Consulting vs Investment Banking

Choose the career where you can see yourself in the long term, but here some pros and cons for both and additional considerations:

Consulting

Pros:

1. Variety of Work: Consulting offers exposure to a range of industries and problems, which can be intellectually stimulating and provide a broad skill set.

2. Work-Life Balance: While consulting can be demanding, it often offers a better work-life balance compared to investment banking.

3. Economic Resilience: Consulting firms can thrive in various economic conditions by helping companies streamline operations, cut costs, or enter new markets (e.g., they profited greatly during COVID).

4. Skill Development: Consultants develop strong problem-solving, analytical, and project management skills.

5. Networking: Consulting provides opportunities to work with top executives and companies, which can be valuable for future career moves.

Cons:

1. Travel: Frequent travel can be demanding and impact personal life.

2. Pressure: High-pressure environment with tight deadlines and client expectations.

 Investment Banking

Pros:

1. High Compensation: Investment banking is known for high salaries and bonuses, especially during good economic times.

2. Prestige: Working at a top investment bank can be prestigious and open doors to various opportunities in finance.

3. Skill Development: Investment bankers develop strong financial modeling, valuation, and deal-making skills.

4. Fast-Paced Environment: The dynamic nature of the work can be exciting and rewarding.

Cons:

1. Work-Life Balance: Investment banking is notorious for long hours and a demanding work environment.

2. Economic Sensitivity: The industry can be heavily impacted by economic downturns, with potential for job insecurity and reduced bonuses.

3. Specialization: Skills developed may be more specialized, focusing on finance rather than a broader set of business problems.

Given the current economic situation:

- Consulting: Economic uncertainty often drives companies to seek external advice to navigate challenges, which can mean steady demand for consulting services. Additionally, the focus on digital transformation, sustainability, and cost efficiency creates opportunities for consultants.

- Investment Banking: Economic volatility can lead to fluctuations in deal flow (mergers, acquisitions, IPOs). While downturns can impact deal activity, there can also be opportunities in restructuring and distressed asset management.

 Personal Considerations

1. Career Goals: If you’re interested in a broad exposure to different industries and enjoy solving complex business problems, consulting might be more appealing. If you’re passionate about finance, markets, and deal-making, investment banking could be a better fit.

2. Lifestyle: Consider the lifestyle implications. Consulting can involve significant travel, while investment banking demands long hours.

3. Long-Term Plans: Think about where you want to be in 5-10 years. Consulting can lead to roles in management, strategy, or entrepreneurship. Investment banking can open doors to private equity, hedge funds, or senior corporate finance positions.

Wow, that's a huge question. 

The reality is that even though these career paths tend to be targeted by people with the same background, in practice they are super different.

The one exercise that I'd encourage you to do is to speak with a couple of people who have been doing the job already for 2-3 years from both IB and consulting. 

Get a sense of what the job is on a daily basis. 

What is it that they enjoy about it.

What is it that they like the least. 

What are their plans for the future.

Etc. 

I'm happy to share a material to give you a sense of what consulting is like, but these conversations will be priceless:

Expert Guide: What Do Management Consultants Do?

Once you have these conversations, what you might also want to try is to get an internship in each industry. This will definitely give you a sense of whether it's for you or not. 

I know this sounds a bit more complicated than getting a direct answer, but it's really time well spent. 

Most people who find themselves feeling miserable a year into their job, they're in that situation because they didn't do this sort of diligence beforehand. 

Best,
Cristian

Hi,

I know a few people who have worked across both spaces and are working in both spaces. Sharing some points from my conversations with them. 

• Despite the cuts recently in comps and perks, IB still pays significantly more than consulting, even in the long term
• If you like doing the same thing over and over again, banking is better. Consulting iterates on approach a lot more and is more variable on this aspect
• At a senior level, consulting projects are easier to sell, so there would be higher longevity (relatively) vs M&A 
• As mentioned by others, WLB is better in consultant because in banking the project process is fixed and not totally under your control (e.g. subject to exchange rules)
• But consulting often comes with its own drawbacks - frequent travel can be something that is difficult to negotiate with family/personal commitments

So really, the question is what determines attractive for you? Longevity vs wealth accumulation vs career growth (and what you term by that) will all determine how you weigh each of the factors that the coaches have elaborated on.

Happy to have a more detailed chat - just shoot me a dm!

Hi there,

I think that depends solely on your preferences and how you define attractive.

Any economic impact is short-lived and you should rather look at the long-term factors that make an industry attractive for you (exit opps, pay, work-life balance, travel, type of work, culture).

I wrote an analysis comparing both industries - send me a DM if you like.

Cheers,

Florian

Hi there,

Q: I am undecisive which career prospect is more attractive: Consulting or Investment Banking.

They are very different paths. The best choice depends on your goals.

If you find both attractive and you have the option, you might want to do an internship in both industries to understand how the actual job is and what you enjoy more.

If that’s not an option, I would consider the following:

1. Define what is important for you in terms of a career. How and where do you see yourself in 5-10 years? What would you enjoy most and in which field? Try to eliminate the “noise” of what people think or expect you to do (a great book on that is The 80/20 Principle by Richard Koch)
2. Check which career path could lead you more easily there. Check out people who have worked in both industries on LinkedIn and see how many are more present in the field you want to move to in the future
3. Talk with alumni who worked in the two sectors (ideally alumni of your school) who already got into that field. Try to understand if you would like to follow the path they had

Good luck!

Francesco

Both are cyclical. But Investment Banking is more cyclical than consulting.

Hi there,

I would be happy to share my thoughts on your question:

I would highly advise you to opt for the option that better aligns with your professional (and maybe even personal) mid- to long-term goals. In order to make an informed decision, I would advise you to do the following:

• Weigh the different criteria that are meaningful to you independently of the current options (e.g., prestige, culture, international exposure, compensation). After that, score the two options based on your criteria and their weighting, resulting in two scores. This way, you have covered the left-brain perspective.
• Critically assess your initial reaction to the outcome of the scores. For instance, if you feel the urge to tweak the numbers, this is a solid indicator that you do not want this decision to become reality. This way, you have covered the right-brain perspective.
• By doing so, you will be able to integrate both parts of the brain into the decision-making, guaranteeing a higher chance that you will still be happy with it years later.

If you would like a more detailed discussion on how to address your specific situation, please don't hesitate to contact me directly.

Best,

Hagen