In the first episode of HBO's excellent show, "Industry", we are introduced to a group of young graduates ready to start their careers in an investment bank. One of the new hires, Hari, pulls an all-nighter fueled by energy drinks and pills and dies from a heart attack in the bathroom.
Had I not worked at a couple investment banks before, I would've written that off as a dramatic exaggeration. It is not. Here is one anecdote from roughly the same time I was working in investment banking: "Bank of America intern died from epileptic seizure in shower, inquest told". It is hardly an isolated incident. A quick search will reveal many more, but I leave that up to you.
When I started my career in finance as an investment banking intern in 2008, I knew that that hours were going to be long. Banking is a well-paid overpaid industry with a cutthroat reputation where you are expected to strictly respect the hierarchy, work long hours, have meticulous attention to detail, and work under near-constant pressure (i.e. superiors yelling at you). The average investment banking analyst works 80-100 hours a week, with one or two all-nighters a week. It is not uncommon to hear people missing loved ones birthdays, anniversaries, etc. I started working the next day I graduated, missed my university's convocation, worked every single Christmas and New Year's Eve, and took a maximum of two weeks off a year.
The banking industry will tell you that the long hours are because the work is complex and the clients demands it. That the pace of finance is fast and the industry is competitive with around-the-clock markets. While that is partially true, is grossly exaggerated and mostly bullshit to feed the junior ranks.
You are expected to be on call at all times, and you are expected to make it to the office under an hour almost no matter what hour of the day it is. Getting an email at 2am while in the club and dashing to the office half drunk to fix a model would barely strike any investment banker as unusual. People routinely get called during their weeks off even if overseas.
So let's talk about the "What", the "Why", and the "How" of investment banking hours.
What Do Investment Bankers Actually Do?
Investment bankers are the middlemen between companies and investors. Think of them as real estate agents for corporations. Past the avalanche of jargon they throw at you, they broadly do two things:
Capital Raising — They raise funds for companies by issuing debt or equity. Think obtaining a mortgage for buying a house. Simple as that.
Advisory Services — They provide advice to companies on mergers and acquisitions, restructuring, etc. Think your real estate agent sending you listings that match your criteria including some metrics such as price per square foot.
The lion share of the work is menial, repetitive, and extremely uncomplicated requiring no more than high school level math. Ignoring the "quants" in an investment bank, the actual math required for investment banking is laughably simple, and you almost never go beyond basic arithmetics. Most of the work is done in Excel, and knowing your way around Excel + PowerPoint is far more important that knowing how to price a derivative. I assure you almost not a single person in investment banking (I am not talking about trading) can even tell you what a Black-Scholes model is. You'll spend far more time fixing fonts and colors in your pitchbook than you will ever spend on a complicated financial model. Even then, the models are fairly standardized, and you won't be estimating market risk premium using advanced statistical models. You'll probably just plop it down from a third-party database.
Why Do Investment Bankers Work Such Long Hours?
Roughly in the order of importance, there are four reasons:
Lack of differentiation - Remember the work is not complicated? That means that one of the main ways to outcompete your peers is to work more hours than them.
Fixed Costs vs. Variable Revenue - Generally speaking, Analysts and Associates are paid a fixed amount with a range that is fairly standardized across the industry. The Directors and Managing Directors however, are usually paid a bonus ranging massively depending on the revenue they bring in. This creates a conflict of interest where the senior bankers want to "pitch" (jargon for "sell") as many potential deals as possible, and the junior bankers are the ones who have to do the grunt work and make the pitchbooks. Senior bankers see the junior bankers as disposable work horses that will help them land deals to stuff their pockets.
The compensation even at junior ranks consists of a base salary and a bonus. The bonus is completely discretionary and accounts for the majority of the total compensation package . You do not have to work 90 hours a week. They also do not have to pay you a bonus at all.
The only juniors who are exempted from this are the ones who have an "in" with the senior bankers. The only analyst who used to go home at 6pm every day and got top bonus, well, let's say the head of investment banking had a picture playing golf with their dad on his desk.
