Investment Banking Vs Management Consulting

Investment Banking Vs Management Consulting

Fresh graduates often wonder whether investment banking or management consulting is a much better career choice. Many of them already know the first thing about these two career pathways: excellent incomes. Some of them also know that work-life balance is a hard action in both. Here we go a little beyond popular perceptions to discover what these jobs really involve. First, just a little about both careers and sectors.

Investment banking (IB) denotes a financial service that creates capital for individuals and organizations, relating to one definition. Investment bankers (i-bankers, or just “bankers”) give traders counsel on market strategies that can minimize their risks and maximize their returns. They provide assistance for mergers, acquisitions, and restructuring. Risk management is a major area of the i-banker job.

A management consultant (MC) provides expert advice to businesses on operations, restructuring, and cost decrease. They are called upon to create strategies to help companies make a turnaround. They look at what their customer companies have been doing and suggest what they can do to perform better. MCs deal with different kinds of problems and, for example, may be called upon to suggest to a marketing team how to improve its product delivery or recommend HR people how to make a new health plan for employees.

I-bankers focus on a summer months internship, followed by an access role as a financial analyst for two years, then, as an associate for two or 3 years, elevation as managing director or VP before. MCs start their careers as business analysts and gain experience for two or 3 years before becoming a co-employee or senior consultant.

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MCs might not focus on an internship as often as i-bankers, since banks do the majority of their recruitment from among interns. Nonetheless it is a good idea for MC aspirants to intern to get industry knowledge. Salary is the largest appeal that both careers hold probably. At least in the first decade, i-bankers beat consultants in take-home figures. 200,000, according to Investopedia.

But they usually don’t see the big bonuses that go to i-bankers. The gap increases higher up the ladder significantly. However the article adds that consulting offers perks including travel allowance. Health insurance and retirement deals may be better. At the end of the entire year, bonus comprises 50 percent of annual compensation for bankers.

A handful of skills are common between the two careers: a number-driven, analytical method of resolving problems and preternatural skills in diplomacy almost. MCs need to comprehend the management structure of their client companies, identify areas for improvement, and explain what needs to be done to improve their functioning. This implies critical-thinking skills, a way with people, the ability to concentrate on business operations, PowerPoint skills, and communications skills.

I-bankers need good knowledge of financial modeling and Excel skills and the ability to put in extended hours. IB is for individuals with the sharpest quant skills. Consultants also need these skills, however, not to the same degree. Senior i-bankers get display opportunities with clients but junior bankers not really much. In comparison, MCs at every level get such opportunities. There is certainly more number-crunching and deal-making in IB. Consulting gives you a wider perspective of business.

An MC may very well be comprehensive at the conceptual level and have strengths in various areas. Both jobs involve similar applicant pools of generalists, interval training, excellent pay, great exposure to corporate and business clients, and high turnover (many employees who leave achieve this to become listed on an MBA program or other fund/strategy jobs after several years). MCs enjoy a more informal atmosphere at the job often.