If you want to be a candidate in a rewarding and elite industry, consider a career in investment banking. Or should you suit up for strategy consulting? Both professions tend to pay well. They are pitched at exemplary high academic achievers. Or, in the words of one former director at McKinsey put it, to insecure, deeply left-brain, hyper-intellectual, OCD over-achievers. Regardless of point of view, banking and strategy counseling puts you in the middle of the global economy, operating with key players and major projects. So if you interested, here is a brief look at both fields with indicators of which may be right for you.
Pay should never be the main factor in selecting a career. Not that it’s been said, it usually is. Here is some data provided by Wall Street Oasis that suggests pay levels received by professionals in the strategy consulting and banking industries.
|First year analyst:
Second year analyst:
Third year analyst:
First year associate:
Second year associate:
Third year associate:
While these numbers imply banking is the higher paying career, one consultant insists in the long term, consulting tops banking. “Once you reach MD-level in an investment bank, compensation starts to plateau. In banking, you can be subject to volatility, both from the market and personal performance. Meanwhile, consultants are on a consistent trend upwards.”
The consultant also reports serious compensation kicks in at the senior partner level. “Take median compensation 15-20 year veterans, and I bet consultants at McKinsey or BCG would come out on top of bankers.”
This may be true: senior partners in consulting firms earn $1 million plus.
Banking is a far more volatile market than consultancy. There are fewer 15-20 year careers. Between 1994 and 2001, McKinsey went from 3,300 to 7,700, and today can still boasts 9,000. Meanwhile, banking headcounts have fallen over 30 percent for a number of reasons. Ironically, as banks slash staff, the strategy consultants that help them make these decisions have stability.
Banking hours depend on the sector you go into. In some areas, 100 hour weeks are not uncommon, especially at the lower rungs of the ladder. Hours in consulting can be rough as well. But one former consultant said weeknights can end before 10 p.m. and rarely require coming in on weekends.
Some of the majors – Bank of America, Goldman, Credit Suisse – are looking to implement policies that will shorten hours, such as ensuring bankers get weekend time off every month. Bank of America hired more analysts and associates this year to better parcel projects.
Consultancy firms are looking to better their situations as well. One prominent group requires strategy consultants to take time off, while another has introduced a program that gives employees time off between projects or allows a leave of absence of up to one year.
The Conclusion: swap if you need
Choosing between strategy consultant and banker has to be a personal choice. A decision based on circumstance and long term professional goals. Candidates already in the field should note a few things. It can be difficult to transition from banker to consultant. Current experiences can limit options, but:
- A good banker can become a hedge fund trader.
- You can move into risk or compliance.
- A background in M&A or debt capital can get you into capital equity or to an in-house strategic advisory team.
For consultants, the transition is a little easier. Banks hire consultants for internal strategic advice. This could be contingent on experiences in the financial services market. This field tends to be far more flexible than banking, with candidates moving in and out, and around to other industries all the time.