Perhaps no job better embodies the image of business than investment banking. It features fancy offices, screens, and those dress shirts where the collar is a different color than the rest of the shirt. You see a fellow wearing one of those, and you just know he’s got kids he doesn’t talk to. But while the image of investment banking is common knowledge, the function is much less well-known. So what do these guys really do?
I’m here outside the offices of Goldman Sachs. Just behind these very doors, dozens of my high school bullies are chained to ergonomic chairs, staring at Excel and cracking down on prescription stimulants. Investment banks like these have long been some of the most prestigious places to work on Wall Street. They are landing spots for young people to make substantial money, coupled with long hours and taking loud phone calls in restaurants. An entire culture has been crafted around investment banking. Yet the question remains: What do bankers actually do?
Investopedia defines investment banking as a type of banking that organizes and advises on large, complex financial transactions, such as mergers or IPO underwriting. And they say more, but no chance I’m reading all that. It’s time to stop beating around the bush and go straight to the source: someone, a real-life person who actually worked in investment banking.
At a high level, investment bankers advise companies when they’re trying to raise money, either through debt or by selling shares. And on the day-to-day, what does that look like? A lot of Excel financial modeling and a lot of PowerPoint presentations. Much of it involves sitting around and waiting for comments from your bosses and your boss’s bosses. Sounds electric.
Steph Moore is the founder of the financial service company PIN and a former investment banking analyst at J.P. Morgan. From her experience, it appears that the exciting world of investment banking is actually much more like the dull world of banking. Anytime you want to do anything in investment banking, it goes through iterative cycles. Your boss sees your work, then gives you comments, then your boss’s boss sees your work, and then your boss has to approve it. It just goes in circles. I just don’t think it’s that interesting of a job, and it’s such a small piece of what you hear about in the news.
Hold your horses. I thought investment banking was the pinnacle of America’s financial system, a veritable thunderdome of dealmaking and drug-taking, where razor-sharp minds driven by lust and ego come together to dominate financial markets and buy a house in Sag Harbor. When you talk about an investment banking analyst, essentially what you are doing is working in a very high-end sales role. So essentially, you are at the mercy of your senior bankers whose job it is to provide financial advice to large corporations.
Liam Killings has a mustache. He is also an ex-investment banking associate at Goldman Sachs, and he was kind enough to walk us through a day in his life as a former associate at Goldman Sachs. A typical day would be waking up between six and seven, rolling out of bed, and immediately heading to the office. From 9 a.m. to 10 a.m., make sure that you have your inbox at zero. Overnight, you’re probably going to get anywhere from 10 to 100 emails. That’s going to take forever. Around ten is when the senior bankers usually come in. VPs tend to get stressed out. About 11 a.m., there is a gym in the building. You lose a lot of control over your time, including the time you have to go get dinner with your friends on a Saturday.
Investment banking is famous for its rise-and-grind work culture, well-documented in countless films, TV shows, and social media posts. So who are the moolah cabooses that these dummies are so smitten with? Investment banking is a fantastic job out of undergrad for two types of people. The first type is the individual who has, for their entire undergraduate career, wanted to work in the financial services industry. Then there is the second group, which I think I fell into, which is the ambitious group of people who have no idea what they want to do with their lives but are aware that the floor from an earning perspective in investment banking is relatively high and that the exit opportunities tend to be extensive.
That’s right. If you’re going to be smart, young, and aimless, you might as well do it on a huge salary, which is almost guaranteed to be well over six figures in your first year as an analyst. Are you done? What’s going on here? So, dude, what do you do for a job? Yeah, I do investment banking. Do you all do investment banking? Is this the whole group here? Yeah, we got the whole group. Oh, where are you guys? Thank you, sir. No, not you guys out in the vest or just the chest and not your arms. First year in investment banking, what’s the salary expected to be earning? On how the market’s going? Yeah, that’s a book called Both Go Lower Book 50 to 200 if it’s a really good market. So to translate this for poor people, buy a book. What do you mean, 100,000?
However, for an industry that thrives off the grunt work of those willing to grind it out for mad bills, threats have been looming in recent years. As interest rates have risen to stamp out inflation, a slump in dealmaking has led to layoffs across the investment banking industry. While investment banks have often used massive paydays to justify their intense culture, young people are beginning to find equally lucrative opportunities elsewhere. Tech companies like Meta can offer high pay, and you get to play ping pong with Mark Zuckerberg. Other finance firms can also pay a high salary, and you don’t have to play ping pong with Mark Zuckerberg.
It’s not the same environment that you saw a couple of years ago where people were hiring investment bankers, particularly young investment bankers en masse. Shonali Bozek is the lead Wall Street correspondent for Bloomberg TV and a writer at Bloomberg News. When I had a conversation with the Morgan Stanley CEO, for example, I asked him, “Can you see yourself hiring again at scale?” And he said, “Listen, we’ve done two acquisitions. Our headcount has already grown so much.” When we talked to Blackstone’s executives two years ago, they had 30,000 applicants. This year, 62,000 applicants—more than doubled in two years in terms of applications for private equity, private credit, and real estate. This has raised the question: has one of the most coveted jobs in finance lost its luster?
I don’t think J.P. Morgan’s going to disappear overnight, but for example, a few years ago, the direct listing, I think Spotify did that where they went directly to an exchange and listed their shares without using an investment banking process and therefore without an investment banker to facilitate that. I don’t think it’s out of the question that investment banking as a practice will decline. I do think that a lot of the stuff that analysts used to do is getting automated away. A lot of it becomes more and more like people management, which again is why some of the prestige of this job is going away. I think you actually lose some of the learning. The business is under pressure. Can you go to other people that are doing the jobs that investment bankers used to do? A lot of the big private equity firms are building capital markets businesses and they are doing business at significant scales. KKR, Blackstone, Apollo—these are businesses that used to be inside of J.P. Morgan and Morgan Stanley. Now, Morgan Stanley and J.P. Morgan are still doing this at scale. These are massive, massive businesses. They don’t go away tomorrow, but certainly, there are other places that are now doing similar things.
Has it lost its veneer? Has it lost its touch? Maybe so. Investment bankers facilitate complex financial deals. At its most entry-level, that looks like waiting 8 hours for your boss to tell you about a slide deck you have to do at 3 a.m., and then no one will ever look at it. The grind. Up until recently, investment banking could justify its culture by offering uniquely high salaries and job security. But today, with increasing competition across financial services, high interest rates, and other industries offering similar pay and better work-life balance right out of college, banking faces an identity crisis. Will college grads continue to see banking as a top job in finance? Will analysts keep falling asleep into their Sweetgreen bowls at 3 a.m.? Will major banks continue to dominate capital market deal flow? And will my high school bully Connor forever remain trapped inside this building, adjusting the margins of some useless PowerPoint, forever unable to craft a meaningful life out of the massive paychecks doled out to him by some stale, lifeless industry? Only time will tell.
But for now, and for good work, I’m Dan Toomey. What does your partner actually do? He has multiple laptops. If he works at home, there are two computers and there’s money involved in banks. Well, I think it’s very clear she’s… and she invests…
