Lots of people are asking these questions now, but no one really knows for sure. We can offer up some near-term predictions, though.
Any industry is driven by demand. The demand for capital, and for buying and selling other companies will always be there - so investment banks themselves will continue to exist into the future.
Bonuses will be way down over levels in recent years, however. 2006-2007 will not return for a long time, and in the near future we're more likely to see 2001 levels for bonus payments.
Goldman Sachs and Morgan Stanley will also be affected - because they are now bank holding companies rather than pure investment banks. However, it's not like they'll suddenly start building ATMs everywhere - they will just be more diversified and have stricter regulation as a result.
What will bonuses at Goldman Sachs and Morgan Stanley be? Well, they'll be down a lot - that much is certain. But it's mostly because the economy is so bad and because so few deals are happening - there's just not enough revenue right now.
"The era of the boutique" may be upon us. Massive talent has left the "old" Wall Street banks lately to pursue new advisory and investment firms, and there's no sign of it stopping anytime soon. The opportunities will lie with much smaller firms that are subject to less regulation and scrutiny.
Nothing in finance is really "safe." Banks, hedge funds, and PE firms have all been failing on a wide scale.
Is anyone still hiring? Yes - in fact, some firms are actually expanding. Funds of funds are still investing and hiring, and anything restructuring-related always needs more heads in a downturn. Hybrid consulting firms/banks have also been more popular lately.
Are we at the bottom? No, probably not. Things will get worse before they get better - and all the new regulation means that influence will shift to smaller firms rather than the established banks of the past.
If you want to break into the industry right now, you need to get outside the US and Europe and think about Asia and the Middle East. And consider positions outside investment banking - think about turnaround consulting, restructuring, and funds of funds - anything that is counter-cyclical is a good bet.
Just like any other field, investment banking must change over time, and investment bankers must adapt accordingly. It's extremely tough to break into the industry currently - but it can still be done with the right combination of persistence and focusing on the right type of firms.
Any industry is driven by demand. The demand for capital, and for buying and selling other companies will always be there - so investment banks themselves will continue to exist into the future.
Bonuses will be way down over levels in recent years, however. 2006-2007 will not return for a long time, and in the near future we're more likely to see 2001 levels for bonus payments.
Goldman Sachs and Morgan Stanley will also be affected - because they are now bank holding companies rather than pure investment banks. However, it's not like they'll suddenly start building ATMs everywhere - they will just be more diversified and have stricter regulation as a result.
What will bonuses at Goldman Sachs and Morgan Stanley be? Well, they'll be down a lot - that much is certain. But it's mostly because the economy is so bad and because so few deals are happening - there's just not enough revenue right now.
"The era of the boutique" may be upon us. Massive talent has left the "old" Wall Street banks lately to pursue new advisory and investment firms, and there's no sign of it stopping anytime soon. The opportunities will lie with much smaller firms that are subject to less regulation and scrutiny.
Nothing in finance is really "safe." Banks, hedge funds, and PE firms have all been failing on a wide scale.
Is anyone still hiring? Yes - in fact, some firms are actually expanding. Funds of funds are still investing and hiring, and anything restructuring-related always needs more heads in a downturn. Hybrid consulting firms/banks have also been more popular lately.
Are we at the bottom? No, probably not. Things will get worse before they get better - and all the new regulation means that influence will shift to smaller firms rather than the established banks of the past.
If you want to break into the industry right now, you need to get outside the US and Europe and think about Asia and the Middle East. And consider positions outside investment banking - think about turnaround consulting, restructuring, and funds of funds - anything that is counter-cyclical is a good bet.
Just like any other field, investment banking must change over time, and investment bankers must adapt accordingly. It's extremely tough to break into the industry currently - but it can still be done with the right combination of persistence and focusing on the right type of firms.
About the Author:
Riyan Richter is a contributing author to Mergers & Inquisitions, the web's top resource on investment banking and the future of investment banking. He writes about key industry trends, how to get recruited, and blunders to avoid in your job search efforts.
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