Differences in Management Consulting and Banking – Part 2
March 10, 2009 by Management Consulted
Filed under Business
#3 SKILLSETS
I’m biased, but I received the best business training possible in my years at McKinsey. Intense and thorough exposure to textbook business principles and practices. In addition, the team-based model leads to mentorship opportunities with managers, partners, and coworkers. Finally, you have close client interaction which develops “client skills” – from managing client teams to leading meetings to learning how to navigate diverse corporate cultures.
That said, here’s what you can expect to learn in both careers:
To clarify – by “hard skills”, I mean software tools (ie Microsoft Office Suite), analytics (eg, financial valuation). By “soft skills”, I mean the interpersonal skills to influence and work effectively with clients, coworkers, and managers.
CONSULTING
Hard skills:
1) Microsoft Powerpoint – you will (and have to) become a master at this, and will eventually have the ability to produce presentations quickly, concisely, and meaningfully
2) Microsoft Excel – less exposure than investment banking. Still, “modeling” is a meaningful component of a consultant’s work, and something every consultant is expected to have significant exposure to. Note -firmsodeling” done in case work may not be directly comparable to the financial modeling more common at investment banks
3) Business knowledge – typically broad exposure across different topics like strategy, operations, organization and several areas where you’ll have expertise. This expertise may be as broad as “operations turnaround” and as specific as “benchmarking for insurance companies”.
Soft skills:
1) Client handling (described above)
2) Close team interaction
3) Communication skills – this is a critical element of consulting work. Findings are useless if you can’t persuade clients to believe in them and implement recommendations
4) Project planning and execution – this is important. Much of the time at investment banks, you are given small incremental things to do – eg, add these updated numbers to the model, bind these presentations, insert a graph on chart 11. Consulting is focused on your ownership of a project piece, setting your own timeline, and executing against those deadlines. This helps you develop the ability to be “standalone”.
INVESTMENT BANKING
Hard skills:
1) Microsoft Excel – clearly you will become a master at this, and is a mandatory for success. You’ll know the ins-and-outs, every keyboard shortcut known to man (and then some), and so forth
2) Microsoft Powerpoint – much less exposure here depending on the focus of your work (for instance, more in Corporate Finance, less in Mergers & Acquisitions). Very little experience in building a presentation from scratch
3) Financial valuation – self-explanatory. Differs based on group/focus, but at the very least you’ll understand financial statements inside and out, and have strong knowledge of how companies are financed
Soft skills:
1) Work endurance – this is the sole benefit of 100+ hour weeks, which is the ability to work for a long time at a high pace. Every job you take after investment banking will feel like a vacation. It’s a great trait to possess
2) Seeing the deal-making process – bankers have better access to the business leaders of the day. As a junior banker, you may not have close interaction but will be exposed through meetings, conference calls, etc to these people and get to see how deals are executed
The last 2 elements are shorter, because I will write separate posts on each of them in the future.
#4 NETWORKING
Less discussed but important. Consultants move on to a vast array of fields – from industry to academia, government to non-profit. Investment bankers do so less – most continue within the financial world. Your professional network and future career opportunities will be heavily influenced by your colleagues and your firm alumni.
In addition – my perspective is that consulting firms (similar to point #2) facilitate more interactions between alumni and current employees as well as future networking between alumni than investment banks. However, bulge-bracket investment banks have a much larger alumni base, and it certainly isn’t impossible for you to build strong connections provided you are proactive and innovative enough.
#5 EXIT OPPORTUNITIES
Corollary to point #4, this is influenced by your firm’s alumni and also the following:
-the different recruiters/headhunters that reach out to you
-the different paths your cohort and colleagues take and the knowledge that you share with each other
-the relationships you’ve built with more senior colleagues and the doors they can open for you
The conclusion is simple: if you want great career flexibility, consulting is the right path. If you want career flexibility WITHIN the finance world (and corporate financial roles too), investment banking is the right path.
A good post to read is my “Big 3 management consulting versus Boutique consulting” post for more info on the important differences between the two.
