Investment banking vs. V5 firm - what would you choose? Forum

[Anonymous User]

Flame? Sonny, this shit is truth. Base might be lower, but during boom times Associates at investment banks will make significantly more (i.e. 30-50%+) than Biglaw associates. Not a associate that I know at BB's and MM firms didn't clear $220K this year, and this year wasn't even that good and some of these guys are in non-NYC markets. The years before this they were a little lower, but the market for these services is roaring back and banks are taking advantage to make up for the lack of trading revenues.

I heard $180k-200k all-in for first year analysts at BB/MM last year. That was only ever so slightly better than Biglaw. Yes, if it were 2007 all over again, 30-40% more could be expected (depending on what Biglaw bonuses looked like). That does require one to be bullish about the next few years, though. Law is definitely less cyclical, and in 2009 BB associates weren't making more than Biglaw associates.

Also, why are you talking about analyst level compensation? You can't get biglaw out of undergrad, so what is even the point of talking about analyst comp. No one here mentioned analyst levels, but with $85K base + bonus bonus (in good times), you pretty much make the same thing, maybe $20K less, as a biglaw associate but without 3 extra years of school and presumably no debt.

Because, as has been mentioned, we're in the employment forum and everyone here presumably got, or is getting, a JD. So it's a sunk cost w/r/t a decision between fields. No one saying going into BB analyst instead of taking $250k in debt was a bad idea. TLS CW is that if you have a stable career option, like BB, CS, EE, etc. coming out of UG, you should take it.

But in circumstances like OP's, I'm a little confused. If he has a first-year associate offer, that means he has at least a couple years of good work in finance. Presumably, the only reason that someone with an opportunity to advance leaves that to go to law school is if they REALLY want to be a lawyer. But if that were the case, he wouldn't have made this thread.

First year analysts are not making $180k-200k all-in at BB/MM, not even those in the top bucket. The only analysts possibly making that much are at Centerview/Qatalyst/etc.

Why would someone with a JD apply to be an analyst? You get placed as an associate with a different compensation structure. Analysts are jobs for people with only a BA/BS not an MBA/JD they get hired as associates.

[jbagelboy]

JW as I haven't really heard of this -- do IBs actually recruit law students? Or does OP presumably have a finance background/experience?

Yes they recruit JD's to work as associates. You don't need any background in finance or accounting, as they have training programs before you start to do that. You are also responsible for "supervising" the analysts that are usually recruited straight from undergrad.

it helps though

[iliketurtles123]

JW as I haven't really heard of this -- do IBs actually recruit law students? Or does OP presumably have a finance background/experience?

Yes they recruit JD's to work as associates. You don't need any background in finance or accounting, as they have training programs before you start to do that. You are also responsible for "supervising" the analysts that are usually recruited straight from undergrad.

it helps though

You do need to know the fundamentals though.
It probably takes a couple days of studying to know enough for the interview

[hellojd]

JW as I haven't really heard of this -- do IBs actually recruit law students? Or does OP presumably have a finance background/experience?

Yes they recruit JD's to work as associates. You don't need any background in finance or accounting, as they have training programs before you start to do that. You are also responsible for "supervising" the analysts that are usually recruited straight from undergrad.

it helps though

You do need to know the fundamentals though.
It probably takes a couple days of studying to know enough for the interview

You need to be proficient enough to know the basics, but the stuff really isn't rocket science in all honesty.

[rickgrimes69]

JW as I haven't really heard of this -- do IBs actually recruit law students? Or does OP presumably have a finance background/experience?

Yes they recruit JD's to work as associates. You don't need any background in finance or accounting, as they have training programs before you start to do that. You are also responsible for "supervising" the analysts that are usually recruited straight from undergrad.

it helps though

Still totally unnecessary. Half the kids coming from Harvahd majored in shit like English.

[prezidentv8]

Neither. Go be a bartender.

[Anonymous User]

OP -- can you give insight into how you prepared for the interviews (i.e. what books did you use, how long did you study, etc)?

[Anonymous User]

OP -- can you give insight into how you prepared for the interviews (i.e. what books did you use, how long did you study, etc)?

OP here - sure. I used a combination of Vault Preparing for Finance interviews (good for an intro), Wall Street Prep, Training the Street, and Breaking into Wall Street. It sounds like a lot more than it is - I just took the useful tidbits from each. How long - eh this is going to vary significantly. I already had an "elementary" understanding of all the concepts, so for me I picked things up relatively quickly (< 1 week, it's truly not rocket science for the most part). YMMV.

