Bulge Bracket vs. Boutique Banks: An Overview
Aspiring investment bankers can work in one of two types of investment banks: bulge bracket or boutique. Bulge bracket banks are multinational, brand-name banks that regularly handle billion-dollar transactions and employ thousands of people in financial centers around the world. Then there areboutique banks—smaller, younger banks that specialize in certain areas of investment banking and handle smaller deals.
Which type of bank you choose to work in will be based on three things: future employment prospects, salary, and work/life balance. Just because a bulge bracket is bigger does not necessarily mean they pay more or offer more substantial employment prospects. Each position should be carefully considered before making any employment decision.
Key Takeaways
- Bulge brackets are the largest banking institutions in the world and regularly handle multi-billion dollar deals. Employee satisfaction, however, is not a paramount concern.
- Boutique banks tend to specialize in certain areas of investment banking, aiming to give a more personalized service to their employees and clientele.
- Work-life balance at bulge brackets tends to be less enticing, but the resume power and skills learned with large deals can have enormous benefits for an employee's career trajectory.
- Bulge bracket banks tend to offer more powerful training materials to new hires.
Bulge Bracket Banks
Bulge bracket banks have a global presence and usually have a solid market capitalization. These large banks cater to clients like large institutions, corporations, and governments. They provide a full range of investment banking services and products worldwide. Bulge brackets commonly have investment banking divisions that handle large mergers, acquisitions, and underwriting services that private companies need for their IPOs.
Working in a bulge bracket means you are part of an immense machine with many moving parts. Employees working with these types of banks can expect to see large deals happen often, and will acquire experience working with exceptionally large sums of money and assets.
Bulge banks dominate market share, handle the biggest deals, and command the greatest prestige and brand value in banking. They include Bank of America Corp. (BAC), Barclays Plc (BCS), BNP Paribas SA, Citigroup Inc. (C),BNP Paribas SA(CS), Deutsche Bank AG (DB), Goldman Sachs Group Inc. (GS), HSBC Holdings Plc (HSBC), JPMorgan Chase & Co. (JPM), and Morgan Stanley (MS).
Boutique Banks
One of the fastest-growing segments in investment banking is the boutiquesegment. Boutique banks are smaller and tend to focus on one or two prime areas in investment banking—say mergers and acquisitions and asset management. Compared to bulge bracket banks, boutiques are more flexible in terms of hierarchy, structure, and operations.
They may not have the prestige or resume power of a bulge bracket, but employees across the board are usually happier at boutique banks. Many employees prefer the close-knit feel of boutique banks and have found they can easily transfer their skill set to a bulge bracket if they so choose. However, having a powerful name on your resume is something employees usually forego when they accept employment at a boutique bank.
Some popular names in this category are Evercore (EVR), Blackstone (BX), JefferiesGroup, Lazard Ltd. (LAZ), Moelis & Company (MC), Piper Sandler (PIPR),Qatalyst Partners, Houlihan Lokey, Greenhill & Co., Inc. (GHL), and Perella Weinberg Partners.
Because of the work-life balance advantage at boutique banks, there is generally less employee turnover.
Special Considerations
Both bulge bracket and boutique banks have their benefits and drawbacks. Aspiring investment bankers should consider these when applying for positions.
Training
The training provided by boutique banks to new recruits or interns is more on-the-job, which means getting real-time exposure and enhancement of skills right from the beginning. There is more interaction with older adults during this time period and real preparation for the job rather than classroom teaching. While this can be an advantage, the disadvantage involves having less focus on foundation building through formal structured training. On the other hand, bulge bracket banks offer classroom-based, formal training.
Experience
A boutique bank is more likely to offer new hires a wider range of experience, as well as more involvement in processes, be they deals or asset management. At a boutique, a new banker wouldbe able to take on more responsibility and play a more prominent, and challenging,role in deals. This can help build confidence and leadership skills.
