Consulting vs Investment Banking | CaseCoach (2023)

Consulting vs Investment Banking | CaseCoach (1)

If right now you’re considering a career in either strategy consulting at a top firm or investment banking then you’re probably wondering which option is going to suit you the best.

In this article, we lay out the pros and cons of each of the four most common banking roles versus strategy consulting to help you make an informed career decision.

Trading vs. consulting

As a trader, you’re on the phone with a lot to clients and buyers to package and agree on deals. This makes it a fast-paced role that’s great for people who love maths, deal-making, and the buzz of making money.

You can expect large responsibility early on in trading because you’re soon managing your own book. This means that you can work independently and if you’re competitive, you’re likely to thrive in this environment.

The compensation is typically very good and the hours are reasonable since you’re only working when the market is open.

However, trading doesn’t lead to any other long-term career option, because you become specialised very early on. This specialisation is reflected in high compensation packages, but depending on your personality you may find that trading doesn’t keep you happy after a number of years.

There is also a question mark over whether trading as it currently stands will be a job that still exists in the future. As a trader, you don’t develop a large number of transferable skills as you would in consulting due to the narrow and repetitive nature of the role, so you may find yourself out of a job with limited options if trading roles are displaced by technology.

(Video) INVESTMENT BANKING vs. MANAGEMENT CONSULTING | Which career to pick? | Work, Lifestyle, Salaries

Nevertheless, trading is a good option for people who thrive on the adrenaline of deal-making, are driven by money, and are successful at the job long enough to retire early. It pays more than consulting and can offer a better lifestyle in terms of hours worked, but it closes future career doors rather than opening them in the way that a few years in strategy consulting does.

Equity research vs. consulting

A role in equity research involves gathering information through desk research and interviews, and then projecting the performance of the business to create reports that educate investors on whether a stock is currently a good or bad purchase.

One perk is that your name goes on the reports you produce, which means you can develop a name for yourself as being a particularly good researcher for certain types of stocks. Another perk is that you get incredible exposure to CEOs, as you get to interview them about their strategy and results as part of your research.

However, equity research is typically the least well-paid role in investment banking because equity researchers do not directly generate revenue. The reports are offered free by the bank in the hope that readers choose to make brokerage transactions via their services. As well, the exit opportunities are limited to working in investment management, for instance as a Fund Manager.

The role is good for people who like to work fairly independently, who are deeply curious about the in-depth details of business, and who enjoy doing analysis. It’s also great for people who get a buzz from the stock market and investments in general.

However, as an Equity Researcher you don’t get to influence the strategy of a business, rather you simply research, observe and report on the strategy. For some people, this can get a little boring and senseless after a while. As a consultant, your research and recommendations lead to the client making changes, which means you can have a greater overall impact in your work.

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(Video) Investment Banking vs. Management Consulting (Thoughts From A Former Banker & Consultant!)

M&A vs. consulting

Simply put, in M&A you pitch potential acquisitions to clients and help them execute deals in return for a cut of the transaction value.

As a junior, your role is to identify acquisition opportunities, model cash flows, and write pitch presentations.

M&A is traditionally the more prestigious role within investment banking because you get the opportunity to work on some of the biggest transactions that can often make headline news. You also get to learn key skills like understanding corporate finance and you will likely have exposure to senior executives.

(Video) SALARIES & HOURS of Banker VS Consultant Exposed 🤯[Ex, BCG] - Applicable for Mckinsey/Bain/Goldman

M&A has a potentially long term prospect of making a lot of money by going into Private Equity afterwards, or becoming a Managing Director within the firm.

However, the work is highly repetitive and involves enduring extremely long hours, sometimes in a harsh environment where there is little concern for your well being. The intellectual challenge is also lower compared with equity research or trading.

The role is great for people who are driven by money, love deal-making, and have a high tolerance for hard and repetitive work.

Compared to consulting, M&A offers better potential to make a lot of money, but the role is way more repetitive and transactional. The lifestyle can also be much worse. In contrast, consulting offers a more enjoyable work environment, lots of transferable learning, the opportunity to get involved in the operations of the business, and the chance to make a positive difference.

Sales vs. consulting

In Sales, you work closely with clients to support them in making the decision to buy investment products from you.

Great salespeople are often motivated by money and feel satisfaction from reaching their targets and getting paid well for it. The perks are of course good compensation and nice lunches or entertainment with clients.

