If you are an individual seeking a career in investment banking, you should be aware of the various options you have in terms of work location. Your experience can vary greatly depending on the size of the bank. This is no more apparent than when comparing boutique banks and bulge bracket banks. Boutique banks are what you call smaller banks that mostly deal in regions and cities, handling less than a billion dollars per deal. Bulge bracket banks, on the other hand, are the top financiers of banking. They deal with billions of dollars per deal and have influence across the globe. If you are undecided on the type of bank you want to work for, here are a couple of important comparisons to help you decide.
Boutique Banks Require More Heavy-lifting
Given their smaller size, boutique banks often lack the infrastructure found in bulge bracket banks like Goldman Sachs or Morgan Stanley. You are not going to have the same access to financial analysts and are likely going to spend a lot of time making your own pitch-books. You are also going to lack in name recognition, so it might be more difficult for you to pitch to prospective clients. Boutique banks will simply require more work on your end, and your work hours will likely be heavier than if you worked for a bulge bracket bank. Consider your work ethic and take heed of these drawbacks before deciding on a boutique bank over a bulge bracket bank.
Boutique Banks Provide More Experience
If you do not mind the extra heavy-lifting required of boutique banks, it can actually be of benefit to you. Having more responsibility will force you to learn the ins-and-outs of investment banking. You will have to formulate stronger pitches to compete with bulge bracket banks and you will have to familiarize yourself with making pitch-books. The lack of analysts and resources at a boutique bank will also require you to do more market research. Though it may take more effort on your end, you will gain more experience and be several steps closer to being a more competent banker if you choose a boutique bank over a bulge bracket bank.
Bulge Bracket Banks Have Higher Starting Salaries
Bulge bracket banks are global institutions that deal with billions of dollars per deal. Thus, it is a given that they will able to provide higher starting salaries than boutique banks. This isn’t to say that boutique banks are incapable of giving higher salaries. They are usually open to negotiation based on qualifications or experience. However, you are more likely to start off with much better compensation if you work at a bulge bracket bank. Determine how important your starting salary is to you and you will be able to make a clearer decision between boutique and bulge bracket banks.
Boutique Banks Have More Opportunities
Because boutique banks deal with smaller transactions, there are usually more opportunities available to them. Multi-billion dollar deals take time and are extremely hard to come by. Smaller, multi-million dollar deals, on the other hand, are far more numerous and readily available. This gives boutique banks a higher potential for gains as more deals may lead to larger market share. Compensation for working at a boutique bank may also end up greater because your higher volume of deals may lead to increased bonuses. So, despite starting salaries being higher at bulge bracket banks, boutique banks may potentially offer better compensation overall. If you are interested in working in higher volume and you want to work based on potential, attending career fairs for boutique banks will hold greater appeal to you than bulge bracket banks.
Boutique banks and bulge bracket banks vary greatly in more than just their size. Your salary, lifestyle and job security will all be affected by the choice you make. If you are unsure about which bank is the ideal choice is for you, consider all of the pros and cons listed in this post before setting forth on a career in investment banking.
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