Is Investment Banking Worth It?

At a family gathering a few months ago, I mentioned that a European city I had lived in was “going downhill.”

One of my cousins overheard this comment and immediately asked a pointed question:

“OK, but what’s going uphill? Everything is getting worse. Which cities are better to live in now than 5 or 10 years ago?”

I didn’t have a good answer because he was right.

I’m borrowing this quote here because it also describes my views on investment banking as a career.

Yes, it is worse than in 2016 or 2006 in terms of the inflation-adjusted compensation and the recruiting effort required, so the Rewards / Effort Ratio has shifted:

But everything else competing with IB jobs – Big Tech, law, consulting, Big 4, corporate finance, etc. – started out worse on the “Rewards” side and is getting even worse.

I’ll start with my short version here and then move into the details:

The Short Version of “Is Investment Banking Worth It?”

Many people frame the question this way:

“Working 80 – 100 hours per week is terrible, but if you can survive it for a few years, you earn a lot and get great exit opportunities. So, assuming you can do it and you want to stay in finance, IB is easily worth it. If not, it’s not worth it.”

This is an incomplete framing because the time and effort required to break in have increased significantly, and they are bigger risks.

And, frankly, working non-stop for ~2 years in your 20s is not that big a sacrifice.

If you value career advancement and high compensation, “brutal hours in the early years” is routine in many other fields, such as medicine, law, and even tech startups.

So, I would frame it this way:

• The rewards from investment banking (compensation, advancement, and exit opportunities) are still quite good if you can survive the hours/lifestyle for the first few years.
• But the effort required to get in is now much higher since you need a series of internships and a very early start to networking and interview prep (Year 1 of university). If you miss that, lateral and MBA hiring still exist, but they have also become more competitive and depend heavily on the current hiring market.
• So, the biggest risk is that you spend a lot of time preparing to enter this industry, only to find out that it’s not feasible or that you do not like it.
• The outlook isn’t great due to global/macro concerns, more AI/automation, and the smaller headcounts that are likely to result from both. Banks will always hire a certain number of Analysts and Associates, but it will be harder to win the initial offers.
• However, these same factors are affecting many other industries to an even greater extent, which leaves us in that “Everything going downhill” scenario.

Why Investment Banking Easily Used to Be “Worth It”

When I got into the industry in ancient times – before the 2008 financial crisis – it was 100% possible to attend a good university, earn high grades, and win full-time IB roles without having relevant finance internships.

Of course, you couldn’t get a Goldman Sachs IB offer with that profile, but students still won offers at lesser banks after deciding to pursue finance quite late.

You had to have some technical knowledge, but the bar was lower, and bankers mostly assessed whether you had the temperament to do the job.

The assumption was that if you were smart enough and put in very long hours, you could learn everything on the job.

After you started working, you also had more time to look for exit opportunities because on-cycle private equity recruiting started later; many large funds waited almost a year to kick off interviews.

It’s hard to find accurate compensation data from back then, but top-ranked 1^st Year Analysts in those years peaked at $150K in total compensation ($60K base + $90K bonus).

Adjusted for inflation, that would be over $240K today, which is well above what pretty much any 1^st Year Analyst now earns.

In short, investment banking in this period allowed smart, hard-working students to get high-paying jobs and set themselves up for even better jobs without committing to the career from Year 1 of university or spending huge amounts of time/effort on preparation.

Not many people seriously asked, “Is investment banking worth it?” because the answer was obvious from 2 seconds of math.

What Changed Over Time

The 2008 financial crisis was the first “shoe to drop.”

Everyone panicked, banks immediately cut their headcounts and hiring plans, and… surprisingly, plenty of students still wanted to break in.

Afterward, banks began to demand more and better internship experience and raised the bar for the technical knowledge required to pass interviews.

In the mid-to-late 2010s, banks began to accelerate their recruiting processes and automate the initial interviews with tools like HireVue.

They expected you to have 1 – 2 solid internships in your first ~1.5 years of university, leaving little time to experiment or try other industries first.