To other posts, thank you for your comments. Although an internet forum can't help me make a personal decision directly, hearing and considering different angles as I move through the process is helpful.

Also, I was not referring to CS out of those 5 since some of you were wondering. I didn't really go through a "traditional" OCI process.

Thanks again, would welcome other thoughts as well.

[Anonymous User]

Do you know what the cash/stock ratio of you bonus will be? I believe that you may get a 100k bonus but half is cash and the other half is stock that vests over 5 years. Any idea if this is the case?

[Anonymous User]

As one of (perhaps the first) commentator who suggested you were talking about CS, my bad. I'm sure you can see why I said so (they are actively recruiting law students and clearly not the natural 5th member to that quartet).

That said, I hope that the advice in this thread has been useful.

One last anecdote/piece of advice I'd like to share, since my last lengthy post [about lawyers at the top of banking] got immediately drowned out by all the chatter and bickering over pay - if your goal is to make lots and lots of money, and there is no other goal on earth that means anything to you, it's not immediately clear that either choice is the best. It's *definitely* not the case that comparing salary info is the relevant/decisive factor.

Let me explain.

(1) a former car-rental executive [now retired, is an investor full-time] who was a Wharton MBA told me once that his friends sneered at him for going to work for a small rental car company right after business school when they were all going into finance (this was in the early 1970s or so) and he said - "you know what, those are smart guys, if I have to beat all of them to make a lot of money, who knows what will happen?" so instead, at least back then, there was tons of money to be made in many many industries that were not filled up with the smartest and most driven and most ambitious and greedy people out there. He went into rental cars, turned that small company into a well north of $5B-plus player, and retired comfortably at least as wealthy as the vast majority of his classmates - to the point that the most recent mention of him I saw in the press was another random $30M donation. We're not talking mega-rich, but a man who's making $30M *donations* is clearly not significantly poorer [and probably wealthier] than your average banking MD or V10 partner. Keep this advice in mind. Pop over onto the world's richest people list - it's not filled with bankers or lawyers. So people who are sitting here and splitting hairs over the extra few grand one profession offers over the other are morons.

(2) wait wait, you protest, they're not morons - obviously they understand that entrepreneurs, etc., earn more money than bankers or lawyers, but come on now, we're talking about *risk-adjusted reward* duh, don't you know any finance? To that I reply - obviously - but risk isn't simply professional, it's personal too. It's about where you can succeed. If I suck hard at a given job or at a given firm or in a given environment, that may accelerate my exit and also prevent my rise. Both of those factors can be expected to greatly reduce my lifetime earnings. On the other hand, even if a place pays 25% less, if I expect to stay twice as long, or rise more quickly, etc., etc., it can quickly become the better lifetime career move. So ignore the simplistic and silly focus on 4-7 year pay returns. I assume that you're planning, ultimately, to have at least a 30-year working life. It would behoove you to think about. Especially as a banker, you presumably understand that immediate earnings prospects can often mean very little to valuation - just ask Snapchat or any of the other recent tech darlings. Think long term. And in order to think long term - you have to consider the highly personal and idiosyncratic risk factors that will contribute to your success. Those can be as simple as the quality of the competition point raised above by the rental-car man, but they can also be your personal fit and happiness and health.

(3) A final point just to contradict the previous one - though the career is a long-one, this move is a short one. Don't overthink it. Most of the people on this thread don't have the kinds of offers you do, and they haven't been in a position to realize that there is MUCH more mobility than people say. I gave plenty of examples in my last post - but many many of the worlds TOP bankers make this move comfortably. I can give even recent and big-time examples - Jim Woolery - spent his whole career at Cravath, even to the point of partner - as in, he was genuinely a legit career lawyer - not simply a dabbler - he left to become head of North American M&A at JPM. As he puts it, he was at CSM on a Friday, and at JPM on Monday, and within the year, he was running the deal team for the largest merger anyone did at any bank anywhere that year. And he didn't suck - friends at JPM tell me was widely respected as incredibly good at what he did. Yet, three short years later, he left to run CWT - a big Wall Street law firm. So really I think the vast majority of the naysayers in this thread just don't realize that when you're talented and in-demand, there are more options open to you than to everyone else. Consistently, over and over, the life experiences of the top lawyers and bankers and other professionals prove this.

