Management Consulting vs Investment Banking: 5 Differences Part 2
March 5, 2009 by John Smith
Filed under Business
#3 SKILLSETS
Call me biased, but I received the best 2 years of business training possible in my time at McKinsey. Thorough and at times intense exposure to textbook business principles and practices. In addition, the project team model leads to mentorship opportunities with managers, partners, and coworkers. Finally, you have constant client interaction which develops “client skills” – from managing client teams to running meetings to learning how to navigate different corporate environments.
That being said, here’s a quick list of what you can expect to learn in both fields:
By “hard skills”, I mostly mean software (ie Microsoft Office Suite), analytics (ie financial valuation). By “soft skills”, I mean the interpersonal, qualitative interactions that you have with coworkers, the broader firm, clients, etc
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 – you’ll get broad exposure to different industries and functions, and begin to develop expertise. This expertise may be as broad as “operations turnaround” and or specific as “benchmarking for insurance companies”.
Soft skills:
1) Client handling (described above)
2) Heavy team interaction
3) Speaking and presentation skills – this is a pillar of consulting work. After all, findings don’t mean anything if you can’t persuade the client to adopt them
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 – no surprise, but you’ll become a master at Excel, and it’s a mandatory for success. You’ll know every keyboard shortcut (and then some)
2) Microsoft Powerpoint – much less exposure here depending on your firm and division (for instance, more in Corporate Finance, less in Mergers & Acquisitions). Practically no experience building strong presentations beginning to end
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
An important but rarely discussed point. Consultants migrate to a wide array of careers – from academia to Fortune 500, non-profit to government. Investment bankers generally continue within the financial world and have a narrower network. Your future career opportunities will be influenced by these connections – your firm alumni and colleagues.
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
like to point #4, this is influenced by your company’s alumni and the following:
-the different recruiters and companies 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
When it comes down to it, the conclusion is similar: if you want maximum career flexibility, consulting provides that in spades. If you want maximum career flexibility WITHIN finance (and corporate financial roles), investment banking provides that.
A great post to browse is my “big consulting firms versus boutiques” post for additional info on the differences between the two types.
