Consulting vs. Investment Banking

Attending a semi-target business school, I was forced to ask myself the age-old question, “consulting or investment banking”? I was lucky (or cursed, depending on how you look at it) enough to work in both fields, and I will outline some of the key differences between the fields below:

• For Private Equity (and Other Finance Exit Options) Stick to IB; For All Other Exit Opportunities, Stick to Consulting – This is probably the most important thing to keep in mind. I am well aware that many individuals view consulting and investment banking as “first jobs” rather than long-term careers, and considering the work-life balance in these fields, I certainly don’t blame them. Consulting will give you the broadest skillset, especially at the top firms, but there is truly nothing that compares to investment banking in terms of the preparation and options that it provides you when attempting to move to the buyside. However, in my experience, even Tier 2 consulting is preferred for general strategy roles over investment banking, so if your end goal is a corporate role with better work-life balance, you might want to be a tad more hesitant before dismissing that Tier 2 consulting offer to work at a BB.

• Remember the Rankings – As much as I hate the obsession with prestige across The Street and Wall Street Oasis, there is some justification to it. For general exit opportunities and prestige, I would rank them MBB > Top 3 BB > EB > Other BBs > Tier 2 Consulting = MM IB > Non-strategy Big 4 Consulting.

• If You Are Considering These Fields as Long-term Careers, You Must Consider Breadth Vs. Depth – To be successful in grueling fields like consulting or investment banking, you have to at least somewhat enjoy it. In investment banking, you will often be working on multiple deals at once, but A LOT of this work will just be refreshing comps, throwing together as many pitches as possible, and seeing what sticks. In contrast, consultants are rarely staffed on more than one project at a time, and although there is some mindless work on the junior levels, it is never to the same extent as IB, and you will be getting deeper into the weeds of each individual company, often for months on end. Luckily, this business model comes with a more predictable schedule – nothing compared to corporate, but you’ll find yourself working less weekends than you would in investment banking, since there are lower odds of one client exploding compared to just 1 of 6-7 client engagements exploding.

• Compensation is Great in Both Fields, but Different – In general, you will see more cash compensation in banking, but consulting careers will still easily set you up on a top 1-5% income path depending on which firm you work for, and another perk of consulting is the travel benefits – I left consulting a year ago and I still haven’t paid for a vacation since, thanks to all those AMEX points I got from all those damn early AM flights.

Best of luck! Landing a role in either of these fields won’t come easy – so do your prep accordingly, but once you get an offer in either of these fields, the world will truly be your oyster.

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