In short: do what you want, do what you'll be good at, be damn good at it, keep the long term in mind, and don't sweat the short term too hard.

[Anonymous User]

As one of (perhaps the first) commentator who suggested you were talking about CS, my bad. I'm sure you can see why I said so (they are actively recruiting law students and clearly not the natural 5th member to that quartet).

That said, I hope that the advice in this thread has been useful.

One last anecdote/piece of advice I'd like to share, since my last lengthy post [about lawyers at the top of banking] got immediately drowned out by all the chatter and bickering over pay - if your goal is to make lots and lots of money, and there is no other goal on earth that means anything to you, it's not immediately clear that either choice is the best. It's *definitely* not the case that comparing salary info is the relevant/decisive factor.

Let me explain.

(1) a former car-rental executive [now retired, is an investor full-time] who was a Wharton MBA told me once that his friends sneered at him for going to work for a small rental car company right after business school when they were all going into finance (this was in the early 1970s or so) and he said - "you know what, those are smart guys, if I have to beat all of them to make a lot of money, who knows what will happen?" so instead, at least back then, there was tons of money to be made in many many industries that were not filled up with the smartest and most driven and most ambitious and greedy people out there. He went into rental cars, turned that small company into a well north of $5B-plus player, and retired comfortably at least as wealthy as the vast majority of his classmates - to the point that the most recent mention of him I saw in the press was another random $30M donation. We're not talking mega-rich, but a man who's making $30M *donations* is clearly not significantly poorer [and probably wealthier] than your average banking MD or V10 partner. Keep this advice in mind. Pop over onto the world's richest people list - it's not filled with bankers or lawyers. So people who are sitting here and splitting hairs over the extra few grand one profession offers over the other are morons.

(2) wait wait, you protest, they're not morons - obviously they understand that entrepreneurs, etc., earn more money than bankers or lawyers, but come on now, we're talking about *risk-adjusted reward* duh, don't you know any finance? To that I reply - obviously - but risk isn't simply professional, it's personal too. It's about where you can succeed. If I suck hard at a given job or at a given firm or in a given environment, that may accelerate my exit and also prevent my rise. Both of those factors can be expected to greatly reduce my lifetime earnings. On the other hand, even if a place pays 25% less, if I expect to stay twice as long, or rise more quickly, etc., etc., it can quickly become the better lifetime career move. So ignore the simplistic and silly focus on 4-7 year pay returns. I assume that you're planning, ultimately, to have at least a 30-year working life. It would behoove you to think about. Especially as a banker, you presumably understand that immediate earnings prospects can often mean very little to valuation - just ask Snapchat or any of the other recent tech darlings. Think long term. And in order to think long term - you have to consider the highly personal and idiosyncratic risk factors that will contribute to your success. Those can be as simple as the quality of the competition point raised above by the rental-car man, but they can also be your personal fit and happiness and health.

(3) A final point just to contradict the previous one - though the career is a long-one, this move is a short one. Don't overthink it. Most of the people on this thread don't have the kinds of offers you do, and they haven't been in a position to realize that there is MUCH more mobility than people say. I gave plenty of examples in my last post - but many many of the worlds TOP bankers make this move comfortably. I can give even recent and big-time examples - Jim Woolery - spent his whole career at Cravath, even to the point of partner - as in, he was genuinely a legit career lawyer - not simply a dabbler - he left to become head of North American M&A at JPM. As he puts it, he was at CSM on a Friday, and at JPM on Monday, and within the year, he was running the deal team for the largest merger anyone did at any bank anywhere that year. And he didn't suck - friends at JPM tell me was widely respected as incredibly good at what he did. Yet, three short years later, he left to run CWT - a big Wall Street law firm. So really I think the vast majority of the naysayers in this thread just don't realize that when you're talented and in-demand, there are more options open to you than to everyone else. Consistently, over and over, the life experiences of the top lawyers and bankers and other professionals prove this.

In short: do what you want, do what you'll be good at, be damn good at it, keep the long term in mind, and don't sweat the short term too hard.

OP here - good write-up, thanks. I think you're right; no real need to overthink this too much. I've been way too frazzled about the decision. I think it's more important to go on a hunch recognizing there's no truly "wrong" answer and just try to be damn good at whichever path I take.