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Why do investment bankers work so much? If you’re one of the people who often ask this question, we’ve created this post to help you. Investment bankers are known for their jaw-droopingly lengthy hours of work. According to a widely circulated recent poll, they work an average of more than 95 hours every week.
On the other hand, professionals sleep for around 5 hours each night. Investment banker hours range from 70 to 85 hours per week on average. That’s a lot of time and stress to spend working, no matter how you slice it. Is it, however, essential?
Isn’t there a way to automate a lot of the work and make an investment banker’s day more structured and less hectic in today’s technology-driven world? Come along as we highlight why investment bankers work so much.
A Day in the Career of an Investment Banker
An investment banker’s employment requires them to spend less than half of their time conducting genuine analysis, which is a little-known fact. The following is a breakdown of their typical day:
- For Pitch Books and Other Presentations, PowerPoint gets used 50% of the time.
- Random and administrative tasks account for 30% of the workload.
- Excel gets used about 20% of the time. Modeling and Valuation of Financial Assets
- This usual weekday starts late in the morning, about 9:00 a.m. But it won’t be over until after the sun has set. At this point, every other company has gone out of business. Furthermore, everyone else had retired to their beds. Even the night owls have been sleeping for quite some time. However, there is nothing on a regular weekday, so that depiction isn’t realistic. Because of the nature of financial services, there are constantly unexpected events that need additional time and attention. This may include handling numerous negotiations simultaneously to pulling an all-nighter to finish that last-minute pitch deck. This is not a viable way of life. Fortunately, it doesn’t last forever since most analysts move up the corporate ladder after a few years.
Why do Investment Bankers Work so Much?
Because of the following factors, investment bankers work a lot:
A large clientele
Unlike a typical business that sells things, bankers must react to every customer request since they sell their time and attention rather than a commodity. So, if your MD calls you at 7 p.m. on a Saturday to tell you that a board presentation is required the following day, you must comply.
Like consultancy or law, there is limited leverage since higher money equals more hours and labour. There are several service-based sectors where “customer service” is lacking.
Investment banking, on the other hand, is not one of them. If a single executive disagrees, there is just too much money (millions of dollars). This might alter if banks had a different business strategy, such as earning $50,000 each transaction and executing 1,000 of them each year rather than making two deals costing $25 million in fees each year.
However, this would be significantly less lucrative than what banks do now. This is why they cling to the strategy of “two agreements worth $25 million in fees each.” That is why they must fulfill all of their customers’ requests.
Another reason investment banker’s work so hard is because of unpredictably high demand. When working on an M&A transaction, for example, the majority of the work is done at the start. This is the time to start working on marketing materials and budget estimates.
Then, as the transaction nears completion, you get busy. However, the middle section usually does not need as much effort.
That’s almost to get expected. But the difficulty is that random events, demands, and problems constantly arise amid the process. You can receive an entire portfolio from a bidder who first declined but then returned at the eleventh hour.
Perhaps your client’s forecasts were off, and you need to redo your 22-page model entirely. Or maybe the Executive is just having a terrible day and wants to see some utterly pointless analysis for its sake. Your team will also make unpredictably high requests.
Sometimes you’ll have a VP or MD who constantly requests unnecessary tasks. This can occur at any time or night, and it may completely overwhelm you.
Failures in the Division of Labor
The issue with recruiting additional individuals in investment banking is that it’s tough to distribute work among multiple Analysts or Associates on a single project. Clients benefit from this for two reasons: accountability and knowledge.
A senior banker desires to go to one person in charge of everything if he needs something done. Not two or three people are involved in the project. Similarly, if an Associate requires a model, he only wants to enlist the help of one Analyst.
He doesn’t want to choose between two or three people who claim to be too preoccupied with other tasks to assist.
When some errors or adjustments need to get addressed, responsibility becomes even more concern. If many junior bankers are engaged, each one is likely to “blame” the others for whatever went wrong. For responsibility and getting things done, just one Analyst/Associate must get assigned to each customer.
