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Investment Banker

The Real Poop

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Pale. That's a good word to describe most investment bankers. They don't see the sun. Instead, they get cathode ray and LCD tans. Very little incidence of skin cancer in this breed. Why?

Mounds and mounds (and mounds) of work. And a lot of it is busy work. Making financial models (i.e., if this company grows at the rate that the CFO (Chief Financial Officer) says it will grow, how much cash will it produce in the next 5 years?); making pitch books (you should sell your company to XYZ MegaGlopCorp today for $23 a share because competition is coming and they will kill you); and making coffee (cream? sugar?).

Investment bankers do one primary thing: They sell money. Think about it as a more complex form of standing in front of the bank teller asking for dollar bills as you've broken piggy bank after piggy bank and then cleaned out the back of the couch. The bank takes a penny for every dollar you change from coin to paper.

It might not seem like much—unless you frame it in the context of how big banks work: They'll exchange $10 billion a day if they can. Lotta pennies. They add up.

The gig inside of an investment bank changes dramatically as you move up the food chain. At the lowest level of amoebae are the "analysts.” An analyst is typically a financial geek who actually combs her hair (with an honest-to-goodness comb and not just her fingers) and hails from one of a dozen top universities. (Clients expect investment bankers to be "best of the best" kind of people—they will pay top dollar for top talent—so if you only have a degree from Podunk U. or a junior college, investment banking ain't a gig for you.)

The analysts are 22 and mostly clueless when they arrive. They attend a kind of accounting boot camp for a few weeks, go through learnings on compliance (what they are legally allowed to say, as much information they will possess is "insider" with regard to trading of securities), and learn the given bank's systems—from computer login codes to complaint processes for sexual harassment. There go half of your usable "insider" jokes.

The analyst gig usually goes for 2 years, at which point the analyst generally applies to business school and, more likely than not, gets rejected by business school (thousands of analysts applying for maybe a hundred decent slots at top biz schools). If an analyst shows high prowess in counting beans, often the bank will ask them to stay and become a 3rd year analyst—maybe they won't need to go to biz school after all. If they are happy as an investment banker and want to remain in the field for a long time (their bank has quite a hill of beans, so there’s no shortage of counting to do), an MBA may be a waste. The business school program at most schools contains a lot of information that investment bankers don't "need" to simply perform their tasks.

The crux of analyst work revolves around grinding. No, extensive experience dancing in sleazy night clubs will not help you here. "Grinding" in this sense is basically every crappy job task that your bosses and their bosses and their bosses simply don’t want to do—they rationalize giving allll of it to you because "it’ll be good for you to know how the financial sausage is made in the long run." Their “financial sausage” is the wurst.

How would you like that?

Grinding involves everything from that making coffee thing to typing in quarterly and annually reported financial metrics from (mostly) public companies and dealing with "pitch book" creation. Pitch books are the stacks of paper that bankers use to market their services to clients. That is, they will have thought on their own about mergers in a given arena, done their own homework, and then gone to the client to suggest that they buy company x or a "target." They will have given you, the analyst, the basic frame of the deal, a template document in Powerpoint and a few other basic data points—and then expect you to put together a picture perfect document with no typos—by morning. Time for more coffee. Black, please.

If you're one of those people who needs a full nights' sleep every night to survive, look elsewhere. And it all has to be perfect. Remember the first four letters in the job title, and "grin."

Next run: Associate. Remember the first three letters in the job title. You get to be an associate after being a 2 year analyst and then going to a business school. Some 70% of investment bankers came from one of three business schools: Harvard, Stanford, and Wharton. Columbia fills in a few gigs as well. But if you are below those levels in the rungs of biz schools which admitted you, it's going to be hard getting an offer at a top bank unless you graduate into a roaring bull market (when times are boomin', economically speaking) where banks are dying for anyone with a pulse. You also get to be an associate if, after your third year as an analyst, the powers-that-be love you and simply want you. Hopefully not in any unprofessional manner. You want the job, but you don't want it that way.

The associate is really the backstop for producing perfect work; in theory, the associate wrangles the analysts in what is lovingly termed a "bullpen." That is, analysts are grazing forms of cattle, which must be fed and watered regularly. And if they are managed, they will produce nice steaks in a few years. Associates are happy to shlep the briefcases of their bosses—vice presidents—who shlep for their bosses—directors—who shlep for their bosses—managing directors. It doesn't hurt to have a little shlep in your step.

There is a pecking order and a structure to investment banking that fits the culture. Those workers going into the field tend to be…stiff. They want structure. They want a clear path to wealth with relatively low risk. And they are happy to have to kiss a lot of butt along the way to get there.

In the end, the power and wealth of the banker world comes from being able to "sell a deal"; that is, the power derives from getting the client to say "yes."