Boutique or bulge bracket, that is the question. It’s all about getting your head around the B’s when you’re deciding the right investment banking firm to apply to. Think of bulge brackets as like the Gary Ablett Juniors of the investment banking world. They’ve got the famous name, the proven track record and they bring in the big bucks. In contrast, boutique banks are a bit more of an Andrew McGrath, the most recent AFL Rising Star. They’re newer to the scene, proving themselves but up and coming, and you don’t know their name yet, but it’s only a matter of time!
There will be lots of factors to consider when deciding where to apply for an investment banking role. Do you want to go with a huge organisation with countless opportunities and offices around the world, or would you rather be a small firm where everyone knows your name (Cheers-style)? Do you want to stay in the city you’re currently living or are you keen on a change?
While we can’t tell you what is the right fit for you, we can give you a lay of the land info on the major differences that exist in the investment banking world. What’s key is that you take the time to think about the sort of work that most excites you and what environment you might thrive in, then find the bank that would best suit you.
Bulge-bracket investment banks
These guys (called BBIB in cool kid finance-speak) are the big daddies of the investment banking world. When investment banks come to mind, whether it be UBS, Credit Suisse or JP Morgan, you’re usually thinking of a BBIB.
BBIB’s do it all, everywhere. They’ll offer the full range of services associated with investment banks, mergers and acquisitions, trading desks, you name it, they’ll do it. They’re the ones whose names are splashed across the newspapers (not just the Australian Finance Review but also the ones non-finance folks read too), managing the IPOs of huge companies like Facebook. They’ve got offices around the globe and massive teams of staff.
Pros of working for a bulge-bracket:
- Brand recognition: You won’t be getting too many blank stares when you explain at family Christmas that you’re working at JP Morgan. BBIB’s generally have solid name and brand recognition, which not only makes it easier to explain but also looks great on your resume. You can’t deny the reputation and prestige of a BBIB.
- Global opportunities: With BBIB’s having offices around the world, it’s even easier to take your career in investment banking global.
- Exposure to big deals: As we mentioned, it’s usually the bulge brackets which manage the really huge and noteworthy investment banking deals. By working at a BBIBs, you’ll get to be part of an IPO or acquisition which might be famous enough to score it’s own Wikipedia page.
- Networking and contacts: Exposure to big deals means exposure to some amazing contacts. BBIBs will often socialise at the big end of town, giving you the chance to rub shoulders with some major players in the finance world and beyond, putting you in a great position for what comes next.
- Exit opportunities: The combination of contacts and brand recognition puts you in a great position for the transition out of investment banking with many arguing that the exit opportunities are better after working at a BBIB.
- Salary: While this isn’t a hard and fast rule, it’s generally considered that you’ll be looked after with a better base salary and bonus.
- Formalised training: At a BBIB, your grad program is more likely to begin with a formalised, classroom-style training program before you dive into the day-to-day world of investment banking. If this is the sort of training you’re hoping for, then this is a definite pro of an investment bank.
Challenges of working for a BBIB:
- Job security: The big staff cohorts in a BBIB means that in times of economic downturn, a bulge bracket might be more likely to trim the fat by looking to reduce staff. This being said, it’s worth remembering that all jobs within investment banking can be volatile and threatened if the deal pipeline slows down. Less predictable working hours: While any job at an investment bank is likely to come with big hours, the challenge with working in a BBIB is that it can be hard to predict when these spikes will hit. Because the bank itself is working across so many clients and deals, it’s possible to get extra assignments at any time, throwing your dinner plans out the window!
- Tougher to argue for a pay rise: The bigger the bank, the more likely things like pay and conditions are standardised, especially at the lower levels. This might make it harder for you to argue for a pay rise, or get tickets to a conference you’re excited about.
- Life as a small fish in a very big pond: The flip side of all the many pros of working for a bigger organisation is the risk of feeling a bit lost. BBIB’s will often have great structures and processes in place to manage this but if feeling connected and familiar with the people you’re working with matters to you, then a smaller firm might be a better fit.
Boutique investment banking firms
Boutique firms are the fastest-growing segment within the investment banking industry. They’ve grown so fast that we even need sub-categories within boutique banks to truly understand what they’re like.
