Recruiting massacre

Question

I heard from a good source that offers for interships in banking (for top tier banks) have decreased by about 75% this year compared to better periods...

Ouch.

nink · Answer

Where?

@ Wharton?

Rubashov1 · Answer

I don't find that surprising.

foodstamp · Answer

I think many people are choosing to not go into banking specifically (could that be driving the recruiting numbers down too? not just the supply of positions. are there people at Wharton who really wanted an IB job and couldn't get one?). Many of my IB friends got their bonus numbers recently and let's just say every single one is thinking about either immediately quitting or leaving within 2 months. If you calculate the amount of money you make in a year in IB and take into account the number of hours you've worked, you end up with something like $8-$10/hour this year. Better off working at McDs.

lsuguy7 · Answer

Agreed. Not suprising at all, I'd expect to see less interns everywhere but as far as banking goes I figured it would be hit the hardest.

liubhs02 · Answer

If money is the sole motivator of these i-bankers to take on the job, maybe quitting isn't a bad option. I'm sure they are all very bright; hopefully, they will be able to find a job in an area that interest them for more than just money.

maverick2011 · Answer

That's pretty narrow-minded to assume it is the only motivator. But realistically, it's just not worth it if you aren't going to make a lot of money. Why work 100 hour weeks and get paid the same as (or barely more than) someone working 40-50 hour weeks in corporate development at P&G (similar type of work with way more job security)??? There will always have to be a pay premium to get anyone to do that job.

Obviously there are other reasons to pursue IB such as the interesting work, the chance to work with smart people, the exit opportunities, etc. But the money is a factor. Hopefully this thread isn't going to be derailed into a "I hate investment bankers" thread.

TimeSquareDesi · Answer

Back in August 2008, when Citi, the US' largest bank, sent out a memo to decrease employee BlackBerry use and to limit color copies ( https://dealbook.blogs.nytimes.com/2008/08/26/in-trimming-expenses-citi-holds-back-on-color-copying/ ), I took that as a hint of how bad the situation is... and since then things have been less than ideal...

icon · Answer

Not trying to be rude here, but I think you are WAY off base with some of what you said. Not a banking expert so I will throw out a couple things for others to confirm or deny.

1. Assume we are talking about an analyst straight out of college. Starting base salary straight from undergrad is at minimum 60k per year for even middle market banks (55k was standard when I graduated college in '05). Let's assume such analyst worked on average 100 hours per for 52 weeks over the past year and got $0 for their bonus they would still make about $12 an hour.

2. That scenario is actually overly conservative in making my point. You probably weren't talking about a first year analyst so salary (which I already modestly estimated) is higher, most banks were slower this year and anaylsts didn't come close to working 100 hours per week on average, and i would venture to say that no bonus is an overly conservative estimate. $8-10 per hour is a terrible estimate on your part.

3. The majority of banks regarded in the US as being in the top 40-50 shops pay bonuses during the summer, often bc it coincides with recruiting. So I find it odd that many of your friends just got their bonus numbers recently.

nink · Answer

Define "majority" because most of the BIG banks announce Bonus in December and pay out bonus in January (i.e. - GS, JPM, MS, etc) That's why a lot of bankers wait until end of January and jump for other jobs after they receive the bonus. Bankers ALWAYS complain and threaten to quit regardless of how much they get in bonus every year. 8-)

It's never enough.

bball · Answer

I think previous poster was talking about analysts that get paid in the summers unless you are S&T which sometimes pays its analysts on the same schedule as associates and up.

Yes, its not $8-$10/hr, but let's face it... very few people would work those kinds of hours for no bonus. But as you said, during these no bonus times, there's not much work to be done so it kind of balances out.

3underscore · Answer

I honestly think that as the profile moves on, the "better periods" will become the erroneous data points. I do feel that the next five years, should recruitment figures hold low as they likely will, are the ones that will save Investment Banking as a career and business. It had become overweight money-hunting. Decreased compensation - or more likely warranted compensation - will be a great model for ensuring they get the right people.

Foodstamp - I would put any money you care to choose on the fact that Wharton had people wanting to get in to IB who didn't. Same as they certainly did last year, and probably every year historic. There will probably be a good number this year. And the driver of the lack of jobs is no recruitment - they will be overlooking a significant number of candidates they would have fought over a few years ago. I am not sure how you get to the idea that Intern recruitment would decrease due to the lack of candidates - it is somewhat cart before horse.

foodstamp · Answer

I am merely pointing out the POSSIBILITY that less people now actually WANT to go into banking because of everything that has been happening. I know many people who are now looking to do consulting or tech post-MBA.

I agree that less positions are now available, however, instead of just looking at the number of opportunities available, I am proposing to instead look at a ratio of positions available to number of people who are competing for banking jobs. Is it possible that this ratio has stayed the same or even gone up because less and less people are choosing to get into banking? Maybe.

foodstamp · Answer

1. Bonuses for some people in IB this year (not even first year analysts) have been $0 - $30k. Many banks are doing deferred bonuses where you literally only get $10k upfront and the other $10k over the next two years (if you stay with the firm). And yes.. $20k bonus for an entire year in IB is pretty common this year. Take into account a $60-$85k base salary, and taxes, you aren't making all that much per hour. One of my friends who is in IB got so fed up with work that he started logging how many hours he worked each day and after getting his bonus, he came up with something around $14.50 per hour (he was in the top tier). I agree, $8-$10 was an understatement... but not by that much IMO. If you are going into IB simply because of the money, I really don't think it's actually worth it.

