1. Bulge Bracket Investment Banking
|Definition: Goldman Sachs, JPMorgan, Morgan Stanley, Citigroup, Deutsche Bank, UBS, Credit Suisse, Bank of America Merrill Lynch, Barclays, Wells Fargo, names people hear most often about them. These Bulge Brackets are the globally largest investment banks operating on a multinational level. Their customer profile mainly covers top tier institutions, corporations, and also government. These banks offer full-service of M&A, Equity, Debt, Restructuring and others to their clients along with sales & trading, wealth management, and equity research. Bulge bracket is the father of many breakthroughs in the financial field such as mortgage-backed securities (MBS) in the 1980s, credit default swaps (CDS) in the 1990s, and collateralized debt obligations (CDO) in the 2000s.|
They tend to work on the largest deals, usually those above $1 billion USD in size, though they sometimes go lower than that depending on the market.
2. Goldman Sachs and Other Banks, Which one is Better?
Large banks in the group “Bulge Bracket Banks” have changed over time. While Goldman Sachs’ reputation has risen for decades, other names disappeared from the list. Prior to 2008, Lehman Brothers was one of the oldest investment banking firms in New York, now, most students have no idea of who they are.
In the wake of the financial crisis back in 2008, Barclays acquired the investment banking business from Lehman Brothers, making it one of the leading banks on Wall Street with the same capabilities as Goldman Sachs, JPMorgan, Morgan Stanley, etc. Naming Wells Fargo as a Bulge Bracket Bank is still controversial. Since the Covid 19 took hold in January, the bank has been planning to slash thousands of jobs to shake up its business. It is struggling to maintain its name in the Bulge Bracket list. Landing a job at Wells Fargo, however, is considered more high-profile than other banks which are seeking wide public recognition in this competitive field.
Here below is the list of big-leagued names and their revenues from investment banking unit:
Year of foundation
Revenue – Investment Banking Unit
1799/ 2000 (IB)
Bank of America Merrill Lynch
1812/ 1998 (IB)
Source: Dealogic, Firm Research
The market, however, is becoming increasingly competitive with the rise of boutique investment banks.
The financial turmoil of 2008 marks the point when elite boutique banks started gaining momentum, the founders of boutique banks are typically renowned experts, veterans from Bulge Bracket Banks.
Statistics: According to Dealogic, Bulge Bracket Banks account for roughly 50% of the Investment Bank market share.
They hardly lack clients owing to their former expertise. To fend off competition, Bulge Bracket Banks have to restructure their operations and be independent from an array of conflicts. Renowned banks such as UBS and Wells Fargo, which were both in the top 10 of the 2008 Most Prestigious Banking Firm Rankings, have fallen behind the likes of Lazard or Evercore recently. Elite Boutique Investment Banks are officially under the spotlight now.
3. What financial service do Bulge Brackets offer?
Bulge Brackets play an important role in the financial market. These renowned firms’ activities encompass capital raising and strategic transaction advisory services for companies and governments. In a large investment bank, advisory deals are categorized into 4 main areas including Investment Banking advisory service, Sales & Trading, Equity Research and Asset Managements.
Investment Banking advisory services include debt and equity issuances, private placements of capital and advisory on strategic transactions such as mergers & acquisitions, and divestitures.
The roles of Sales & Trading are “making the market” and executing the deals. The division helps distribute stocks and bonds to institutional investors with the support of Equity Research Division, which is geared towards performing analysis and anticipating the market trends based on financial modelling and evaluation numbers and fact-based judgements. The Equity Research serves both internal and external parties.
Beyond financial advisory services, Asset Management is another core business generating billions of dollars for Bulge Bracket Banks. Asset Management Funds run by Bulge Bracket Banks raised hundreds of billions of dollars to invest in various lucrative assets. Asset Management Division also offers “wealth management” advisory service to high networth clients, both institutions and individuals.
