Investment Banking vs. Management Consulting: Which One Is Right For You?

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Management consulting and investment banking are popular career paths for individuals who are looking for a progressive and rewarding profession.

From a distance, the two occupations look very similar. However, a closer look will tell you that while both careers deal with business growth, how they engage and provide services are very different.

Investment Banking

Investment banking is a financial service with an objective to create capital for individuals or businesses. This can be done through modes of equity, securities or debts. Additionally, investment bankers also provide advice related to market strategies in order to minimize risks and maximize the return of investments.

Another aspect of the job scope is assistance in mergers, restructuring and acquisitions. Like management consulting, investment banking has evolved to suit the needs of clients by providing other services related to proprietary trading and asset management.

There are different divisions within an investment banking company. The Investment Banking Division (IDB) deals with industry coverage sectors such as public finance, media, financial institutions and technology; while product coverage sectors revolve around equity, mergers and acquisitions.

Analysts and Risk Management

Research plays a big part in the investment banking industry. This may include research in the global economy (macroeconomics), credit and fixed earnings. Based on case studies done by analysts, investment bankers are able to advise their clients on execution and large trades.

A chunk of an investment banker’s role is risk management, which can help solidify the advice being rendered. This can be related to credit, forecasting and market activities. Because of this, it is common for investment banking companies to hold or facilitate mergers between two high capital companies. Reputable companies such as JP Morgan Chase and Barclays provide these financial services, as well as restructuring and hedge funds management, making them incredibly sought after by large companies.

Management Consulting

Management consulting is an industry that renders expert advice and solutions for businesses. Some of these tips are related to operations, restructuring and cost reduction. Additionally, clients may choose to seek the services of a consultant when launching a new product or when facing difficult decisions.

A Closer Look At The Lifestyle

Even in the preparation stages, management consulting is demanding, highly competitive and busy. Often times, consultants are relied on to patch up or boost the current condition of a business. With that in mind, consultants are under a lot of pressure and work beyond the usual 40 hours, with work carrying over the weekends and some holidays.

Turnover rates in management consulting firms are relatively low. High compensation and above par benefits are common, even for entry-level consultants (compared to other entry level positions in other industries). Those who are not able to cope with the demanding profession often switch careers. Having a foundation as a consultant opens many doors for other paths, primarily as analysts and entrepreneurs. Management consultants rely on their network throughout their career, from landing a consulting job to exit strategies (to other consulting firms or careers).

Similarities In Lifestyle And Benefits

The professional lifestyle of an investment banker is very similar compared to a management consultant. Not all of their time is devoted to crunching numbers and meetings. Many investment bankers make it clear that a lot of time is wasted on waiting for clients, and representatives. Moreover, professionals in the field spend a lot of time getting clearance and papers signed by seniors.

The Fork On A Road 

Where does management consulting separate from investment banking and vice versa?

As mentioned earlier, businesses that require the services of a management consultant are usually in a compromising situation. Consultants are brought in to shine light and implement new strategies with hopes to turnaround a failing business. When a company faces new problems due to unpredictable trends and shifts in the market, a management consultant can help provide effective solutions.

On the other hand, investment bankers are used by successful businesses that are looking for alternatives in boosting profits or increasing market value. Based on the two comparisons, one industry (management consulting) deals with patchwork and new strategies, while investment banking is more suitable for individuals who want to “push the envelope” when it comes to projections and earnings.

In conclusion, those who want to deal with creating opportunities for a company’s financial growth, should go into investment banking. If forming strategies, reducing operational costs and restructuring are your ideas of an engaging profession; then management consulting could be what you’re looking for.