2. Analysts didn't come close to working 100 hours per week on average this year? Really? My data set consists of 6 people in IB spread across 3 banks and I have to disagree with you. When things get slow and the economy turns sour, IB hours don't change dramatically. The nature of the work changes instead. If you spent long hours working on deals while the economy was good, you are now spending countless hours on making desperate pitches to win deals. Same hours, different work. When the bank isn't doing well, there is much more pressure to crank out as many pitches as possible and try to hook something.

3. Many banks reveal bonus #s in Jan-Feb. (Some banks have converted analyst pay schedules to mirror associate/higher levels' pay schedules.)

CrushTheGMAT · Answer

Ha! Obviously you have never worked in the industry. I-Banking is definitely not interesting work, and most people aren't geniuses. Money is the motivating factor.

This is coming from someone in the industry.

maverick2011 · Answer

You are correct 'crushthegmat', I haven't worked in the industry but made these statements based on bankers I have spoken to. I guess I was pretty vague though. I still stand by my statements, so I'll clarify (feel free to disagree):

By "interesting work", I didn't mean creating powerpoint slides and building models. I meant the actual deals that you work on. As an associate, I agree that you don't really get to be involved in much besides the details though.

By "work with smart people", I still stand by the fact that investment bankers are intelligent (you said genius, not me). For the most part, unintelligent people don't get into the top schools and get hired by the top banks. I'm sure there are exceptions. I also was referring to the customers that you work with (C-level employees, private equity folks, etc.).

I wasn't saying either of those two reasons is the main factor. Sure money is a primary factor, but I don't think most people go into IB post-MBA looking to make it into a long-term career. It's something they plan to do for 3-5 years, get the experience on their resume and exit into a more rewarding career that provides a better work-life balance. Therefore, I still say the exit options, in addition to the money, are the top reasons for going into IB post-MBA.

nink · Answer

Although I wouldn't knock everyone down (even "most" ppl) as non-geniuses, CrushTheGMAT is correct in the sense that i-bank recruiting is full of flaws. They boast how bright and enriched the value of human capital and their workforce, but I've met and seen some incompetent people working at financial services firms. However, some of the brightest individuals do end up on Wall St and other financial services firms, not to mention countless individuals hold doctoral degrees, MBAs, CFAs and etc. Money invites all kinds of individuals....the bright, the greedy, the insane, etc etc. Aren't some of us appealed to this industry due to money factor? :-D

89nk · Answer

How likely is it during this time, to land a BB IB job post-MBA and get that "amazing experience" for 2 to 3 years only to jump to the next "amazing job". (Although students chose this path due to a combination of money, business experience, exit options, fast track due to the dynamic pace of work)

I feel this path just became a lot harder. Almost unrealistic?

Example:
BB IB job salary - $150k
Bonus - $30k
Fed Income Tax (single) - $43k (roughly)
Hourly Pay (50wk @ 60hrs) - $45/hr

Not bad. Now if the starting is $100k and bonus is $10k, the hourly drops to $31/hr. Starts looking worse and worse. Not sure what the correct numbers are, just wanted to post so others can use it as base.

riverripper · Answer

Wow, way to ruin a subject with a needless debate. I am sure most people know I am not a fan of that career path but thats not what this thread started as so since this has gotten way off topic I will give my 2 cents on what I have heard about banking internships...here at Kellogg and at other top schools. To say this year has been a terrible year for the number of offers made would be a huge understatement. Not only did the number of people chasing decrease but the rate of success seems to have gone down too. Career switchers had an incredibly difficult time since there are so few positions and they can find enough people with previous experience to fill those spots. Companies gave out X internship offers and are assuming very high acceptance rates, they dont want to over extend themselves with offers this year so almost as many people were waitlisted as were given offers.

This definitely isnt only Kellogg and Wharton, its every single top school. Anyone trying to put a positive spin on this years recruiting for banking isnt being honest. The 75% decrease in offers seems to be a lot closer to reality than the 50% I read in another post (I think soni posted that figure in another thread). I think when internship recruiting stats come out next year, it is going to be horrifying to a lot of people. I dont think this is going to be the only down year. Next year probably will bounce back but how far is the real question. Is this a new level and will there only be a slight increase or will companies realize they need a lot more interns than this year. I dont think that anyone on this site will see a strong IB recruiting season during their b-school career.

I dont want to be overly negative but I do want to give wannabe IB'ers an honest observation of recruiting this year. I think sometimes people you talk to are probably less than forthcoming because they want you to attend their school or whatever.

3underscore · Answer

As per ripper. I understand the conjecture foodstamp, and have seen it first hand. The numbers reduced, but the way things went were way worse on lower numbers than most expected.

Numbers looking have certainly decreased. "Yield" as most applicants would be familiar with calling it has dropped significantly as well. With the self selection that has happened, I get the further impression that it has become those that are good are chased by many, and the many get nothing at all.

I understand this isn't happy news to many of you, but this is how it is heading into summer 2009. I think it would be a lot worse to pretend it were any better - there are some candidates who's resume's you would shiver at who cannot get in.

Recruiting massacre

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