You can expect to quickly become responsible of specific client accounts. You’ll have to keep a finger on the pulse of the market so that you can provide insightful recommendations to clients.

(Video) Consulting vs Investment Banking - salary | selection | lifestyle | work life balance | exit options

The downside to sales is that is can often be perceived as the least prestigious area within investment banking and has fewer exit opportunities outside of lesser-paid sales jobs.

It’s a great career for individuals who enjoy convincing others, reaching targets, making money, and don’t mind doing it all over again.

However, for some people the role lacks intellectual challenge, meaningful impact and, in some cases, exposure to the real world. If these are important factors to you, then consulting is often a better option overall.

The verdict

When weighing up the options, it’s important to recognise both the short and long term benefits of choosing investment banking versus strategy consulting.

In the short term, you want to ask yourself whether you can imagine enjoying the work and whether you feel it’s a good way to spend three or more years of your career. Consider whether you’ll be good at the role and if you have the skills and interest to succeed. Then of course there’s the compensation and lifestyle you want to have, and how each potential option allows for goals to be met.

The main benefits of consulting is that it offers:

  • Broader learning and greater transferability of skills to new roles, leading to many more open doors if you choose to leave, and better long term career prospects. By contrast, investment banking may pigeonhole you for the future
  • More tangible impact compared banking, which is often a zero-sum game
  • Exposure to a variety of industries and problems to solve, where no two projects are the same. Banking work is repetitive and limited to making the next transaction

However, if you’re the kind of person who gets a kick out of making deals, is fascinated by the market, and doesn’t mind repetitive work or is driven by money, then banking is likely a very good fit.

(Video) Finance vs. Management Consulting

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Consulting vs Investment Banking | CaseCoach? ›

“Investment banking gives you better access to finance exit opportunities in private equity, hedge funds, and corporate development, but management consulting gives you broader exit opportunities not just in finance but also in strategy, operations, non-profits, startups, and more!”

Is consulting better than investment banking? ›

“Investment banking gives you better access to finance exit opportunities in private equity, hedge funds, and corporate development, but management consulting gives you broader exit opportunities not just in finance but also in strategy, operations, non-profits, startups, and more!”

Is consulting harder than investment banking? ›

Consulting is a great stepping stone into industry, and most former consultants move into strategy or operational roles at corporations ranging from startups to large firms. While it is a bit more challenging to transition into investing (e.g., private equity, venture capital) than for bankers, it can be done.

Is Goldman Sachs a consulting firm? ›

Our team guides investment consultants to strategies and investment vehicles specific to the needs of their clients. We share market views and leverage resources across GSAM and the broader firm to help investment consultants navigate financial markets.

Do you make more money in consulting or industry? ›

According to at junior levels you will earn less in industry vs. consulting. Senior Analysts make 35% less, Associates 21% less and Managers 8% less. This gap narrows as you become more senior within an industry.

Do consultants make a lot of money? ›

Let's start with the overall average pay for consultants. As there's a lot of variance regarding pay around the globe, we'll focus on pay within the United States so there's consistency in the comparisons. The most recent data for 2023 shows that consultants make an average of $7,091 a month.

How many hours a week do McKinsey consultants work? ›

On average, a standard number of hours a consultant can expect to work in a week is between 70 and 75, including lunch and travel time. Weekends aren't included in a consultant's working week.

Does private equity pay more than consulting? ›

PRIVATE EQUITY WINS. Compensation. The package is often designed to attract investment bankers, who are better paid than strategy consultants. As a consequence, you should expect a significant increase in your total compensation package, up to 100% in some cases.

How prestigious is it to work for McKinsey? ›

They produce the most Fortune 500 CEOs. Many McKinsey alumni run companies with more than $1 billion in annual sales. According to one estimate, McKinsey alumni have a 1 in 690 chance of securing a CEO position at one of the 1,187 publicly traded companies valued at a minimum of $2 billion in market capitalization.

Is consulting more stressful? ›

There's no denying that the consulting lifestyle can be extremely challenging. Regardless of which firm they work for, management consultants work long hours and are required to travel a great deal in order to work with clients in person. There is also a great deal of pressure for consultants to contend with.

Does McKinsey do investment banking? ›

We help investment banking clients meet a wide range of strategic, organizational, and operational demands.