Culture - The culture in investment banking is one of the most toxic in the world. I have seen and heard my fair share of hazing having always been an active member of fraternity life and sport teams. Nothing comes close to what I witnessed in my investment banking years as an analyst. The seniors treat you like a literal slave. My MD once threw a stapler at another analyst who couldn't hear him because he had his headphones in. An MD called me to complain that I should've listed him before another MD on the "to" line of an internal email because he was more senior. I was frequently told to "not blow anything up" in various references to my Middle Eastern ethnicity. Homophobic and sexist comments are expected.
Because they got treated like garbage to get to where they are, they for sure want to make sure you earn your "rite of passage". This is why even if juniors don't have any work left to do they will not leave and put in "facetime". Leave earlier than others a couple of times, and the staffers will make sure your workload increases. There is no room for efficiency. You have every incentive to drag out your work as long as possible so at least you can go to sleep and have one day of the weekend off.
Client Demands - This is the only legitimate reason for the long hours and notice that it is actually last on this list. If you are staffed a live deal, then absolutely there are times when all-nighters are warranted. In a bidding war in a hostile takeover you absolutely need to adapt a wartime mentality and be ready to work around the clock.
That said, the vast majority of the time you will be working past midnight on a pitchbook that might never be opened in a client meeting. Once I had a colleague who had to come in over the weekend to send our VP his "Harry Potter" book. He didn't have to do it, but as I said above, they also didn't have to pay him a bonus.
How Do Bankers Accept This?
Money.
Anybody who tells you otherwise is lying.
The funniest part of investment banking interviews is that when they ask you why you want to work in investment banking, you literally answer any bullshit you have cooked up other than "money"! You have an entire industry concerned with valuation, buying and selling, making money, taking fees, but the only thing you will never hear out of a banker's mouth is that they're in it for the money.
Let me elaborate on other terms you might hear that effectively translate to "money":
"Exposure" - You will hear this a lot. "I advise CEOs and CFOs". Sure you do. I'm sure the advice of a freshly graduated 22-year-old banker or consultant in a pinstripe suit is invaluable to a CEO who is giving the bank an advisory role which happens to also extend them a couple billion dollars in credit facilities.
"Learning" - You certainly will learn a lot. I learned how a bank works with its many divisions and pivotal role in a capitalistic economy. I also stopped learning around the one-year mark because the rest was just more of the same. However, I cannot name too many jobs where a 22-year-old, short of professional sports, could make 150k USD a year in an entry-level job.
"Prestige" - I used to think I was hot shit because I had landed a super competitive job. Outside professional services and the type of people you probably don't want to be surrounded with, no one really cares that you are an investment banker. I would take an honest farmer over a thousand conniving bankers any day of the week.
Final Words
Industry is a fantastic show if you want to understand the prevalent culture at investment banks. The first season is simply incredible.
Remember this, banking at junior ranks has a turnover that is well over 90%. If it were such a great place to work, why would people quit so often?
I learned the hard way that despite the image portrayed, I was not surrounded by the best and the brightest. A high GPA is absolutely necessary to break into banking without some sort of "in", but make no mistake. A high GPA indicates far more that you can follow instructions and are willing to perform what is needed to get the grade. It does not indicate above average intelligence. In my three years as an analyst, I never met a senior banker who I would consider above average intelligent. The smart juniors find plenty of better and more fulfilling opportunities elsewhere.
Now despite all the shade I threw at an investment banking above, I wouldn't discourage anyone from trying it out. I think I would do it again, although for at least one year less and wouldn't have taken it so seriously. I was hungry to pay off my student loans, and achieve a nest egg I could fall back on. I did that, and I am grateful for the experience. I met some of the best friends I have in my life, and I learned a lot about myself. Every single analyst and associate I was with moved on to better things, and we still keep in touch. I wouldn't have met them otherwise. And I certainly wouldn't have been able to use banking as a stepping stone to where I am now.