Multiple junior bankers may get allocated to big or otherwise significant transactions in certain situations. However, they frequently focus on entirely separate project elements when this occurs. You can genuinely split the task since it is so significant.
Another issue with allocating numerous junior bankers to a single customer or transaction is that keeping everyone informed is tough. One Analyst may begin updating a model and then fail to notify the other.
This might confuse 3 a.m. when Analyst #2 attempts to correct a presentation using the model that Analyst #1 had amended the day before but hadn’t informed him about.
It also takes time to catch up on what’s been going on. This is in addition to the previous work you’ve done for a customer. Deciphering months or years’ effort takes more than a few hours or days.
Long hours of labour
Investment bankers who have worked in the profession for a long time are used to the concept that their colleagues work long hours. That’s simply the way it is, and it’s always been that way.
And this is one of the issues. Since senior bankers all worked overtime on their way to the top, there is a cultural conviction that, as a result, fresh entry-level bankers must go through the same ordeal. Junior analysts and colleagues aren’t the only ones that suffer.
Even senior bankers put in a lot of hours. While hours on the job and work-life balance increase with seniority, senior bankers still put in many hours. Because the supervisors work around the clock, junior bankers get expected to be available 24 hours a day to respond to their needs.
Working from home in the COVID age has just exacerbated the problem. Analysts are now required to reply immediately, regardless of the time of day or night.
Some may argue that the high income of an investment banker compensates for the arduous effort. However, only those who have experienced it can completely comprehend the magnitude of the strain.
Why do Investment Bankers Work so much: The Way Out
Investment bankers’ hectic jobs seem to be a complex scenario with no quick solutions. After all, isn’t that how things have always been? Things do, however, change.
Technology advancement is one of the most important causes of change in today’s society. And advancements in artificial intelligence might be a quick cure for some of the issues that overworked investment bankers are dealing with.
Data automation might save investment bankers up to 30% of their time. Administrative chores such as manual data input consume a significant amount of time for an investment banking analyst.
Nobody wants to do it, but it has to get done. Does it, however, have to be done by them? Is it essential to accomplish it by hand?
Much of the administrative labour that a financial analyst spends 30 per cent of their time on might get automated quickly and permanently.
The quantity of data handled in a typical transaction is enormous. What if financial institutions could utilize technology to reduce the hours spent manually entering data?
Much of the 30 per cent of a banking analyst’s time spent performing administrative work might be automated and saved quickly and permanently.
Artificial intelligence-driven data technologies can input and handle all administrative data automatically and independently. Plus, since they don’t make data input errors, they can do it better than people.
They may also check whether the data is already in the system to avoid duplicating data entering. In short, they can help everyone, from entry-level investment bankers to managing directors and beyond, better their lives and effectiveness.
Frequently Asked Questions
Why do investment bankers work so much?
Investment bankers work so much because investment banking is a client-service sector that caters to a large clientele.
What is the mean number of hours an investment banker works every day? An investment banker’s weekly working hours are estimated to be between 60 and 80 hours.
Because there are so many moving sections in even basic financial transactions, getting deals done in investment banking consumes a lot of labour.
Is it worthwhile to work as an investment banker?
Being an investment banker is, without a doubt, one of the best-paying careers accessible today. In other words, it pays much more than other jobs. It’s also one of the most challenging occupations imaginable in every manner.
Do investment bankers have vacation days?
Yes, however, it all depends on the individual, the company, and their degree of seniority. Because they can, senior bankers take more vacations than junior bankers. Junior bankers often accept fewer assignments – sometimes simply due to the atmosphere.
In conclusion, investment bankers come with various merits. On the other hand, the work is usually stressful. And if you need more help on this topic, the above highlight on “why do investment bankers work so much” will aid you immensely.
I am Lavinia by name, and a financial expert with a degree in finance from the University of Chicago. In my blog, I help people to educate by making wise choices regarding personal investment, basic banking, credit and debit card, business education, real estate, insurance, expenditures, etc.