4. Distinguish between Bulge Brackets, Middle Markets and Boutique Banks
4.1 Bulge Bracket Investment Banks: The Superstars
Bulge bracket investment banks are the household names that everyone recognizes. They are the global titans of the financial world with thousands of employees and hundreds of locations distributed worldwide.
Bulge Bracket Banks are indeed the superstars in their field without limitations in their specialization, compared with smaller investment banks such as Middle Markets or Boutique Banks. Stars on the rise over the past 10 years, as Elite Boutique Banks have been, can rarely be all-star due to its size and structure.
Large banks hold multibillion-dollar deals. They often work closely with billionaires, biggest conglomerates on a global scale.
If put rising boutique banks aside, the most prestigious investment banking firms are as follows:
- Goldman Sachs
- JPMorgan Chase
- Morgan Stanley
- Credit Suisse
- Deutsche Bank
- Wells Fargo
- UBS Group
- Bank of America Merrill Lynch
If you are a fresh finance graduate, getting a job offer from any of these 10 banks is definitely your dream-come-true. Multibillion-dollar deals and Fortune 500, if not Fortune 100, clients are the words you hear most often about them. Whatever financial service is desired, they can satisfy.
4.2 Boutique Investment Banks: The Rising Stars
As mentioned above, In the aftermath of the Great Financial Crisis in 2008, rising unemployment and dwindling faith in banking giants inclined numerous high-profile senior bankers in bulge bracket firms to leave and establish their own boutique banks. At the same time, the outsourcing of all non-core aspects thanks to technological advancements makes it easier for one or few individuals to run a boutique bank.
Boutique investment banks:
- provide less service, but they are more specialized and industry-focused
- are small in size, but some of their deals are huge cash
- are not international, but they are regionally recognized
WARNING: They are going aggressively for a GREATER share of the M&A Advising market!
Yet, in general, if deals of bulge bracket banks are usually worth $500 million or above, the majority of boutique banks often handle deals worth $50 million, with a few worth up to $500 million.
4.3 Middle Market Investment Banks: Not That Big but Obviously Not Small
People usually want a clear-cut division between big and small, but the reality is not always just black and white. That is why middle market investment banks exist.
A simple definition of a middle market bank is an investment bank that lies between a bulge bracket and a boutique bank. They offer more services than just Mergers and Acquisitions and Restructuring, like Equity Capital Market and Debt Capital Market, but their deal sizes are worth less than that of a bulge bracket one (normally from $50 million to $500 million).
Some more distinguishable features, please!
- Middle market banks have a firm reputation in their home countries with offices spanning across multiple regions, but their international reputation is nothing compared to bulge bracket banks.
- The service range is wider than boutique banks, but the diversity and strength are not as good as bulge bracket banks either.
- Sales and Trading and Equity Research are their most significant services besides investment banking product groups.
- Exit opportunities, although brighter than boutique banks, are still somewhat limited with entry into small or mid-size private equity and hedge fund firms. Corporate finance, however, is a good fit for this category.
5. Pros and Cons of working in Bulge Bracket Investment Banks
- Brand Name & Alumni Network: Bulge Brackets are recognizable names in both finance and non-finance markets. Reputation can make you stand out when applying for an MBA or to higher roles. Diverse alumni network is another advantage of working in large banks. Former bankers with the relationships in mega funds can easily network your ways to mega PE, HF, making your pathway smoother than the majority of other applicants.
- Greater Exit Opportunities: Your chance of getting hired by Mega Private Equity, Hedge Funds are significantly higher than most other career switchers. Your exit opportunities can be biggest private equity firms, hedge funds, and important roles in corporate development, and corporate finance.
- Larger, More Complex Deals: You’ll be involved in large deals requiring in-depth works and complex analysis. The deals are multibillion dollar ones. If you can take advantage of working in Bulge Bracket Banks, working on 2-3 deals simultaneously helps broaden your horizon, and build both your physical and mental stamina.
