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Management Consulting vs Investment Banking: Which One's for You & Why?

The “deal process” consists of pitching to win deals, creating promotional materials, and marketing the clients to potential acquirers or investors. As an intern or graduate analyst, you’ll support ongoing deals by preparing models, PowerPoint decks, perform research and analysis as well as attend client meetings. 

While consultants can be involved in deal advisory, the scope is much broader, focusing on operational and strategic issues such as the feasibility of entering new markets, expansion plans, potential acquisitions, deal due diligence, and transforming ailing business units.

🎯*Recruitment & Interview Process:* While a ‘target’ school gives you an advantage, you’ll need high grades and 1-2 related internships (corporate banking/ Big 4/ deals & valuation) for IBD. Consulting roles will also take into account your leadership roles apart from grades (prior consulting experience isn’t a must). Most big firms use HireVue for initial screening (BCG uses Pymetrics) and even game-based assessment. It’s more competitive to win a management consulting role at MBB than cracking an investment banking role at a bulge bracket (BB) or elite boutiques mostly owing to limited entry-level headcount in the top consulting firms. 

🎯*Salary & Bonus:* IB salaries can be 50-100% higher than consulting from internships to entry-level roles. A McKinsey Business Analyst role can pay you around HKD 30k while JPMorgan S&T and IBD roles offer upto HKD 80k.

🎯*Career Track & Work Life Balance:* The usual IB hierarchy is Analyst, Associate, VP, Director or Principal, and Managing Director or Partner. In consulting, the hierarchy can be Analyst or Associate, Associate or Consultant, Project Leader or Engagement Manager, Associate Partner or Principal, and Partner. So you can be promoted to partner level in about 10 to 15 years of joining as an analyst. But that’s where the similarity ends. Consulting promises a saner work life balance (60 hours weekly) as compared to the ‘unholy’ IBD hours (80+ hours weekly) although the latter pays exceedingly well. 

🎯*Exit opportunities:* IBD, S&T, and equity research analysts can exit to private equity and hedge funds (ideally after 2-3 years experience) but it’s much more difficult for management consultants unless you’re backed by a big brand. You can switch from Big 4 if you have Transaction Advisory or deals experience.

🎯*Which One Should You Pick?:* Not everyone will be in a position to choose between a McKinsey consulting offer and a bulge bracket IB offer. Don't let the salary and bonus be your only deciding factor. If you want to get more deal experience and eventually exit to PE then IB would be a better choice. If you prefer a better work life balance, stability with more exposure to a wider variety of strategic projects, consulting might be your calling.

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