goods companies”.

Soft skills:

1) Client handling (explained above)

2) Close team interaction

3) Communication skills - this is a critical element of consulting work. Findings are useless if you can’t persuade clients to believe in them and implement recommendations

4) Project/workflow planning and execution - this is subtle but important. Much of the time at investment banks, you are given incremental work - eg, add these updated numbers to the model, bind these presentations, insert a graph on chart 11. Consulting is focused on you OWNING a piece of the entire project, setting your own deliverables and timeline, and executing against that framework. This helps you develop the ability to be “standalone” in consulting lingo.

INVESTMENT BANKING

Hard skills:

1) Microsoft Excel - clearly you will become a master at this, and is a mandatory for success. You’ll know the ins-and-outs, every keyboard shortcut known to man (and then some), and so forth

2) Microsoft Powerpoint - much less exposure here depending on your firm and division (for instance, more in Corporate Finance, less in Mergers & Acquisitions). Practically no experience building strong presentations beginning to end

3) Financial valuation - differs based on your group and focus, but at the very least you’ll understand financial statements, and have a strong knowledge of how companies are financed

Soft skills:

1) Work endurance - this is the one benefit of 100+ hour weeks, which is the ability to work long and hard. Every job you take after banking will feel like a vacation. It’s a great trait to have and desired by employers

2) Seeing the deal-making process - bankers have better access to the business leaders of the day. As a junior banker, you may not have close interaction but will be exposed through meetings, conference calls, etc to these people and get to see how deals are executed

The last 2 points in this post are shorter, because I plan to write separate entries on each of them in the future

#4 NETWORKING

Consultants move on to a broad array of careers - from corporate to academia, non-profit to public sector. Investment bankers generally continue within the financial world. Your professional network and future career opportunities will be influenced by your firm connections and colleagues.

In addition - my perspective is that consulting firms (similar to point #2) facilitate more interactions between alumni and current employees as well as future networking between alumni than investment banks. However, bulge-bracket investment banks have a much larger alumni base, and it certainly isn’t impossible for you to build strong connections provided you are proactive and innovative enough.

#5 EXIT OPPORTUNITIES

Corollary to point #4, this is influenced by your firm’s alumni and also the following:

-the different headhunters and recruiters that reach out to you

-the different roads your colleagues take and the opportunities that you share with each other

-the relationships you’ve built with more senior colleagues and the doors they can open for you

The conclusion is simple: if you want career flexibility, consulting is the right choice. If you want career flexibility WITHIN finance (and corporate financial roles), investment banking is the right choice.

A great post to read is my “Large management consulting firms versus boutique consulting companies” post for more info on differences between the two.