- Relatively Higher Compensation: At junior levels, your total compensation is relatively higher than Middle Market Bankers and regional Boutique Bankers. Yet, it can be lower than Elite Boutique Bankers in some cases.
- Extremely Competitive to get into Bulge Bracket Banks: Hundred thousands of applicants apply for an internship and a job at Bulge Bracket Banks, and only around 2% receive offers. If you want to start off your career with Bulge Bracket Banks, you’ll have to start early, attend a prestigious university or MBA program, have a great track record of excellence in work and study, and do extensive networking.
- Long working hours: The working hours can be up to 90-100 hours per week in the busy season. You will struggle to find time to go to the gym or hang out with friends outside of banking. You should expect this life for at least the first few years.
- Large Teams with “cumbersome” procedures: The deals are indeed complex and large. Human capital in Bulge Brackets are assigned to various tasks, so attention to advisory is not as high as specialized boutiques.
- Deferred Bonus and Stock-Based Compensation: While the bonus and compensation of Bulge Bracket Banks are generous, the large portion of bonus is deferred to the next year and paid in stock.
6. Bulge Bracket Investment Banking: Career, Salary, and Working Hour
6.1 Career progression and salary
Similar to other groups in an Investment Bank, an real estate investment banker starts off his/her career as an Analyst, then moves up to Associate, Vice President, Senior Vice President/Director, and Managing Director.
The table below shows the salary with respective positions, the numbers listed on the table are averaged numbers surveyed from multiple respondents, for reference purpose only:
|Promotion Timeline||Base Salary (USD)||Total Compensation (USD)|
|Analyst||2 -3 years||80K – 90K||150K – 200K|
|Associate||2 – 3 years||150K – 180K||250K – 400K|
|Vice President||5 years with a strong performance||200K – 300K||500K – 700K|
|Director/Principal/Senior Vice President||5 – 10 years||250K – 350K||500K – 1,000K|
|Managing Director||450K – 600K||1,000K+|
6.2 Working hours
The working hours are quite intense in Investment Banking. For junior levels, the hours hover around 70 – 80 hours per week, and can be up to 90 hours during the busy season due to multiple deals and transactions at the same time.
7. How to Get into Bulge Bracket Investment Banks?
7.1 Common pathways to get into Investment Banking
Classification: Investment Banking Division (IBD) as Tier 1, Sales & Trading (S&T), Equity Research (ER) as Tier 2
The step-by-step guide created with 6 steps (embed a link to 6 steps) gives you the best shot possible at landing one of the most lucrative careers in finance. However, in this article, the pathway to get into Investment Banking is summarized with 4 main steps as follows:
- Resume / Cover letter
- Internship / Relevant Banking Experience
If you want to learn about your specific chance of breaking into investment banks, you can check our Wall Street Career Planning Tool. The tool examines the chances of getting into Wall Street for different backgrounds. It provides the big picture of Wall Street’s job market and acts as a career guideline for you to land your dream job.
For freshman and sophomore:
- Tier 1 summer analyst internships at Bulge Bracket banks are getting more and more competitive. If you have little to zero relatable professional work experience, applying for an Bulge Bracket internship in your freshman and sophomore year is infeasible. However, freshman and sophomore year are golden times to secure a summer analyst in junior year. You should start early and apply for an internship / part-time position at wealth management firms (most realistic if you don’t have a strong network), or ideally boutique investment banks & small private equity funds – this takes a lot of smart networking and some relevant finance course / experience though.
For junior and senior:
- If you are unable to secure a Tier 1 IBD, S&T internship at Bulge Bracket banks, you should focus more on Tier 2 positions at Middle Market & Boutique banks or Sales & Trading and Equity Research. These are considered less competitive, yet still require a lot of smart networking and selling your relevant banking experience on your resume (link to our product). If you are struggling to land an investment banking internship, then internships in Private Equity, Hedge Funds, Venture Capitals, Corporate Development, Management Consulting, Big 4, and Valuations can be viable options. These industries provide a significant overlap or deals directly with investment banking. After equipping yourself with relatable experience, you can apply for full-time analyst roles whose recruitments happen annually.
