Perhaps the most unsung hero of investment banking and private equity, the Financial Institutions Group (commonly referred to as FIG) can often find itself overlooked in the grand scheme of things. However, depending on your goals, working in FIG can be one of the greatest opportunities in your career. Although FIG can vary wildly in scope and deal flow depending on your bank/buyside firm, you will develop a very specialized skillset that will carry you to countless opportunities across your professional career. Below, I will discuss some of the key benefits and considerations of entering this niche:
Good, Stable Client Base: First and foremost, let’s review what you can expect in FIG. Most of your clients will comprise banks, insurers (ranging from life, health, auto, home, etc.), credit card companies, brokers, and financial technology firms. A majority of these clients make money by leveraging their balance sheet capabilities – and you can think of this in terms of how a commercial bank would make money. For example, all banks, from large, global players like Citi and JP Morgan to smaller regional banks like Fifth Third and PNC all leverage their funds by borrowing money from each other and then repackaging those loans as lending money that can be given out to consumers, whose interest can be collected and invested on behalf the bank. As we’ve seen especially throughout the past decade and a half – all of these banks, from global to mid-market, play an important role in sustaining our global economy, and often, for better or for worse, have the backing of governments to private security for their funds. This type of government support might not be relevant when working with middle-market companies, but this is not to say that middle-market advisories or clients are undesirable. In fact, it’s quite the opposite! No matter the economic conditions, there is always solid, inflexible demand for this extra security that translates into your job security – while FIG might not see the explosive highs that TMT and Healthcare companies experience in bull markets, they can often avoid the hardship that plagues and injures them during bear markets.
A Wide Selection of Niche Exit Opportunities: Let’s just cut to the chase and address the thing that most junior bankers are interested in – exit opportunities. I won’t beat around the bush and will admit that this is where some people hesitate when it comes to joining FIG. To be as blunt as possible – if your goal is to keep the most doors open to the widest array of exit opportunities, I would not recommend prioritizing a Financial Institutions Group unless it is of extreme prestige and caliber (i.e., Goldman Sachs). While the FIG universe can be a bit narrow, there is no shortage of private equity funds and consulting firms that specialize in this space. Some of the corporate exit opportunities to strategy and development groups are extremely desirable in the corporate development space (a few names that come to mind are JP Morgan, Goldman Sachs, and Capital One). Additionally, experience in FIG can help separate you from your competition when looking for exit opportunities. There are hundreds of generalist analysts looking to join funds in a generalist role on the associate level but separating yourself by approaching recruiters with a specialized skillset can really help you out in a competitive process (almost as much as the wonderful resources and coaches at OfficeHours can help you out). A niche skill set is only a bad skill set if it is not the one that you desire. I hardly think many professional athletes are complaining about their “lack of diverse experiences”, similar to how many accomplished FIG professionals won’t even bat an eye to only having these more “niche” exit opportunities.
Mostly Large-Cap Deals: We often hear that bigger is better in investment banking and while this might not always hold true for deal teams or culture, bigger deals will certainly always pop off of a resume more than a middle market deal every day of the week. Luckily, when it comes to deal flow in the FIG space, a lot of these deals will be larger in scale. While you can find some deals in the fin-tech space that are smaller in scale, most of the traditional FIG deals will be done with larger insurance companies, regional banks, large-cap banks, etc. As an employee at a leading global TMT conglomerate, I can assure you that we are extremely impressed by any form of large-cap deals, and it can absolutely help separate you in a competitive application process.
Risk of Being Pigeon-Holed: Investment banking is probably going to be your first job – it’s going to teach you a lot of skills, and you’re going to gain industry knowledge depending on what area you choose to specialize in. While some fields like TMT and Healthcare can give you a broad range of exit opportunities, FIG is on the opposite end of this spectrum as I discussed earlier. It will open the door to a lot of unique FIG exit opportunities, however, your opportunities in the field will be a niche given your previous experience. FIG strategy, financial modeling, and general operations are not ubiquitous across various industries – and you will have a harder time transitioning between various industries if you start in FIG. This is not to say that you cannot make a transition if that is what you desire but it will take more effort in comparison to working in another industry group.
Best of luck! The FIG space is a wonderful, and underrated, industry to start your career in. Although, it sometimes gets a bad wrap for being “niche”, you can really take the opportunity and run with it if you play your cards right. You can learn more about other industries here on OfficeHours, as well as chat with some of our top coaches to learn more about the industry, its exit opportunities, and more about a career in FIG in general.
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