I’ve spent the last few weeks trying to figure out how to make my debut on TFM (that’s a lie, I’ve been doing finance things and obliterating Austin’s 6th street, but that’s neither here nor there). I finally just decided to write about something I know, because Writing 101. Ever since leaving the investment banking world, I’ve discovered that very few people actually understand what investment banking is, or what an investment banking analyst does (DISCLAIMER: this article is going to discuss corporate investment banking, not sales and trading or any of the other divisions of an investment bank). And yet, every year, college juniors and seniors line up to try and obtain these jobs. Well, I’m here to give you the insider’s perspective on what it’s really like, so you can be better prepared as you think through how you’re going to subsidize your alcohol problem after graduation.
Let’s begin with a brief history of the investment banking analyst program. Many years ago, Goldman Sachs realized that the vast majority of college grads actually have no fucking clue what they want to do after college. They realized they could create a two-year program that took really smart but insecure kids, throw a shit ton of money at them, promise them an “education” in finance, and work them until they wanted to jump off the Brooklyn Bridge. Then, at the end of the two years, those kids were free to leave and pursue other career opportunities. Well, this took off faster than a girl at the bar when her psychotic ex-boyfriend walks in, and every other bank on Wall Street had soon copied the program.
Before we get to what investment banking is, let’s debunk a few common misconceptions:
1. Investment bankers are great at giving stock advice.
Actually, some of the worst personal investors I know are investment bankers. The two are completely unrelated. This would be like assuming a soccer player is good at basketball because they’re both sports. Just because the two professions fall under the title of finance, it does not make them similar.
2. Investment bankers caused the financial collapse.
While there is a special place in hell reserved for senior investment bankers, it’s not because they caused the financial collapse. Investment bankers simply help companies raise capital either through debt or equity. When Facebook goes public or Time Warner and Comcast merge, that’s because of an investment banker. When someone takes out a fifth mortgage on his house that he couldn’t afford to pay even if he won the lottery, that’s because of some other fucktard.
3. Investment bankers must be really smart to make that much money.
Wrong again. I’ll let you in on a little secret: a trained monkey could do the investment banking analyst job. I’ll let you in on another little secret: the only people who stay in investment banking and become senior bankers are the ones too stupid to get out while they can.
Now that we’ve cleared that up, let’s talk about what an investment banking analyst actually does. Let’s assume the analyst (we’ll call him Bill for simplicity’s sake) has already gone through summer training (also known as a 10 week extravaganza where he learned a bunch of shit that he may or may not actually use, drank until his liver begged for mercy, and hooked up with as many female analysts from other offices and divisions as possible) and he is now well into his first couple months on the job.
Bill wakes up in the living room of his apartment in midtown Manhattan. You might assume he’s in the living room because he went out hard last night and passed out before making it to bed. Nope. The living room is his bedroom, because despite making what can only be described as a fuck-ton of money, he’s still not wealthy enough to have his own apartment in Manhattan and is forced to share a one-bedroom with a roommate.
Upon opening his eyes, Bill will immediately reach for his BlackBerry. What’s that? You don’t know what a BlackBerry is? A BlackBerry is a mobile device with a physical keyboard on which you can write emails. I think it makes phone calls as well. So, like an iPhone? Yes, but much worse. Then why do investment bankers use them? Because investment banks are slow dinosaurs who think it’s still 1995. I firmly believe that the finance industry is the only reason BlackBerry is still a company, but I digress. For an analyst, the BlackBerry is like the medical profession’s version of the pager. The analyst is always on call.
Bill will immediately notice that the red light on his BlackBerry is blinking, which means missed emails. Cue panic. When I say panic, I mean the kind of panic that sets in when some girl you banged four weeks ago and haven’t spoken to since sends you that “I think I’m late” text. I once heard a story that at JPMorgan, analysts were expected to respond to all messages and phone calls within 15 minutes, no matter what time of day, or they risk being fired on the spot. Luckily, young Bill has been spared this morning and the only messages he has missed are the morning updates from various newswires. He has avoided the standard investment banking fire drill (a situation where the analyst has to produce something under an incredibly tight time frame, will lose many years off his life in the process, and then ultimately learn that the whole thing was unnecessary). He quickly showers and heads off to work.
Upon arriving at his desk, a normal employee at any other company would pick up his work where he left off the night before and start plugging away. Not Bill. Investment banking analysts don’t go to sleep while there are still tasks outstanding. Each morning is a completely clean slate with nothing to do, because everything else was done the night before. Investment banking is built on what we call a “false sense of urgency.” Everything has to be done immediately. If there is a document due in a week, it means there are seven days’ worth of edits that can be done on that document, never mind that probably one or two rounds of edits would be completely sufficient. Because of this false sense of urgency, Bill was at work until 3 a.m. last night, and therefore has nothing to do when he sits down this morning. He must wait for someone to give him a task.
