Breaking into I-Banking

Even with big names cutting back, opportunities are still out there. Just know why you want this demanding job, and be prepared to intern

I'm a first-year part-time MBA student at Washington University in St. Louis. I'm very interested in investment banking, but I really don't want to leave the St. Louis area. Would an investment-banking academic concentration be wasted if I'm not willing to relocate? Also, I want to maximize my earnings potential, which is part of what draws me to investment banking. What might be another high-earnings alternative?

-- D.C., St. Louis

What is it about investment banking? Is it the money, status, power, or all of above? Ask Careers receives more mail seeking advice on getting into I-banking than on any other issue. So it's probably time we tackled such a question.

As you likely are well aware, now isn't exactly a boom time for the field. The leading firms, including Goldman Sachs and Merrill Lynch, have collectively cut tens of thousands of jobs in the past year or so, as merger and acquisition activity has pretty much come to a halt and the market for initial public offerings has all but dried up.

What's more, bonuses, where the real money in investment banking is made, have shrunk by as much as 60% on Wall Street, says recruiter Joan Zimmerman, a partner at New York City-based Rhodes Associates, which specializes in executive searches for the finance and real estate industries.

SMALLER PONDS.

  Your desire to remain in St. Louis definitely would keep you away from the center of the action, says Zimmerman. That's mainly New York, for U.S. investment banking, and London and Switzerland if you're interested in going global, she says. "St. Louis is just not where investment banking has made its headquarters," Zimmerman adds.

Still, our experts say, staying put may not end up hurting you. On the contrary, "the non-New York banks are frequently the ones that are continuing to do quite well," says Paul Bernard, a New York-based executive coach, who works with senior level mangers. Smaller, boutique banks didn't bulk up as much in the '90s as the top-tier ones. And they may not be tainted by conflict-of-interest scandals involving research analysts, adds Bernard, president of Paul Bernard & Associates.

Unlike New York-based institutions, I-banks in smaller cities such as Albany, N.Y., and Charlotte, N.C., have been hiring, although often at about half the salaries available in the Big Apple, our job pros say. Regionally, "the career track is also less rapid, and there's probably less glamour," says Bernard.

CULTURAL STUDIES.

  Yet several banks in your area may have opportunities. A.G. Edwards is one St. Louis firm with an investment-banking arm that comes to mind, but it wasn't immediately available for comment on its hiring outlook. The career-services center at Washington University may be able to point you in the right direction.

If I-banking is indeed your dream career, consider trying to land a summer internship if your current employment situation allows it, says John Worth, interim director of career development at the University of Virginia's Darden Graduate School of Business. With MBA hiring on a downswing, Worth says, I-banks suddenly are less willing to take chances on untested candidates. As a result, they're hiring full-timers mainly from their pool of summer interns, he says. "If you're serious about investment banking, you need to really hustle to get an internship," says Worth.

One job-search tip to keep in mind: Investment banks are elitist. Each has its own distinct culture and likes to open the door only to candidates who seem to be the right fit. You must show that you have particular reasons for wanting to work at a specific firm, Worth says.

TARGET YOUR SKILLS.

  So get to know the firms' reputations and cultures. "It goes beyond just having a good résumé," Worth says. "If, for instance, MBA candidates haven't talked to the alums from their school who are now working at the firm, then they aren't going to be taken seriously."

Rest assured, though, that even if investment banking doesn't work out, your concentration in the field won't have gone to waste. Zimmerman says the analytical and dealmaking skills you'll learn could be used at many companies in areas such as finance, mergers and acquisitions, corporate strategy, and business development.

Another path, Bernard suggests, might be to pitch your skills as ones that could be put to use in corporations that are struggling with the down economy. They might be useful to companies involved in valuation consulting, leveraged buyouts, or turnaround situations, he says. "You need to ask 'How are my MBA skills going to be used in a period of deflation?'" says Bernard.

"MORE AGRESSIVE."

  Other positions may not pay the big bucks typical in I-banking, says Worth. However, companies lately have realized the need to hike their salaries to better compete with the banks and consultancies that have managed to lure the best students in the past. "Although they may still lag a little behind, they have really been more aggressive with salaries and signing bonuses," says Worth.

The one other career that can perhaps match, if not exceed, the earnings potential of an I-banker is that of entrepreneur, says Zimmerman. In that case, of course, you'll have to possess a dynamite idea -- and ideally a chunk of change to commercialize your concept.

This brings us to your real reason for wanting to be an I-banker: This career is challenging work for ambitious, analytical-minded professionals who like making important decisions when the stakes are high. That's why the money and prestige are legendary. But remember that the job comes at a cost. "It's not a job that you leave when you go home at night, and there are times when you don't go home at night," says Zimmerman.

IMPOSSIBLE HOURS.

  You didn't elaborate on what's keeping you in St. Louis. Your reasons may include family or quality-of-life issues. Whatever the case, the fact that something is holding you there should prompt you at some point to assess how willing you are to embrace a high-stress job with impossible hours -- such as investment banking.

"The person who says 'I thrive on that type of environment' should go into investment banking," says Worth. "The person who only says 'I can deal with that' should probably do something else."

So, by all means explore the investment-banking jobs in St. Louis, since they may be more plentiful than you think. But be sure to figure out what kind of person you are before you actually take one.

Have a question about your career or workplace issues? E-mail us at askcareers@businessweek.com, or write to Ask Careers, BusinessWeek Online, 1221 Avenue of the Americas, 46th Floor, New York, NY 10020. Please include your real name and phone number in case we need more information. Only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally. Questions may be edited for length and clarity.

By Eric Wahlgren in New York

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