What consulting firm is like Deloitte? ›

The Big 4 firms in management consulting are Deloitte Touche Tohmatsu (Deloitte), KPMG International (KPMG), PricewaterhouseCoopers (PwC), and Ernst & Young (EY). As of 2020, they are the four largest consulting firms in terms of revenue.

Is Morgan Stanley a consulting firm? ›

Founded in 1973, Morgan Stanley's Consulting Group provides a range of investment consulting advice and services to both private individuals and institutional investors. Through our attention to client objectives, we have earned a distinguished reputation as a leading provider of investment advisory services.

Which Big 3 consulting pays the most? ›

McKinsey & Company is the last, and highest paying Big 3 MBB consulting firm on this list. McKinsey is arguably the most prestigious consulting firm of all tier 1 companies and consistently attracts the top Fortune 500 clients to its offices around the world.

Can you make millions in consulting? ›

Is a consulting business profitable? Of course! Many successful entrepreneurs have been able to work as a consultant and grow their business to a million-dollar enterprise. It takes hard work, determination and some help along the way, but it's certainly possible.

Why are consultant salaries so high? ›

They pay good money for said expertise and expect transparency, cost efficiency, trust, better quality and value for their money, accountability, and expediency, in their services. And if consultants fail to deliver, they can always switch to another firm that can provide results.

Do consultants make six figures? ›

The typical entry-level position earns about $40,000 annually and rises to roughly $63,000 at mid-level. At the senior level, consultants can make six figures, with the average salary at $105,000.

Can consultants make 7 figures? ›

There are several different approaches when it comes to compensation for consultants. Some charge an hourly, daily or per-project rate — and those rates can be quite high. However, you're still unlikely to earn a seven figure income with this approach. The approach with the higher ceiling is to charge based on results.

What is the highest paying job in finance? ›

Highest Paying Jobs in Finance
  1. Chief Financial Officer. A Chief Financial Officer (CFO) is undeniably one of the highest-paying jobs in finance globally. ...
  2. Chief Compliance Officer. ...
  3. Investment Banker. ...
  4. Financial Analyst. ...
  5. Investment Specialist. ...
  6. Financial Manager. ...
  7. Financial Risk Manager. ...
  8. Economist.
Dec 9, 2022

Is consulting a 9 5 job? ›

Consulting is not a 9-to-5 job. You might feel like you're “always on“ as you may be expected to be on the road a lot, and it can be exhausting. If you envision stability and structure, consider a career elsewhere.

How much PTO do you get at McKinsey? ›

McKinsey & Company's PTO and Vacation policy typically gives 20-30 days off a year with 67% of employees expected to be work free while out of office. Paid Time Off is McKinsey & Company's most important benefit besides Healthcare when ranked by employees, with 50% of employees saying it is the most important benefit.

Do McKinsey consultants travel a lot? ›

Your travel and lifestyle will vary depending on your role and the client engagement you are working on at any given time. However, an average McKinsey consultant travels 40 percent of the time. Sometimes travel is heavily concentrated between Monday and Thursday, and other times it is fairly infrequent.

Do consultants get paid more than accountants? ›

Consulting vs Auditing – Salary

The Big 4 firms pay their consultants over 30% more than auditors. A first-year auditor at Big 4 firms has an average salary of $58,000/year. Meanwhile, entry-level consultants are paid around $80,000-90,000/year.

How much do Harvard investment bankers make? ›

How much do Harvard Business School's class of 2022 earn?
Hedge Funds175,000392,500
Private Equity175,000380,000
Investment Banking175,000350,000
Jan 5, 2023

How much do Harvard MBA private equity students make? ›

Finance proves to be a boon for HBS grads

Some of the highest earners are those who go into private equity; in 2022, they earned $175,000 median base salaries, $30,000 in signing bonuses and a whopping $175,000 in performance bonuses.

What GPA does McKinsey look for? ›

McKinsey, Bain, and BCG don't have a strict GPA cutoff, but they do typically consider anything from 3.6 up as a strong GPA. However, it's not quite that simple. For instance, you may have a 3.4 GPA but have top scores on your SAT or GRE, so all of these academic results will be reviewed.

Is it harder to get a job at Google or McKinsey? ›

McKinsey will rather prepare you for a career in corporations, Google will better prepare you for setting up your own business after some years. It will be harder to get into McKinsey after Google than into Google after McKinsey.

