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Banking vs Consulting: What’s the Difference?

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banking vs consultingInvestment banking vs management consulting is a question that pops up quite often from aspiring professionals in the finance world.

These two jobs are among the most prestigious in the financial field, and people just apply and see which offer they end up getting.

However, I think your interviewer will be more impressed if you know what you are getting at… and who knows, they might ask about your views on banking vs consulting. Let’s get prepared.

Banking vs Consulting: What’s Similar

1. Very Well Paid

These jobs are among the highest paid in the financial industry (in fact, among all industries) if you consider the bonus in the summer. Banking is likely better paid than consulting in good years.

2. Intensive Training

Both jobs look for entry-level “generalists” and offer intensive on-the-job, apprentice-like training by more senior colleagues.

3. Same Applicant Pool

Because both firms are looking for generalists without specific skill-set, they tend to compete for the same applicant pool.

4. Great Exposure

Both jobs are offering services to corporate clients. It is very similar in terms of exposure.

5. Most Employees Don’t Stay for Long

A significant portion of junior bankers and consultants leave their firms for MBAs and other finance / strategy jobs after the generalist program is over (typically 2-3 years).

Banking Vs Consulting: What’s Different

1. More Quantitative for Investment Banks

Investment banking tends to look for people with more quantitative skills, or at least, they make sure the new hires aren’t afraid of numbers. Consultants present numbers and data too, but it’s quite different from the financial modeling banking analysts need to build.

2. More Presentation Opportunities for Consultants

Investment bankers are expected to present and bring in deals as they move up their career path, but junior bankers seldom need to present to the clients. On the other hand, consultants have the opportunity to make presentation at the most junior level.

3. Projects are External for I-Banks and Internal for Consultants

Both jobs are project based, but investment banking projects are usually shorter and more “tangible” (i.e. you can see the actual transaction discussed on newspapers), while consulting projects are often internal in nature.

Question From Readers: Did You Consider Management Consulting?

I get occasional questions on my personal experience in banking vs consulting. I guess the answer is yes and no.

I am more of a analytical person so the number-crunching and deal-making aspects of investment banking suits me. Also, presentation skill is certainly not my greatest strength. I probably wouldn’t excel in any management consulting firm without a lot of hard work.

But I did interview with McKinsey (after I got the banking offer) just to see gain experience. There were 2 interviewers in the first round. I think the first guy liked me a lot and gave me tips on the second round, but I bombed the other one, without knowing why. Oh well 🙂

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