Last Updated on February 20, 2024
The biggest competitors for McKinsey, BCG, and Bain when it comes to hiring are not tier-2 consulting firms but top-tier investment banks such as Goldman Sachs, JP Morgan, and Morgan Stanley (besides big tech companies).
Many applicants I work with consider going into top-tier consulting or investment banking.
In this article, I want to break it down for you to understand what career would fit you most. Let’s look at it systematically, by answering a couple of questions.
- What is management consulting?
- What is investment banking?
- What skills are needed for both?
- What are the typical tasks of both?
- How long do they work?
- What are their salaries like?
- What are the exit opportunities?
At the end of the day, what career to pursue is a very personal choice based on individual preferences and a combination of short and long-term goals. Both fields offer a rewarding career, high pay, prestige, and excellent exit opportunities.
Summary for Those In a Rush
If you are in a rush, this table summarizes the key points of the article. If you want to learn more, read on!
|What is it?
|Helping organizations improve performance through analysis and strategic planning, and implementation.
|Financial services focusing on raising capital, underwriting, and providing financial advice
|Strong analytical and problem-solving skills, excellent communication, ability to work under pressure, adaptability and flexibility, strong business acumen
|Strong analytical skills, excellent communication and presentation skills, attention to detail, ability to work under pressure, strong business acumen
|Analysis and research, strategic planning and development, operational improvements, change management and implementation
|Financial analysis and modeling, deal structuring and execution, market and client research, client advisory and relationship management
|Around 60 hours per week, which can go up to 70 or more during deadline-driven projects
|Known for brutal working hours, often up to 100 hours per week including significant weekend work
|Entry-level: $110,000 to $130,000 per year, experienced: $230,000 to $400,000 or more per year
|Entry-level: $150,000 to $180,000 per year, experienced: $300,000 to $500,000 or more per year
|Leadership roles within the firm, leadership roles within client companies, starting a consulting firm, transitioning to related fields or industries, pursuing additional education
|Leadership roles within the bank, leadership roles within corporate finance departments, starting a financial services firm, transitioning to private equity, venture capital, or asset management, pursuing additional education
Career Choices in Consulting and Banking
The decision between pursuing a career in management consulting or investment banking is a pivotal one for many aspiring professionals. Both fields offer unique challenges, rewards, and career trajectories, making it essential to understand the nuances of each before making a choice. This section aims to shed light on the key aspects of consulting and banking careers, helping you navigate through your career options with greater clarity.
Understanding Your Career Options
Management consulting and investment banking represent two of the most prestigious and competitive career paths available to graduates and professionals alike. While both offer the allure of high compensation, networking opportunities, and the chance to work on significant business issues, they differ substantially in their day-to-day activities, lifestyle implications, and the skills they demand from their practitioners.
Management Consulting is about advising organizations on how to enhance their performance, tackle complex problems, and implement effective changes. Consultants work across a variety of industries, offering solutions that range from strategic planning and operational improvements to organizational change and technology adoption.
Investment Banking, on the other hand, is centered around helping organizations, governments, and individuals manage and grow their financial assets. Investment bankers are key players in mergers and acquisitions, fundraising activities, and the issuance of securities, dedicating their expertise to navigating the complex landscape of financial markets.
The Battle for Talent: Consulting Firms vs. Investment Banks
The recruitment landscape for top-tier consulting firms like McKinsey, BCG, and Bain and leading investment banks such as Goldman Sachs, JP Morgan, and Morgan Stanley is fiercely competitive. These institutions are not only competing with each other but also with big tech companies for the brightest minds. The choice between consulting and banking often comes down to personal preference, career aspirations, and lifestyle considerations.
Consulting offers a slightly more varied work schedule and the opportunity to solve diverse business problems across multiple industries. It appeals to those who enjoy strategic thinking, problem-solving, and the possibility of having a tangible impact on businesses and their strategies.
Investment banking, while offering higher initial salaries, demands longer and more unpredictable hours, especially in the early stages of one’s career. It attracts individuals with a keen interest in finance, markets, and the inner workings of corporations and governments in the financial context.