Does McKinsey only hire Ivy? ›

While McKinsey and the other top firms are heavily represented by graduates of Ivy League universities (and their international counterparts), it is not staffed exclusively this way. The story that follows is very instructive for anyone applying from a non-target school.

Why do people quit consulting? ›

Management consultants often quit their job after 2-4 years. Some are attracted by offers with higher pay, more autonomy, or better work-life balance; others quit to get new experience and refresh their learning curve, or to pursue other long-term plans.

What is the main disadvantage to being a consultant? ›

Consulting often has high turnover rates, meaning that you may experience more coworker changes when working in consulting than you would expect when working as an employee at a company. This can make it harder to develop work relationships with your coworkers.

What is the average age of consultants? ›

The average age of an employed business management consultant is 43 years old.

Who pays more Bain or McKinsey? ›

Differing bonus schemes mean total compensation packages vary between the three firms. While they earned the least in 2022, Bain MBA consultants now have the highest overall compensation with salaries and bonuses amounting to $285,000, a 16% increase on last year.

Which is better JP Morgan or McKinsey? ›

J.P. Morgan scored higher in 2 areas: Work-life balance and CEO Approval. McKinsey & Company scored higher in 7 areas: Overall Rating, Culture & Values, Diversity and Inclusion, Senior Management, Compensation & Benefits, Career Opportunities and Recommend to a friend. Both tied in 1 area: Positive Business Outlook.

Will McKinsey pay for an MBA? ›

McKinsey also offers a 50% reimbursement to second years according to Management Consulted, while Bain includes profit sharing. For MBAs and PhDs seeking to relocate, Bain and McKinsey reimburse anywhere from $8,000 to $16,000 in expenses, while BCG provides an interest-free loan.

Which Big 4 is hardest to get into? ›

EY and PwC are harder to estimate. EY is the second biggest of the Big Four in terms of headcount, which lends credence to this claim in 2019 that their acceptance rate was approximately 3.5%, based on 69,000 global hires from 2,000,000 global applicants.

What are the 4 types of consulting firms? ›

Therefore, to help you get a sense of consulting landscape we've broken down the different types of consulting firms into four classes: strategy consulting, implementation consulting, industry specialists and functional specialists.

Which Big 4 is best for consulting? ›

The Big 4 Consulting Firms are PwC, Deloitte, EY, and KPMG. They are the top 4 Consulting firms in the world. They are well known for being the top audit firms in the world.

Is McKinsey better than Morgan Stanley? ›

Morgan Stanley scored higher in 2 areas: Work-life balance and CEO Approval. McKinsey & Company scored higher in 8 areas: Overall Rating, Culture & Values, Diversity & Inclusion, Senior Management, Compensation & Benefits, Career Opportunities, Recommend to a friend and Positive Business Outlook.

Is working for Morgan Stanley prestigious? ›

Morgan Stanley is one of the most highly respected financial institutions in the world. Its name on your resume will open doors throughout your career. Morgan Stanley is a global leader in mergers and acquisitions, IPO underwriting, investment management, and wealth management.

What is considered a consulting firm? ›

A consulting firm or simply consultancy is a professional service firm that provides expertise and specialised labour for a fee, through the use of consultants. Consulting firms may have one employee or thousands; they may consult in a broad range of domains, for example, management, engineering, and so on.

What type of consulting is most prestigious? ›

Management Consulting is generally considered prestigious (Lets define "Prestigious" as what MBA schools like the most).

Which consulting firm is growing the fastest? ›

  • Consulting Magazine Ranks Fastest Growing Firms for 2022. ...
  • The 2022 Fastest Growing Firms: AArete. ...
  • The 2022 Fastest Growing Firms: Ankura Consulting Group, LLC. ...
  • The 2022 Fastest Growing Firms: Insight Sourcing Group. ...
  • The 2022 Fastest Growing Firms: Ryan, LLC. ...
  • The 2022 Fastest Growing Firms: AIM Consulting.

What is the most successful consulting business? ›

McKinsey & Company

The company is consistently ranked as the #1 most valued brand in the consulting industry, making it the most prestigious company on the list. Since its founding in 1926, the company has grown to over 38,000 employees across more than 120 offices around the world.

