Updated: Aug 18, 2022
Career insights by GGI is a new series by GGI sharing hacks and tips around management consulting, MBA, product management and public policy.
In this GGI career insight, we will be sharing insights into: all the aspects of investment banking and management consulting, and what these job profiles consist of.
Have you wondered whether management consultants earn more than investment bankers or vice versa?
Or what kind of exit opportunities do consultants get compared to bankers? In this career insight, I will help you make a better decision on which career path can be more suitable for you.
I have divided this career insight into 4 parts to facilitate comparative analysis.
1. Work Profile
This part includes the kind of work and problems you would be solving as a management consultant and an investment banker.
The former involves a lot of strategic thinking and also operations. In a few projects, you can get into the financial aspect as well. In management consulting, you would be primarily required to analyse financial statements, enhance revenue and facilitate cost reduction. You begin with collecting data- by conducting fieldwork, researching on the internet, talking to the stakeholders and presenting final insights.
As a management consultant, you create a story using this data and give recommendations to the client. Eventually, you interact with team members, leaders, partners, and clients and collaborate with them. Consulting can involve working in large teams, thus you need to be good with soft skills to work in teams efficiently.
Investment banking is an intermediary between parties who pay and those who receive the payment. The profile accounts for work such as raising capital for the client and restructuring of deals for mergers and acquisitions. The former can be achieved via equity (IPO route)or debt.
Let me illustrate this through an example- suppose you take the equity route and raise money via IPO for your client. Now as an investment banker, you determine the initial share price, and the number of shares to be released, by valuation models and building presentations for internal and external stakeholders.
The second task of restructuring deals involves finding the answers to questions such as - would it be an all cash or equity deal, what would be the share price, what would be the new organizational valuation and other problems on similar lines.
2. Exit Opportunities
So what comes after working in these promising roles?
Management Consulting has a very wide scope of exit opportunities. This is also an aspect of why consulting is held in higher regard amongst other career paths. In my case, when I was leaving BCG, I was offered roles by leading VC/PE and as chief of staff role to CEOs of unicorns. Broadly speaking, you get strategy role exits with an intersection with finance/ops. There is also a third part which involves working for social impact organisations such as the Bill and Melinda Gates Foundation and Clinton Health Access Initiative.
Speaking in terms of investment bankers, since finance becomes your forte, your obvious exit opportunity becomes venture capital and private equity roles.
And here comes addressing the elephant in the room- the tedious working hours involved in both jobs.
Consultants working at MBB can clock 60-70 hours a week. Needless to say, these are some extensive tiresome hours. You can check out a more thorough breakdown of these hours, in a separate article here.
Looking at the other side of the spectrum, an investment banker clocks about 80-100 hours a week. It is safe to say investment banking is not for the light-hearted. Now that we have seen who wins the battle of hours, let us move on to the merrier topic of salaries.
Post MBA, management consultants can get 28-33 Lakhs, per annum in India. Please note these are post-MBA averages. Again, you can check out a more detailed account of salary and benefits, here.
Moving onto the investment bankers- they make 30-40% more on average than a management consultant (excluding bonus which is a huge component of their salary).
Having said this, I would suggest investment banking if you are clear that finance is the only field you wish to work in. I say so because you gain so much in-depth knowledge about finance, it is the only obvious path for you in the future. You can expect to spend most of your time crunching numbers in excel. Moreover, it can become hard for you to pivot into new sector opportunities without taking a pay cut.
On the contrary, as a management consultant, you gain a wide variety of knowledge in different sectors, which helps you grow holistically. The basic principle is that you must not enter an industry based on the pay scale and lifestyle. Rather, I actively advocate introspection and finding your own answers regarding what kind of work energises you.
At Global Governance Initiative, we help our scholars get a hands-on experience of what consulting is like through our impact labs and masterclasses. In addition to that, you get to interact with top professionals from these industries to get to learn from their experiences.
Author: Shatakshi Sharma, Co-CEO Global Governance Initiative, Ex-BCG Management Consultant, Former Policy Advisor, Tony Blair Institute for Global Change
If you need more help to get into consulting, feel free to check out GGI's Impact Fellowship program, here.