What does Bill do in his spare time? Peruse his Facebook wall? Send out a few tweets? Check his Gmail? Nope. All forms of communication with the outside world are blocked at investment banks like it’s fucking North Korea. Luckily, ESPN.com is still available. Bill spends the next hour reading every article on the site. (Quick aside: I had a bold colleague back in my banking days who was able to get access to one of those illegal television streaming sites. He spent the month of November plowing through eight seasons of “24.” There’s that much fucking down time in this job.) After a quick Starbucks run (the lifeblood of any investment banking analyst) Bill returns to his desk and spaces out. That’s where he stares at his desk, but it looks as if he’s working. He may get tossed a few one-off tasks to do for the day, but Bill is only on one deal at the moment, and he’s still waiting for the senior bankers to provide comments on all the work he did the night before.
7 p.m. rolls around, and it’s time to start thinking about dinner. The analysts typically get around $30 to spend on dinner every night, which, if strategically used, also buys lunch for the next day. The guys fire up Seamless (an online food ordering service) and order an obscene amount of food for the evening, because when combined amongst the analyst class, $30 per person is enough money to feed all of Haiti. This practice will eventually lead to every analyst putting on at least 20 pounds over their two years.
After dinner, it’s now 8 p.m. and a normal human being might be thinking it’s time to head home. Bill knows better. Like clockwork, at 8:30 p.m. the comments arrive. “Comments” are a senior banker’s changes to any of the many documents the investment bank puts together to help market the companies it is trying to sell (usually 80 to 100 page books or slide presentations). The analyst’s job is to make changes to these pages as directed by the senior bankers. These are usually scribbled on a printed version of the presentation and then scanned and sent to the analyst (because senior bankers are never in the office). If your managing director is a real dick, he tries to mark up the presentation on his iPad, which, for an analyst, is like trying to decipher the Rorschach test.
If you’re really unlucky, you get a managing director who isn’t the brightest bulb in the box (these guys are usually great at building relationships, which is how they got to where they are). I once had a managing director tell me to “juxtaposition page 35 with page 36.” Now, I was an English major, but for the TFM international community and those here at home who are less familiar with the English language, let me point out a few things for you:
1. “Juxtaposition” is a noun, and the managing director used it as a verb. The correct form of the word would be “juxtapose.”
2. The definition of juxtapose is to “place or deal with close together for contrasting effect.” If you’re scratching your head at how to juxtapose two pages that are already next to each other in the presentation and actually deal with similar ideas, I don’t blame you. I was scratching my head, too. I finally discovered that what my managing director actually meant was he wanted me to switch the order of the two pages. I took full responsibility for not understanding that.
With comments in hand, Bill will now spend the next hour or two translating the managing director’s comments into something legible he can take to Desktop Publishing (DTP). DTP is a division of most banks, filled with people fluent in PowerPoint, Photoshop, and other design tools. They theoretically exist to try and alleviate the workload of the analyst, so the analyst can focus on more analytical tasks instead of just processing changes. In reality, they exist to do a shittier job over a longer period of time while the analyst sits around and waits for them.
12:30 a.m. rolls around, and DTP finishes up Bill’s edits. Bill then prints out the entire presentation and sets it down next to the marked up version from his managing director. He will then go slide by slide, making sure DTP made all the changes correctly (spoiler alert: they didn’t) and will mark up any they missed. This is the MOST IMPORTANT job an analyst has. An analyst’s main task is to not fuck up. Even if an analyst can’t do basic arithmetic, the best analysts are the ones who can still function at 2 a.m. at a level where they aren’t making mistakes and are still catching other people’s mistakes. True story: the first ever pitch (presentation where senior bankers go try to win new business) I worked on, we lost. Upon returning from a trip to California, my vice president called another colleague and me into her office to discuss how the pitch went. The number one takeaway from that meeting? I had forgotten to put one period on one footnote on one page in an 80 page presentation. Based on that conversation, you’d have thought the reason we lost the pitch was because of that period. I promised to never let it happen again.
Bill makes the final changes himself and sends it back to his team. It’s now 2 a.m. and he calls the company car service to take him home.
Thus ends our story of Bill’s day. I could have talked about a lot of different stories in this article: the time I was called back into the office hammered at 11 p.m. on a Friday night, the time I had to personally get in a cab at 4 a.m. and hand-deliver books to my managing director’s house in the suburbs because he didn’t trust the courier service, the time I spent weeks on a 100+ page pitch book only to have the managing director throw it out the night before the pitch and start from scratch, or even the time I had to come in on New Year’s Eve and put together 150 FedEx boxes with handwritten notes for potential buyers. The stories are endless. Hopefully, this has given you a good idea of what it’s like to be an analyst. The pay is good (though on an hourly basis, it’s actually less than minimum wage), the work is meaningless (if you want to do something important, go cure cancer), and the education is suspect at best (I learned to build financial models and not fuck up), but if you want to work in the finance industry, investment banking is the gatekeeper. It’s your own personal Charon, slowly rowing you across the rivers of Styx and Acheron to hell. Godspeed.