Top 20 MBA programs:
- Associate roles at Bulge Bracket Banks are highly sought-after targets by MBA students. Top 20 MBA students have a decent chance of getting into both Tier 1 & 2 careers given the school’s prestige and strong alumni network. They are often approached by Bulge Brackets’ recruiters right at the campus. The key to win a full-time associate role upon graduation is to grab a summer associate internship right after the first year of MBA. You will need to bankify your resume and know how to sell your background (link to our product), especially if you did not work in Finance before your MBA.
Outside-top-20 MBA programs:
- Though students outside-top-20 MBA have less competitive advantages than highly achieving top 20 MBA students, they have certain chances of landing jobs at Bulge Brackets. Provided that you have strong finance-related work experience, and do a crazy amount of networking through LinkedIn or professional connection, you can stand a good chance of breaking into Bulge Brackets. In addition, you should consider Middle Market banks and Boutique banks since your chances there are higher.
- Professionals with several years of relevant work experience in Big 4, Consulting, Valuation firms, etc can apply for associate roles and some customized professional programs. Over the past few years, Bulge Bracket banks have offered many slots to experienced professionals. A lot of recruiting programs and events are designed with the aim of diversifying the workforce. The programs vary from firm to firm. For example: Goldman Sachs has Neurodiversity Hiring Initiative, Career Pivots series for professionals who want to learn about the firm and get into the banking career. For this category, your chance will be more decent if you apply for associate roles at Middle Market banks and Boutique banks. The key to win a job at large banks is always sticking with having relatable practical work experience and an extensive network (embed a link to network products) with pro-investment bankers.
For a detailed assessment of your chance of getting into these Tier 1 & 2 division/ careers, leverage our Wall Street Career Tool.
Make your resume stand out and finance-oriented
The investment banks generally look for two key differentiators on your resume.
- History of excellence (i.e. GPA / test scores, awards & honors, brand name, competition wins, leadership) – Quick fact: Goldman Sachs recommends applicants to submit their SAT scores to increase the chance to pass the application round.
- Interest for finance, specifically investment banking (i.e. school major, clubs, related coursework).
- Relevant Experience (i.e. past finance-related internships, past relatable work experience). – Investment banking internships (i.e. IBD internship) work best.
Mistakes: Candidates often just list their activities rather than putting their accomplishments.
Beyond basic mistakes listed out above, what are some of the other common mistakes candidates make? If your resume is not “bankified”, it will be difficult to get past even the 1st screening round. BankingPrep Resume Toolkit (embed a link to resume product) is here to make your resume stand out among the piles of thousands of prominent candidates, and make it finance-oriented even for non-target backgrounds. Your profile will be proofed properly to make sure it has absolutely NO mistakes.
Once you have finance-related experience, the most effective way to get an Investment Banking interview is to network with your school’s alumni. If there’s no alumni at your targeted banks, you better find current professionals in investment banks by connecting with them on cold calls, LinkedIn, or emails. (Need a template for this type of networking)
You should start networking as soon as possible. The ideal time to start networking is 6-12 months before the application begins.
For MBA graduates:
You have to start networking as soon as you get accepted to MBA programs. Similar to the undergraduate group, you should reach out to your school’s alumni first, then current professionals who can give you the most insightful information source.
Mistakes: A lot of students reach out to investment bankers when they do not have any finance-related experience. It won’t look great. You still can connect with them, but it will be better if you can explain detailed plans for your upcoming internships and jobs, and you are looking for their advice.
The internship is considered a prerequisite to land a place in bulge bracket investment banks. Although relevant finance internships in other financial corporations and firms are appreciated, investment banking internships always work best.
