Tuesday, October 27, 2009

Fall Recruiting Season

If you're a senior, you are probably in the middle or near the end of the fall cycle recruiting.

At many target schools, the number of finance positions being offered is much higher than last year. You all recall what happened last fall - the shotgun marriages, the last minute bankruptcies, the government bailouts. This fall has spared us a similar bloodbath.

Last year at this time, only two or three banks bothered showing up at one target school that was traditionally a core school. And the positions offered included back office (technology, finance). Of course there were interviews handed out for front office roles, but hiring was down. If someone didn't have connections, prior internships at a bank, or a winning resume, it was very hard to land a position.

And the verdict is out on fall recruiting season

Things have turned out better so far this fall. It might be helpful to provide a glimpse into the numbers and types of positions that seniors can currently apply for at one target school:

- Goldman Sachs: Banking, Securities, Private Wealth Management, Asset Management, Technology, Operations

- Morgan Stanley: Banking, Wealth Management, Asset Management, Sales & Trading (Note that MS's hiring numbers seem to be relatively high)

- Deutsche Banking

- Barclays Banking

- Citi Sales & Trading

- Merrill/BOA Banking

- UBS Banking

- BMO Banking

- William & Blair Banking

- Banking at boutique firms

- Hedge fund positions: DE Shaw, Bridgewater, among others

As for consulting, McKinsey / Bain / BCG saw record applications last year - they're hiring was hit but not as hard as finance and banking. As for the current hiring climate, the target class sizes have fluctuated but word on the street is that MBB and other consulting firms are looking to hire normal numbers of analysts / associate consultants (or not that much lower). Salaries are also in line with the previous year.

A frequently asked question

Is it better to do banking or consulting in this turbulent climate?

- The answer would of course be a personal one, but it turns out that those who were previously only interested in banking and finance have now turned their attention to at least consider a consulting gig. One look at the numbers would explain the increased incentive to look at consulting:

The average consulting week is 60-70 hours, with many weeks at ~50 hours or even zero hours if you're on the beach. At a $65K base salary, that comes out to a pre-tax hourly income of ~$20. Accounting for a moderate bonus of say $10K, which brings total income to $75K, the pre-tax hourly income is ~$24. Not too shabby.

The average banking week is still 90-100 hours, despite the recession. At a $65 K base (not counting bonus), that comes out to a pre-tax hourly income of ~$14. Accounting for a moderate bonus of say $25K, which brings the total income to $90K, the pre-tax hourly income comes out to ~$19.

So on the margin, it doesn't make a whole lot of sense - at least salary-wise - to do banking.

The other considerations that influence your decision would be: 1. What skill set you want to build 2. Culture and office environment and 3. Your long-term career aspirations.

Let's address these one at a time...

1. What skill set you want to build
- Consulting: access to high-level management of fortune 500 companies, presentations to senior executives, and work that spans everything from finance to outsourcing to human resources. There's also exposure to M&A work, if that's one of your draws to doing banking, though of course in consulting you would only be advising and not executing.

- Finance: Hands down winner if doing valuations and tweaking excel models makes your heart sing like a hummingbird. More seriously though, finance will give you recognized "hard skills" that are readily transferable to another finance gig. If you know you want to do finance, and that you have no other ambition in life, then working at a BB or another finance firm is the way to go.

2. Culture and office environment
- Consulting: collaborative, generally no-yelling and a civil atmosphere. Depending on your team and firm, there can be a greater focus on work-life balance (except when on traveling cases). Also, encourages creativity and at times entrepreneurship, depending on the type of project.

- Finance: Can be cut-throat and demanding, but the excitement of being on a live deal or doing a live trade often compensates. The rush of working on a market transaction is incomparable. Team environment can be tense, and as an analyst you are an office monkey. So ponder the up and downsides!

3. Long-term career aspirations
- Consulting: Exit ops run the whole gamut - from entrepreneurship (this site!) to public service to further professional training (business, medicine, law). You name it.

- Finance: Exit ops can run the whole gamut but generally IBD or trading sets you up for a more senior position at the firm (with the option of direct promotion from analyst to associate, sponsorship for business school upon the completion of which you would return to the firm), the transition to a smaller firm that pays better and treats its employees better, or a complete exit from the industry to do something else.

There are obviously a lot of differences between the two industries, but at the same time they do attract similar people: smart, driven, ambitious, type-A early twenty-somethings.

As always, feel free to send your queries our way. Happy recruiting season!

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