Advice on Banking

So you’ve read Advice on College and Advice on Getting to Wall Street. You’ve won that coveted analyst position. It’s the last week of July – in another week, you will probably finish your training and find out your group assignment. Maybe you’ve been on the job for a month or so, and you’re starting to get the hang of things.

This is your first job out of college. It’s a nutty working environment. It can be hard to find time for taking stock. In this post, I will give some advice for new investment banking analysts. Not everyone has the same experience in banking; in fact, some people don’t get a lot of benefit from it. Here are some things you can do to make the most of your two years.

Golden Rules

The Golden Rule of Analysts is: If you work hard and have a great attitude, you will be a star analyst. And a second is like it: Work for experience, not money. Keep these two principles in mind, and you will have a great experience.

First, work hard and have a great attitude. Investment banking is a service business. Your bosses (vice presidents, SVPs, and managing directors) are paid more or less on commission. (They have good base salaries too, but if they don’t bring in enough revenue, eventually they’ll be fired.) So bankers do a lot of free analysis and sales presentations, in hopes of someday earning a seven- or eight-figure fee. A lot of this work is prepared on short notice, forcing you to work very, very late.

Senior bankers expect access to 100% of your time. That is the culture. There is no way around it. 90-hour weeks will be your bread and butter. (90 hours means arriving at 8 a.m. and leaving at midnight on weekdays, plus 10 hours on the weekend – a non-demanding week.) In the busy season (e.g. January and February) you can expect to work over 100 hours for several weeks back-to-back.

Even with smart, motivated coworkers, working such long hours can be stressful. You can help your associate and VP just by keeping a positive attitude. Don’t complain or resist assignments. Don’t take criticism or correction personally. Don’t duck out the door at 9 p.m. – that’s for seasoned second-year analysts. See who needs help. If you work fast and carefully, with a cheerful attitude, you will be a star.

Second, your real pay is the experience. The learning curve is enormous. Money is incidental; you’ll be well paid no matter what, but you won’t have much time to enjoy it. If you are working 100-hour weeks to get a few extra thousand dollars, you will be miserable. Get your priorities straight: you have your whole career to make money and most of it will come in your 40s and 50s. Right now, you need to get skills, a work ethic, and good relationships with your supervisors.

For more on how to act and communicate on the job, I highly recommend two books for new college graduates: From Day One, by Bill White, the former CEO of Bell & Howell, and In But Not Of, by Hugh Hewitt. I could stop there, but here are some practical tips.

Practical Tips

Learn Excel. Excel is the basic tool for all the interesting work you’ll do. Learn to think in Excel. Spend a Saturday pulling apart an LBO to see how it flows. Get comfortable with advanced formulas (once you have INDEX and MATCH, you’ll never VLOOKUP again). I have had good luck with Peachpit Press – try their Excel Quickstart Guide by Maria Langer. Forums like Mr. Excel.com are also helpful.

Get organized. Take your level of organization from college and square it. (1) Learn or develop a naming convention for files, and stick to it. (2) Print and save all source documents. (3) When you are getting numbers from some source, highlight the number itself and tab the page. (4) If you expect to do something more than once, take the time to build an automated template. For example, if you need a histogram of market capitalization sorted by size, let your data provider download the data and let Excel do the sorting. You should only have to enter the tickers and date. A 10-minute exercise reduced to 15 seconds.

Insist on running models. Sometimes there’s so much other work to do that your associate (post-MBA coworker/direct supervisor, probably not a former analyst) will end up doing all the financial analysis. That’s why you’re here, so don’t let six months go by without running a DCF, accretion/dilution, or LBO model. Make sure your associate is letting you take over these tasks – then he or she can spend more time turning into a VP. Also, let the staffer know your interest.

Choose your group carefully. It does matter who you work for – what product or industry, and what banker. Unfortunately, it’s tough to tell what you’re getting into, especially if you get placed into a group when you are hired or during training. Look for industry-level research or news coverage that can help you predict how much activity your sector will see in the next few years. If you get a hot sector, all your time will be taken up with deals, not free work or pitching. Awesome!

Still, it helps to work for the smarter, more connected, more practical bankers. At first this is mostly luck, but if you like your boss, perform well and he or she will help you get staffed on more of his or her projects.

(Note, some groups are more “transferable” than others. There are more outside opportunities if you covered consumer products or pharma than if you covered West Coast insurance companies.)

Life After Banking

Bonus career advice. In two or three years, once you finish your analyst program, get out of banking. Work a few years for a corporation, or try consulting or private equity. Banking is a great job right out of college, but after that (especially after business school) it is a bad job, with long hours, lots of travel, politics, stress, and too much money. You won’t be able to quit, and you’ll take too much away from your family.

Beyond the associate level, the skills that make a great banker change. Analytics and hard work aren’t as important; instead, banking becomes a sales job. Senior bankers need a network and good presentation and people skills. If they are coverage bankers, they need to be expert on some industry, which is hard to get within a bank. The skills that made you a great analyst won’t make you a great VP.

Bonus life advice. In a couple of months, you’ll be working harder and sleeping less than you ever expected. At times you might be overwhelmed. It’s important to keep your eye on “navigation aids” outside the office. Schedule time each weekend to talk with your family. Do something cultural or athletic (staying fit is hard but a big help). Don’t neglect your religion. Read a good book for a few minutes each night. The job is tough enough without losing perspective.

PREVIOUSLY on Zeal and Activity: Advice on College, for college freshmen, and Advice on Getting to Wall Street, for undergrads – the earlier the better.

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One Response to “Advice on Banking”

  1. Advice on Getting to Wall Street « Zeal and Activity Says:

    […] COMING SOON: What to do once you get that job. […]

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