Well, I think that's a short-sighted view. There are a lot of people that do banking (or consulting) for 2-3 years, and transfer into general management at an accelerated level. If you look at an executive roster at any top company, you're going to find that a substantial portion have experience with big 3 consulting and bulge bracket banks. It really is the fast-track to the top. In fact, I'd bet that most top companies (depending on industry, competitiveness, things like that) will have more people with top consulting/banking experience than pure home-grown talent. We've all heard the statistic that people graduating from business school these days will change jobs 10 times on average in their careers. Having Bain or Morgan Stanley on your resume, especially as VP or senior manager or something like that, gives you instant credibility in future job searches regardless of industry.
Another way to look at it is to browse company websites and look at the qualifications they value for senior roles. It's unbelievable how often you will see things like "investment banking and consulting experience a big plus". This is true for roles in all fields and different types of firms, including finance and strategy of course, but also marketing, business development, any type of business or quantitative analysis...pretty much everything. If you go straight into general management, you can be sure that 6-8 years down the line, when you're trying to make your move into upper management, you will be competing for jobs with folks with 2-3 years of consulting and banking experience. That's just how it is. And of course, banking and consulting are well-beaten paths to the highest paying jobs of the day, whatever that may be. During the tech boom, many top leaders came from Goldman, McKinsey, BCG, etc. even though they had no tech background; these days, PE/HFs recruit from the same places; and 5 or 10 years from now, whatever industry or business is most desirable will cherry pick top talent from...you guessed it... big three consulting and bulge bracket banks. It really is a great way to position yourself for the future, even if your future isn't in banking or consulting.
A third way to think about it is that you make enough as a banker to take a year-long sabbatical after every two years of work - and you actually see this happen. You'll make more money in 2 years at a bank than people working 4 years in general management. It's relatively common to see people who switch banking jobs take substantial time off between jobs; and when people get laid off from banking, many are in no hurry to transition to a new job because they can afford the time off. Of course, some people spend every penny they have, but those that plan ahead, but those that plan ahead have the option of taking substantial breaks during their careers.
A fourth way to look at it is that bankers will make more in 10-15 years than people in most other industries will in their entire careers. The implications of this are obvious, especially for those that plan ahead and see the big picture. If you're good at what you do, you can start seeing 7 figure paydays after 5-7 years; how many million dollar paychecks do you need before you can start thinking about hanging them up? It's silly to just think about life as a first year associate and the salary of a first year associate. Many SVP/Directors leave before 6PM every day and take home money by the barrel - in fact I just had a chat about this yesterday with a soon-to-be MD as he headed out the door at 5:15 (he leaves before 6 every day). I doubt it's the goal of very many people to work 100 hours or be on the road 4-5 nights every week to make $2-300k; but I think many people can see working 60 hours a week and bringing home $1mm or more (maybe lots more). The thing is people, aren't just going to hand that to you your first year out of business school - you're going to have to work and learn and perform to get to that level.
Another thing that cannot be ignored is that (yes I'm going to come right out and say it) money does matter. Sure, everyone has a different threshold for how much they'd like to make, the things they'd like to have and do, but I think few people are shelling out cash for MBAs without doing some type of calculation on future returns. And statements like "money isn't everything" and "money can't buy happiness" are folksy and sweet, but they aren't implicit truths any more than "a stitch in time saves nine" (whatever the hell that means). They are just sayings. For a lot of people, the ability to afford a nice car, or go to nice restaurants, or live in certain cities, or in a nice neighborhood, or vacation in top destinations, or send their kids to private school, or provide elder care for their parents, or fund their wine or car hobby, or any number of the million other possibilities, are reasons to work harder and make more money. Sure, if you're main concern is yourself, and all you want to do is live a quiet life with plenty of free time, then take whatever job makes you happy; heck go work for the government and count on a steady paycheck and 40 hour work weeks. Back when I waited tables in college, I knew a lot of people that went through this same decision process; they decided that surfing was their top priority and that they would work just enough to afford the rent on their shack near the beach. Hmm, doesn't sound too bad actually, and woe to the dumbasses that wasted their lives attending college. Don't know what those guys and gals are up to these days though...
In a lot of ways, competing for a top consulting or banking job is a lot like choosing to get an MBA (probably why such firms are favorite destinations for MBAs year after year). To get an MBA you have to go above and beyond and spend time doing things that a lot of your peers do not (GMAT, applications, visiting schools, interviewing, all a lot of work you're not getting paid for). Business school itself is an intense experience, to say nothing of sacrificing salary for two years and paying a buttload of money to go. But once you do it, especially at a top school, your career is accelerated and you shoot out the back end ahead of peers from your former career. Same thing applies to banking and consulting roles. These aren't easy jobs, and they aren't the easiest jobs to get; and you definitely have to make lifestyle choices in the short run (sounds like getting an MBA huh?), but in most cases you'll come out ahead of people that don't do it.
To say someone views their life as equivalent to their pay of $300k is silly and lacks vision. Perhaps someone believes their life is worth $2mm, but nobody is willing to pay them that yet - what's the most certain way to get there? I think it's stupid to try and impose a particular viewpoint on what others are doing. A lot of the bankers I know live fairly modest lifestyles (some flashy big spenders as well of course), and have the ultimate goal of financial security. You can weather downturns a lot better if you have some cash tucked away and everything is paid off. Personally, I'd love to put away enough change to quite work and help with mental health and animal charities, but you need to achieve some measure of financial freedom before you can so something like that.
Which leads to the final point. A lot of people take banking and consulting roles out of business school because it's the best way to pay off student debt. It's the most direct way to make a dent after two years of not working and accumulating debt. We have an analyst here where I work who ran up $120k in loans as an undergrad (not that rare for people from private schools that now charge $30k for tuition plus room, board, etc.). Pile on another $150k to attend business school and maybe some more for deferred interest, and such a person would be highly motivated to take the highest paying job possible, at least in the short run. I'm not sure exactly, but I think even with extended payments, debt service might be $3k per month at today's rates. Taking a $100k job would be absurd, and I think pretty much all people pursuing MBAs at top schools have thought about this (unless they have rich parents or something). But a lot, even before applying to business school, plan to work their asses off for 2-3 years in banking or consulting to ramp up to the next stage of their lives. It helps pay down debt and it definitely opens doors and accelerates your career. One might argue that it would be shortsighted to not give banking or consulting some serious consideration given these circumstances.
16 Jul 2008, 16:36