- To improve your profile to break into large banks, you need to have at least 1-2 finance-related internships. If you do not have an internship from a bank or a financial services firm, activities such as student-run investment funds in college can be used to support your profile. This is an example of a student’s resume without an internship (link to resume product)
For MBA graduates:
- Internship is particularly important. That’s why you definitely have to have one finance-related experience pre MBA or during MBA. If your pre-MBA full-time jobs are irrelevant to banking and finance, it will be very difficult to get into. Let’s equip yourself with at least one summer associate internship at investment banks/private equity firms/ hedge funds. Here, Investment Banking internships (summer associate programs) always work best.
The interview process will include multiple rounds. Normally, there will be three rounds. The first round of application is to screen candidates’ resumes. The second round of application is to assess candidates’ practical abilities via short interviews. Specifically, if a resume is qualified, the candidate will be sent a link to complete a video-recording process – HireVue as some firms are deploying (i.e. two behavior/technical questions to test the analytical abilities, presentation abilities, etc) or phone screen, which is still popularly used by investment banking firms.
The final round of application is Superday, when chosen candidates are gathered in the office or nearby hotel to meet interviewers in person. Superday (U.S)/ Assessment Centers (EMAM) are designed to assess both your technical capabilities and physical/mental stamina. Here, in order to receive offers, most highly-achieving candidates will have to get through an intense interview day (simulating the real working pressure) with a myriad of questions largely hinged on their respective division/industry preferences in their application.
What do Recruiters Evaluate?
Investment banks will evaluate your skills, your technical knowledge, and how you are interested in the position you apply for. Many questions are designed to test these competences. Simply put, interview questions will be around 3 main parts:
- Behavior questions (often asked in HireVue/Phone Interview)
- Fit questions (Superday/Assessment Centers)
- Technical questions (Superday/Assessment Centers)
In which, behavior questions largely resemble fit questions asked during Superday. Some say that HireVue/Phone screen just asks you behavior questions. However, as mentioned above, you can be asked both technical questions and behavior questions right after you proceed to the second round. The full list of interview question samples and what you need to prepare, let’s check on investment banking interview questions (embed a link to interview question articles). Presented below is the short version of what you should do to have an upper hand in the interview.
How to Prepare and Ace an Interview
You can visit our interview questions articles for analyst and associate roles for more details.
#1. For fit/behavior questions, this is the part where you tell your stories with interviewers. Thanks to these questions, recruiters will learn how your previous academic and work experience fits into the division/industry you apply for.
The questions in the first place always surround:
- Introduce a little bit about yourself / Walk me through your resume
- Your strengths and weaknesses
- Your achievements and failures
- Future plan and why Investment Banking?
What you should prepare here are crafting your own stories (reflecting your achievements, past experience, transferable skills and leadership), and backing up small personal stories to answer questions related to strengths and weaknesses.
If you have some disadvantages in your profile such as low GPA, non-target background, fewer outstanding accomplishments, fewer finance internships, and etc., you have to prepare stronger responses to make up for these “real weaknesses”.
#2. For technical questions, the interview always sticks with accounting, finance, valuations, and practical deals.
- Accounting: Financial statements (types of financial statements, links between different types of financial statements), revenues, operating costs, EBITDA, debt & equity, etc.
- Finance: Equity Investments (stocks), Fixed Income Investments (government bonds, corporate bonds, commodities, currencies) , Derivative Investments (options, futures, forwards, swap), etc.
- Valuation: Valuation metrics and multiples, (Discounted Cash Flow, LBO modeling, etc.), knowledge about mergers and acquisitions, etc.
Beyond technical comprehension, investment banking’s recruiters also want to test your knowledge about the market, practical deals and companies. Your work is to keep abreast of news about markets, imminent IPO, bond issuances, and mergers & acquisitions on a daily basis. The questions largely depend on your experience shown on your resume. That means if you present your active involvement in transactions/deals, you might get many questions about it. Discussing the deals is considered the most challenging part in an interview.