A big reason why investment banking, despite the horrible hour and stress level, still attracts so many young and bright talents is because of the exit opportunities it provides for one’s career trajectory. On the IBD side, many treat investment banking as a stepping stone to the high profile jobs (potentially also higher paid) in private equity, hedge fund, and venture capital firms.
The exit opportunities are getting narrower and narrower when you get more and more senior. It is due to a few factors: 1) experience and opportunity match; 2) compensation and life style trade off; 3) expertise niche.
In most cases, for associates and above, the hardest part to accept when they leave banking is the pay cut. There are few opportunities that will pay them a similar compensation package for the level of experience that they have. The trade off is bigger for more senior positions. The attrition rate for associates for example is a lot lower than it is for analysts.
So where have the bankers gone?
A) Investment bankers / M&A bankers
- Private Equity
- Hedge Fund
- Boutique investment bank
- Client side corporate M&A advisory
- Join as Board (only mid to senior levels)
- Opening a strip club…
B) Research analysts
- Asset management
- Hedge fund
- Corporate advisory
C) Sales & Trading
Very limited exit opportunities for sales & trading department. People who join Sales & Trading are also not aiming to leave, unlike Investment Bankers or Research Analysts. The exit for sales & trading is to sell somewhere else, or trade somewhere else.