As you consider your career path, it’s essential to weigh these aspects carefully. The decision between consulting and banking should align with your personal goals, work-life balance preferences, and the type of challenges you find most rewarding. Both paths offer substantial rewards and opportunities for professional growth, but the right choice depends on where your interests and aspirations lie.
Comparing Both Industries and Roles
What is Management Consulting?
Management consulting refers to the practice of helping organizations improve their performance through the analysis of existing business problems and the development and implementation of improvement plans. Management consultants work with companies to identify areas of need and recommend solutions in the form of operational changes, process improvements, and strategic planning.
They may work on a variety of projects, including business restructuring, organizational design, supply chain optimization, market expansion, and technology implementation. Management consulting firms typically hire experienced professionals with strong analytical and problem-solving skills, as well as expertise in a particular industry or functional area.
What is Investment Banking?
Investment banking is a financial services company or division that engages in advisory-based financial transactions on behalf of individuals, corporations, and governments. Investment banks assist their clients in raising financial capital by underwriting and issuing securities, as well as providing financial advice. Investment banks also trade securities for their own account and engage in proprietary trading, in which they trade securities on their own behalf rather than on behalf of a client.
Investment banks typically generate revenue through a variety of activities, including underwriting new debt and equity securities, acting as a broker or dealer for institutional clients, and trading securities for their own account. Investment banks may also provide a range of services such as merger and acquisition (M&A) advisory, project finance, and asset management.
Skills for Consulting Roles and Investment Banking
Key Skills for Success in Management Consulting
There are several skills that are important for management consultants to have:
- Strong analytical and problem-solving skills: Management consultants are often called upon to analyze complex business problems and develop creative solutions.
- Excellent communication and presentation skills: Management consultants need to be able to clearly and effectively communicate their findings and recommendations to clients.
- Ability to work under pressure: Management consulting projects often have tight deadlines, so consultants need to be able to work efficiently and effectively under pressure.
- Adaptability and flexibility: Management consultants may work on a variety of projects in different industries, so they need to be able to adapt to new environments and projects quickly.
- Strong business acumen: Consultants need to have a deep understanding of business principles and be able to apply them to a variety of situations.
- Leadership and management skills: Management consultants may be called upon to lead teams or projects, so they need strong leadership and management skills.
- Attention to detail: Consultants need to be able to analyze data and draw accurate conclusions, which requires attention to detail.
- Interpersonal skills: Management consultants need to be able to build relationships with clients and work effectively with people at all levels of an organization.
- Multicultural competency: Many management consulting firms work with clients around the world, so consultants need to be able to work effectively in multicultural environments.
- Industry or functional expertise: While not always required, having expertise in a particular industry or functional area can be beneficial for management consultants.
Essential Skills for Investment Bankers
Several skills are important for investment bankers to have:
- Strong analytical skills: Investment bankers need to be able to analyze financial data and understand complex financial products.
- Excellent communication and presentation skills: Investment bankers need to be able to clearly and effectively communicate their findings and recommendations to clients.
- Attention to detail: Investment bankers need to be precise and accurate in their work, as even small mistakes can have significant consequences.
- Ability to work under pressure: Investment banking projects often have tight deadlines, so bankers need to be able to work efficiently and effectively under pressure.
- Strong business acumen: Investment bankers need to have a deep understanding of business principles and be able to apply them to a variety of situations.
- Leadership and management skills: Investment bankers may be called upon to lead teams or projects, so they need strong leadership and management skills.
- Interpersonal skills: Investment bankers need to be able to build relationships with clients and work effectively with people at all levels of an organization.
- Multicultural competency: Many investment banks work with clients around the world, so bankers need to be able to work effectively in multicultural environments.
- Industry expertise: Having expertise in a particular industry can be beneficial for investment bankers.
- Sales and negotiation skills: Investment bankers need to be able to sell financial products and services to clients and negotiate favorable terms for their firms.
Ace the consulting interviews with our dedicated preparation packages.
Comparing the Daily Life: Consultants vs. Bankers
A Day in the Life of a Management Consultant
The daily life of a management consultant can vary depending on the specific project and the needs of the client. In general, however, a management consultant can expect to:
- Work on client site: Management consultants often spend the majority of their time working on-site at the client’s business, usually from Monday to Thursday. This allows them to gain a deep understanding of the client’s operations and challenges and work side-by-side with key client stakeholders.