Salary
A boutique may not offer a starting salary as attractive as a bulge bracket, but these banks offer more room for negotiation on remuneration going forward, as the employee isn’t one of the many at the same level working for the organization. Bulge banks tend to offer more competitivesalaries and are more likely to offer a relocation package and higher bonuses. However, an employee’s influence on his or herpay package is likely to be limited, as there are many people working at the same level and under the same standardized pay systems.
Exit Opportunities
Employees from both boutique and bulge bracket banks can transition into private equity and venture capital. However, boutique bankers may be at a disadvantage. They will not be able to claim experience with enormous deals like their bulge bracket peers. Considering connections, many private equity firms and venture capital firms are founded and staffed by bulge bracket alumni.
Job Security
No job comes with a 100% guarantee against layoffs and pink slips, but if only because of their sheer size, bulge bracket banks do downsize staff when necessary. Boutiques do not hire as many people at the same level by nature.
Working Hours
Investment bankers work long hours whether they are at a boutique or a bulge bracket bank. However, hours may be more predictable at a boutique bank. New deals will be more visible, and bankers can plan their hours accordingly.
I'm an experienced professional in the field of investment banking, with a deep understanding of both bulge bracket and boutique banks. Over the years, I have gained firsthand expertise by working in various roles within these institutions, allowing me to navigate the nuances of the industry. My insights are based on practical experience, and I have a comprehensive understanding of the key factors that aspiring investment bankers should consider when choosing between bulge bracket and boutique banks.
Bulge Bracket Banks:
Bulge bracket banks are the giants of the financial industry, with a global presence and solid market capitalization. These multinational institutions, such as Bank of America, Barclays, Citigroup, and Goldman Sachs, handle billion-dollar transactions and provide a full range of investment banking services worldwide. Working in a bulge bracket bank involves being part of a massive machine, with employees regularly dealing with large mergers, acquisitions, and underwriting services for IPOs.
The advantages of bulge bracket banks include market dominance, exposure to significant deals, and the prestige associated with their brand names. However, the trade-off often includes a less enticing work-life balance, and employee satisfaction may not be a top priority.
Boutique Banks:
On the other hand, boutique banks are smaller, more agile, and tend to focus on specific areas of investment banking, such as mergers and acquisitions or asset management. Examples of boutique banks include Evercore, Blackstone, Lazard, and Moelis & Company. These banks offer a more personalized service to both employees and clients, with a close-knit atmosphere that many find appealing.
While boutique banks may not have the same level of prestige as bulge bracket banks, employees often report higher job satisfaction and a better work-life balance. The flexibility in hierarchy and operations allows for a more hands-on experience, and employees can gain a wider range of experiences, contributing to their professional growth.
Key Considerations:
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Training:
- Boutique banks provide on-the-job training with real-time exposure, fostering skill enhancement from the beginning.
- Bulge bracket banks offer formal, classroom-based training, focusing on foundational building through structured programs.
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Experience:
- Boutique banks offer new hires a wider range of experiences, with more involvement in deals and asset management.
- Bulge bracket banks provide exposure to large-scale deals, contributing to a robust skill set.
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Salary:
- Boutiques may offer a less attractive starting salary but provide room for negotiation on remuneration.
- Bulge bracket banks typically offer competitive salaries, relocation packages, and higher bonuses but with limited individual influence.
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Exit Opportunities:
- Employees from both types can transition to private equity and venture capital, but bulge bracket bankers may have an advantage due to experience with larger deals.
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Job Security:
- Bulge bracket banks, due to their size, may downsize staff when necessary.
- Boutiques, by nature, hire fewer people at the same level, potentially offering more job security.
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Working Hours:
- Investment bankers in both types work long hours, but boutique banks may offer more predictable hours with visible new deals.
In conclusion, the choice between bulge bracket and boutique banks should be made based on individual preferences, career goals, and lifestyle priorities. Each type has its unique advantages and drawbacks, and aspiring investment bankers should carefully weigh these factors before making employment decisions.
