The motivation and ambition to become the “Wolf of Wall Street” (read Best movies for MBA students) drives many young professionals to the world of investment banking (IB). After a few months or years of slogging 100 hours a week, some of them have an epiphany: that there is more to life than just big earnings and a lavish lifestyle.
They realize that before it’s too late, they had better give some priority to their personal lives and try to make an impact on the lives of others around them. Read about the dark side of investment banking. Then they explore ways to get out of investment banking.
But a majority of professionals who want to leave their IB jobs typically interview for other similar jobs, with a view to protecting their standard of living and status. They end up in other finance-services areas with the same routine as their IB jobs. The new jobs all involve taxing hours that leave very little time for a fulfilling personal life.
While many ex-bankers settle for jobs that bring similar pelf and perks, some try to break into other similar fields and succeed. Some make efforts to make their IB experience a stepping stone to a different career. Some manage to create gainful opportunities using their client and industry exposure.
On the other hand, a few former bankers manage to make a clean cut from IB and the financial sector. They opt for a completely new life, with no time or work pressure, to enjoy the freedom that they have not had in years. Some travel the world or become part-time musicians. Some become entrepreneurs or volunteer for social service. They take in their stride the fact that they may not be able to afford the lifestyle they once led and shed no tears.
Best exit options after investment banking
Among those who leave IB, some find different career paths in the financial-services sector. What are some realistic exit options for investment bankers?
1. Private equity
Competition among investment bankers for private equity (PE) positions is extremely tough. To make the move to PE, ex-bankers need to have graduated as a top student from topnotch universities. They require experience in corporate finance gained at big banks. Their performance at their banks will be taken into account: PEs usually look for highly competitive IB candidates with professional ratings higher than their peers for at least two years.
2. Venture capital
Becoming a venture capitalist gives you the freedom to choose your hours, your projects, and your investments. However, you need to be astute about choosing start-ups for your investments. You should go into VC only after you have made yourself a fund with your IB salary. That’s assuming you want to retain your freedom and don’t want to work for another VC fund.
Ex-bankers can move into strategy consulting from banking. However, earlier, before joining banking, they must have done some time consulting. Ex-bankers who become strategists will require expertise in power-point presentations and matrix diagrams.
Former risk and compliance professionals with banking experience can also try out regulatory consulting. But they may not be happy with the hourly rate paid by their employers, who obviously charge their clients a higher rate for the services of risk and compliance professionals.
Ex-bankers who have a background in technology or were involved in the sales of banks’ trading systems have a good chance of getting into fintech. Some experience in computer programming and software development may be necessary.
5. Corporate finance
Middle-level and junior ex-bankers can look for a place in corporate finance. However, they will be at least slightly disappointed with the pay. The work in corporate finance may not be exciting and uninteresting deals may be a reality at your workplace. The key is to be choosy about the corporation you want to join.
6. Advisory for corporates
This job can restore you work-life balance at the cost of earning a smaller salary. It is tailor-made for you if you don’t mind earning less. It is an ideal career for senior-level bankers looking to improve their personal lives. But you may not see the big deals of your M&A days and you may work in smaller teams.
7. Entrepreneurship, start-ups, boutiques
Branching out on their own to launch a business is a dream for many ex-bankers. Many ex-bankers who made their pile of money from IB leave their professions to start boutique financial-services firms on their own or launch themselves as entrepreneurs.
Another option is to join a start-up. Those who join tech start-ups get into areas such as business development, financial planning, and analysis, and operations. Some ex-bankers use their entrepreneurship ideas to start a hedge fund or other businesses, such as even a restaurant or bar. Getting into entrepreneurship has saved many a banker from the financial crises of the new millennium.
Read more on Entrepreneurship.
8. Hedge funds
If you have tried your hand at auditing trading and can set trading strategies, this job is for you. However, ex-bankers may find working for hedge funds difficult as funds have tough performance guidelines and will show the door to any trader responsible for even small losses.
9. Asset management
Some professionals who want to get out of banking are often lucky enough to get into the asset management wings of their own banks. The important thing is to get adequate and relevant experience before planning a move.
Asset fund managers may also consider hiring analysts and also those with sell-side experience, especially candidates with a CFA and a talent for building relationships. Successful candidates may have to take a pay-cut initially.
10. Other options
Equity research is an option if you love data, research, and reporting but not deals. Working with financial statements and reports, you will have a better life in equity research with a pay almost close to IB.
Trading with your own money is another option, but you need to be careful. It is not the client’s money that you’re investing anymore.
If you’re tired of IB and have knowledge and writing skills, you can publish tell-all guides about the industry. But ensure that you have enough savings to fall back upon.
Joining an MBA program may make you ready for an associate-level position that might not come to you without that degree. However, pick and choose the MBA program and make sure that it does really add value.
Life after investment banking: Some examples
Although many former investment bankers choose to remain in the finance sector and go on from strength to strength, a few go off the beaten path. After the financial crises of the past couple of decades and the loss of tens of thousands of jobs, many finance professionals had to pull out their roots and reinvent themselves in other parts of the economy.
There are many examples. Two friends from New York, former employees at Lehman Brothers, launched a website to give an online presence to art stores and graphic designers who depended only on foot traffic to run their businesses. They used their talent for evaluating investment ideas and developing and cultivating business relationships to run their new venture.
A floor broker on Wall Street who lost his job joined classes to train himself as a baseball umpire. He now officiates at school games, and says he has discovered “a nice world.”
A loan underwriter from Atlanta went from investment analyst to banking consultant to teacher of strategy at a university in Florida.
A Columbia Business School graduate, who worked as an investment portfolio manager at Merrill Lynch and institutional advisor at Morgan Stanley, started a business to build and rehabilitate low-income housing.
An MIT graduate who followed an ambitious path into Wall Street identified her social commitments to join a non-profit working in India and Brazil to deliver needle-less vaccinations.
An MBA who worked for the Citigroup and the Royal Bank of Canada joined a friend to create a new type of pizza box that could be opened to create a storage container and serving trays.
A Wall Street professional in her late 50s left the finance sector to volunteer for a wing of Doctors without Borders.
Leaving investment banking: What to keep in mind
In an interesting blog, a former banker, now an entrepreneur, gives a few tips on how he managed to leave IB and the world of finance. He says that boredom or not liking your boss may not be good reasons to quit your investment banking job. You need to find out what motivates you and pursue it.
You also need to plan what lifestyle you would like to lead after you quit. Do you want a lifestyle that allows you to take an unplanned break with your family when you want it? Or would you rather derive happiness from seeing an extremely strong bank statement?
Don’t put off finding a job for a long time. What are you going to do after you quit IB? Have a plan made.
Listen only to good advice that will help you pursue your goals. Some people will call you crazy for planning to quit an extremely well-paying job to embark on an adventurous career path. Ignore them. But if someone has constructive ideas, include these ideas in your plan.
If is likely that at times you may miss your old job and the salary and perks. You may even miss your feeling of self-importance. But don’t yield to temptation and call your old boss and beg to be allowed to return.
Quitting doesn’t have to mean that you completely cut off from your old colleagues. Remember that it helps to maintain at least a part of your old network: you never know when you might need old friends.
From experience, some ex-bankers say that you may feel hesitant to leave IB if you don’t find a position in a PE, another bank, or a start-up. Read: “insecurity.” But getting such a job is difficult as a majority of applicants are also investment bankers, and you don’t stand out among them.
If you’re working in a smaller city, you can’t advertise the fact that you are looking for a job, for the fear of the boss finding out and punishing you with a smaller bonus or, worse, firing you. But it is often worthwhile to take the risk to develop a network and build relationships.