Regional boutique banks
These guys are your more down-to-earth low key banks. Generally, they might only have one or two offices and a small team. They’re incredibly focused, specialising in not only a specific geographic region but also a specific function, for example, an investment bank based in Perth that focuses just on mergers and acquisition for mining and resources companies.
Elite boutique banks
Elite boutiques are in some ways closer to a bulge-bracket then they are a regional boutique. Like a BBIB, they’ll handle some huge clients and big deals and they’ll have multiple offices in various parts of the world. They’re boutique, however, in the sense that they’re likely to focus on a specific area of business, for instance, asset management or IPOs. In most cases, they’ve grown from regional boutique banks and so have a layer of additional prestige but not quite the recognition or reputation of a truly global BBIB firm. Lazards, Rothschild and Greenhills are all examples of elite boutiques operating in Australia. When thinking about a boutique, make sure you’re also considering the work area that most excites you. If you’re most excited about working in sales, but the boutique you’re applying for doesn’t necessarily do sales, it might not be the best fit for you.
Pros of working for a boutique:
- Close to the action: Boutique firms are generally smaller in size and characterised by a flatter structure of hierarchy. Not only is this great in that you don’t feel as acutely like you’re at the bottom of the pecking order but it also means you’re going to get closer contact and interaction with clients and senior bankers, which is an awesome learning experience. You’re also likely to get more much exposure to the actual deals, immersing yourself quickly in the world of investment banking.
- On the job training: In a boutique, you’re more likely to be thrown in the deep end and learn the key skills of investment banking by getting your hands dirty and giving it a go. If this sounds more like the learning environment you thrive in, then boutiques might be for you.
- Variety: One challenge of working for a BBIB is that your first few years will often feature countless hours on excel or powerpoint, smashing out similar work ad nauseum. With smaller teams in a boutique bank, you’re more likely to be able to dip your toes into lots of different areas and tasks within the world of investment banking.
- More predictable hours: While boutiques will still have massive hours because the bank is a bit smaller, you’ll generally know when they’re coming. This way, you can set up your life around knowing when there might be a really busy period.
- A faster path to seniority: Due to the smaller teams and flatter structure, it can be easier to escalate and access new opportunities within a boutique bank. That being said, opportunities for advancement always depend on opportunities being available, so keep in mind that escalation within any bank isn’t always inevitable.
- Specialisation: While working at a boutique will allow you to have a little taste of lots of parts of the business, boutiques will often focus on a particular function, industry or geographic area. This will allow you heaps of exposure to this part of the banking world, effectively making you an expert!
Challenges working in a boutique:
- Salary: If making the big bucks is the number one driver for you, then working for a boutique might not be as appealing as working for a bulge-bracket. It’s said that, generally, boutiques will pay a bit less, however, it may be easier to argue for a pay rise in a boutique and given the teams are smaller, any bonuses tend to go further!
- Less access: While you can get specialised knowledge working for a boutique, you won’t get the wide range of access to clients or networks. This could have an impact on exit opportunities and next steps after working at a boutique, and so is important to keep in mind.
- Less global opportunities: More often than not, boutique banks won’t have offices scattered around the world. Practically, this means it might be trickier to take an investment banking job overseas.
- You’ll be the jack of all trades: We know boutiques are smaller but practically this can mean the bank has less staff dedicated to administration and operations. As a consequence, you might sometimes find yourself making coffee for a client or fixing the paper jam when working at a boutique firm…
Location, location, location - the other big thing to think about
The other big thing to consider when choosing which banks to apply to is where you actually want to live! Are you dreaming of drinking champagne by the Sydney Harbour? Surfing lessons on Perth’s golden beaches? Or eating your way through Melbourne’s cafes?
The Australian investment banking scene is largely based in Sydney, Melbourne and Perth. The Sydney scene is the biggest, with Melbourne following closely behind, and both cities will have a mixture of options in bulge-brackets and boutiques. The Perth scene is smaller and mostly focuses on the things we know Perth for: mining and resources.
A huge factor when deciding the right bank for you will not only be the type of bank but the part of the country you want to live in. To find out more about living in these cities, click here for Sydney, Melbourne and Perth.