- Conduct analysis and research: Management consultants spend a significant amount of time gathering and analyzing data related to the client’s business. This may include reviewing financial statements, conducting market research, and analyzing operational data.
- Meet with clients: Management consultants frequently meet with clients to discuss project progress, present findings and gather additional information.
- Work in teams: Management consultants always work in teams, which may include colleagues from their own firm as well as professionals from the client’s organization.
- Travel: Management consultants may need to travel to meet with clients or attend meetings and conferences. The amount of travel required can vary depending on the location of the client and the specific project. If the client’s office is in your home town, there is no travel. If the client has multiple locations across the globe, you might be traveling several times per week.
- Work long hours: Management consulting projects can be demanding, and consultants may need to work long hours to meet deadlines and deliver results for their clients.
- Continuously learn: Management consultants need to stay up-to-date on industry trends and best practices and may need to continuously learn new skills and techniques to stay competitive in their field.
For a detailed analysis of the pros and cons of a consulting job, continue here.
We have also conducted a couple of interviews here:
In my day-to-day as a consultant, it’s the small wins that stand out, like finding a clever solution to a client’s problem or seeing a strategy come to life. Sure, the job demands a lot: time, energy, sometimes even the patience to navigate complex organizational dynamics. But at the end of the day, knowing my work has real impact gives me a real sense of accomplishment. It’s not always about the big, dramatic transformations; it’s the incremental improvements that keep me motivated.2nd year MBB Associate
A Day in the Life of an Investment Banker
The daily life of an investment banker can vary depending on the specific role and the needs of the firm. In general, however, an investment banker can expect to:
- Work long hours: Investment banking is known for its demanding work schedule, with long hours that include nights and weekends.
- Conduct financial analysis: Investment bankers spend a significant amount of time analyzing financial data and modeling various financial scenarios.
- Work with clients: Investment bankers frequently work with clients to identify their financial needs and provide solutions in the form of financial products or services.
- Attend meetings and presentations: Investment bankers may attend meetings with clients, prospects, and colleagues, as well as give presentations to clients and internal teams.
- Work in teams: Investment bankers often work in teams, which may include colleagues from different departments or offices.
- Travel: Investment bankers may need to travel to meet with clients or attend meetings and conferences. The amount of travel required can vary depending on the location of the client and the specific project. It is usually much rarer than in consulting.
- Stay up-to-date on industry trends: Investment bankers need to stay informed about industry trends and developments to provide the best possible advice to their clients.
- Manage and develop junior staff: Investment bankers may be responsible for managing and developing junior staff, including assigning tasks and providing guidance and mentorship.
Investment banking is as grueling as it is exhilarating. The long nights and constant pressure are a given, and while I’ve learned more about finance this year than I ever imagined, I find myself looking ahead. The truth is, the intensity of this job makes you think hard about your long-term path. I’ve started to eye exit opportunities, not out of disillusionment, but as a strategic step to leverage the skills and network I’ve built. It’s about finding a balance that works, where I can still engage deeply with finance but on terms that allow for a life outside the office too.1st year BB BA
Career Longevity and Work-Life Balance
In the competitive and fast-paced realms of management consulting and investment banking, career longevity and work-life balance are topics of significant importance and frequent discussion. As ambitious professionals navigate the complexities of these demanding careers, understanding how to sustain a long and fulfilling career while maintaining a healthy balance between work and personal life becomes paramount.
This section delves into the realities of working in these high-stress environments, exploring strategies for career progression, the implications of intense work schedules on personal well-being, and how individuals can strive for a harmonious balance. Whether you’re considering a career in consulting or banking, or already navigating these paths, insights into achieving longevity in your career and ensuring your job enriches rather than depletes your life are essential components of long-term success and satisfaction.
How Long Do Consultants Work?
The number of hours that top-tier consultants work per week can vary depending on the specific project and the needs of the client. Some consulting projects may require long hours, including evenings and weekends, while others may have more predictable and regular work schedules. In general, however, management consultants in McKinsey, BCG, and Bain can expect to work an average of around 60 hours per week, although the exact number of hours may vary. It is not uncommon for management consultants to work 70 or more hours per week, particularly when they are working on a deadline-driven project or preparing for an important steering committee presentation to a CEO. On top of the work hours, consultants spend a significant amount of time per week traveling to and from the client’s location.