Is there a lot of math in consulting? ›

This means management consultants spend a lot of their time working with numbers – during quantitative data analyses, team meetings, client interviews, etc. That's why although the specific format may change, math will always be part of the selection process.

Can consulting be a side hustle? ›

There are many reasons why you might consider starting a consulting “side hustle” before going all in. Consulting is a low-risk, high-reward business. You don't need any capital to get started. You don't need a storefront or a warehouse.

Is consulting a hard job to get? ›

Consulting is one of the most competitive graduate professions to enter, but you should not let this put you off applying.

Is there high turnover in consulting? ›

The top consulting firms receive thousands of applications each year, and only a handful of candidates are ultimately offered a position. Once hired, consultants are typically expected to work long hours and travel frequently. As a result, turnover is relatively high in the industry.

Why is it so hard to get a consulting job? ›

Role type. Due to the limited numbers, consultancy firms usually hire a single type of generalist consultant. Therefore, if you do not fit this all-purpose general model, you might struggle. Consultancies also want people slightly to the left or right of this perfect generalist.

Does consulting pay better than industry? ›

According to at junior levels you will earn less in industry vs. consulting. Senior Analysts make 35% less, Associates 21% less and Managers 8% less.

Can investment bankers go into consulting? ›

Investment banking positions include consultants, banking analysts, capital market analysts, research associates, trading specialists, and many others. Each requires its own education and skills background.

Should I do private equity or consulting? ›

Compared to consultants, private equity professionals often have more influence and a more direct impact on the companies with which they work. With this power, however, comes greater accountability, as they're more deeply involved as company shareholders.

Why is consulting better than industry? ›

Scope of work

While industry employees typically don't have management positions, they may occasionally lead projects or provide project support through their specialized skills. Consulting managers have a wide scope of work because management and process improvement is a part of every industry and department.

Do most investment bankers have an MBA? ›

Although it is possible to enter the field of investment banking with only a bachelor's degree in a business-related field, you will likely need an MBA or another advanced degree if you want to progress in your career.

What is the highest paying consulting type? ›

Top 15 highest-paying consulting jobs
  • Software consultant. ...
  • Business consultant. ...
  • Consultant. ...
  • Security consultant. ...
  • Management consultant. ...
  • Financial consultant. National average salary: $88,497 per year. ...
  • Systems consultant. National average salary: $93,956 per year. ...
  • Senior consultant. National average salary: $98,468 per year.
Mar 10, 2023

What is the big firm that pays consultants the most? ›

Consulting Firms Ranked by Pay
  • EY Parthenon.
  • PwC Strategy&
  • Investor Group Services (IGS)
  • Bain & Company.
  • Avencore.
  • Boston Consulting Group (BCG)
  • Oliver Wyman.
  • Accenture Strategy.

Can you move from consulting to PE? ›

Yes, professionals with consulting experience can move into private equity. Many private equity firms value the skills and expertise consultants bring to the table, such as analytical thinking, problem-solving, and communicating effectively with clients.

How do I break into PE from consulting? ›

There are two primary paths for consultants into the Private equity industry: the operations team and a portfolio company (while a small portion of consultants end up working in an Investment Team, firms primarily target individuals with investment banking or Private equity backgrounds for these roles).

What pays more than private equity? ›

Hedge Fund vs Private Equity pay, US$

Compensation at hedge funds is somewhat higher than at a private equity fund - $196k a year on average, compared to $167k – a difference of around $10 an hour in the hourly wage.

Why is consulting so stressful? ›

One of the common causes of stress and burnout in tech consulting is the lack of boundaries between work and personal life. You may feel pressured to work long hours, take on extra tasks, or be available at all times for your clients or colleagues. However, this can lead to overwork, exhaustion, and resentment.

Which industry is best for consulting? ›

  • Technology – IT, Software, Information Systems. As today's project-based economy continues to grow and as more organizations embrace remote work, many companies are looking to outsource information technology projects. ...
  • Management Consulting. ...
  • Graphic design. ...
  • Video production. ...
  • Accounting. ...
  • Environmental Science. ...
  • Politics.

What is the life of a consultant? ›

Consultants support individuals and businesses in improving their operations by helping them identify challenges and find appropriate solutions. They typically have deep knowledge and experience in a specific field, which allows them to provide qualified advice to their clients.


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