How Long Do Investment Bankers Work?
Investment banking is known for its brutal working hours with analysts spending up to 100 hours per week in the office with most weeks including a significant portion of the weekend.
Salary and Compensation Comparison
What is the Salary of a Top-Tier Consultant?
The salary of a top-tier management consultant can vary depending on a number of factors, including the specific firm, the level of experience, and the location. In general, however, top-tier management consulting firms typically offer competitive salaries, with starting salaries for entry-level consultants ranging from $110,000 to $130,000 per year. Experienced consultants with several years of experience can earn significantly more, with salaries ranging from $230,000 to $400,000 or more per year. It is important to note that management consulting firms often use a tiered system for compensating consultants, with higher levels of pay being reserved for those with more experience and expertise. In addition to salary, many consulting firms also offer bonuses, profit-sharing, and other incentives, which can significantly increase overall compensation.
For more data, see below:
What is the Salary of an Investment Banker?
In general, investment banks offer the most competitive salaries for graduate hires, with starting salaries for entry-level bankers ranging from $150,000 to $180,000 per year. Experienced investment bankers with several years of experience can earn significantly more, with salaries ranging from $300,000 to $500,000 or more per year. It is important to note that investment banks often use a tiered system for compensating bankers, with higher levels of pay being reserved for those with more experience and expertise. In addition to salary, many investment banks also offer bonuses, which can significantly increase overall compensation. Bonuses for investment bankers can range from a few thousand dollars for entry-level employees to millions of dollars for top performers.
Exit Opportunities and Career Growth
What are the Exit Opportunities for Consultants?
Exit opportunities for management consultants can vary depending on the specific skills and experience of the individual, as well as the demand for those skills in the job market. Some common exit opportunities for management consultants include:
- Transitioning to a leadership role within the consulting firm: Many management consultants aspire to move up the ranks within their consulting firm and take on leadership roles such as manager or director.
- Moving to a leadership role within a client company: Some management consultants may be offered leadership positions within a client company as a result of their work on a consulting project.
- Starting a consulting firm: Some management consultants may choose to start their own consulting firm and use their skills and experience to help other organizations improve their performance.
- Transitioning to a related field: Management consultants may choose to use their skills and experience to transition to a related field such as strategy, operations, or business development.
- Changing industries: Management consultants may choose to use their skills and experience to transition to a new industry, such as healthcare, technology, or manufacturing.
- Pursuing additional education: Some management consultants may choose to pursue additional education, such as an MBA or a specialized master’s degree, to broaden their skills and advance their careers.
What are the Exit Opportunities for Investment Bankers?
Some common exit opportunities for investment bankers include:
- Transitioning to a leadership role within the investment bank: Many investment bankers aspire to move up the ranks within their firm and take on leadership roles such as manager or director.
- Moving to a leadership role within a corporate finance department: Some investment bankers may be offered leadership positions within a corporate finance department, such as chief financial officer (CFO) or treasurer.
- Starting a financial services firm: Some investment bankers may choose to start their own financial services firm and use their skills and experience to help other organizations raise capital and manage their financial affairs.
- Transitioning to a related field: Investment bankers may choose to use their skills and experience to transition to a related field such as private equity, venture capital, or asset management. This is usually the most lucrative and most sought-after exit.
- Changing industries: Investment bankers may choose to use their skills and experience to transition to a new industry, such as healthcare, technology, or manufacturing.
- Pursuing additional education: Some investment bankers may choose to pursue additional education, such as an MBA or a specialized master’s degree, to broaden their skills and advance their careers.
It all comes down to personal choice and preferences. Consulting gives you a career that allows you to work on exciting strategic projects, have somewhat of a life outside of work, and have great corporate exit opportunities. Investment banking has you work brutally long hours on more mundane tasks with a higher pay-off while on the job and afterward, if you get hold of the right exit opportunity.
You could also just watch the video below but we believe they are biased. :-))
If you want to break into consulting, read on.
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