Summer internship recruiting in the U.S. eventually settled on a start date about 1.5 years in advance of the internships, though this varies from year to year.

Buy-side recruiting kept creeping up as well, to the point where some PE mega-funds recruited a full 2 years in advance (!). Analysts would start their jobs, do nothing, and immediately recruit for these roles.

Exit opportunities remained good, and compensation increased modestly, but investment banking also lost ground to Big Tech jobs and even fields like consulting.

These fields didn’t offer the pay ceiling or exit opportunities that banks did, but you could still earn a few hundred thousand per year with a much better work/life balance.

Plus, you didn’t have to start preparing from Day 1 at university to get in.

COVID and the Aftermath

When COVID struck in 2020, most industries initially panicked… before over-hiring amid a boom in deal activity (banks and law firms) and a much higher demand for online services and products (Big Tech).

Hiring standards fell, bonuses skyrocketed, and it seemed like you couldn’t go wrong with any of these jobs.

Somehow, investment banking hours got even worse, but recruiting got easier, and exits and compensation were strong, so most people went along with it.

Of course, it didn’t last: Inflation, higher interest rates, and the Ukraine War all increased volatility and pushed down deal activity and bonuses.

Tech companies began their rounds of layoffs, everyone moved into “efficiency mode,” and the age of the “Fun Tech Job” seemed to be over.

Recent Changes: AI, Automation, and Headcount Fears

We still have some of these macro issues (and new ones, like Iran), but the AI boom/craze has also changed the appeal of many careers.

The doomers claim that everyone will lose their job to AI, especially in “knowledge work” fields like finance, law, and accounting.

I think this is greatly overstated, but there is evidence that the job market is bad in certain industries, with tech firms in 2025 laying off nearly 250,000 employees.

The total headcount is still up substantially over the past 10 years, but most Big Tech firms have not been growing much over the past few years (e.g., Microsoft and Alphabet):

The work environment has changed drastically, with much higher expectations and a persistent fear of job loss across almost all departments.

Everything seems to be going downhill, but in my view, other industries are at greater risk than IB for several reasons:

• Headcount: Banks in the U.S. do not hire that many IB Analysts; the total class size across all banks is a few thousand per year vs. hundreds of thousands of new hires per year in tech. Also, the compensation expense in most IB groups is top-heavy since the senior bankers earn far more than junior staff.
• Turnover and Promotions: IB is based on the “up or out” principle. Since bankers constantly leave for other industries and firms, banks always need to replace them with new hires. Even if these new hires are not immediately useful, they need to maintain the pipeline.
• Clients & Deals: Many software engineering, administrative, and back/middle-office roles are easier to automate because they are not client-facing. As an Analyst or Associate, you are not exactly client-facing, but you still have some client interaction. Also, banks offer specific results: If you successfully raise capital or close a deal for a client, you get paid. If not, you don’t.

Industries that use hourly billing, such as law and consulting, are at greater risk of disruption because work can always be done more efficiently.

But in banking, efficiency concerns are negligible because clients pay for closed deals.

Yes, class sizes will probably shrink, but I don’t think firms can “stop” hiring Analysts and Associates.

The most likely scenario is that junior bankers get asked to do more with less, and headcount levels might become less sensitive to deal volume.

So, What Does This Mean? Is Investment Banking Worth It?

If you are at a target university (a top-ranked school), you start the recruitment process early, and you are 100% fine with working 80+ hours per week for a few years, yes, investment banking is still worth it.

Also, if you are in a closely related field, the hiring market is good, and you are serious about making a major change, lateral hiring could still be worth it.

But if you are not in one of these categories, the rationale is weaker:

• Target School But Issues: If you got started late, have no real finance experience, or have low grades, I’m not sure it’s worth the uphill battle.
• Non-Target School: Honestly, I think you would be better served by aiming for a different field at first (see below).
• Huge Career Changer: If you’re moving in from an MD or PhD program or engineering or something else quite far removed, I’m not sure it’s worth it (age could also be an issue).

If you decide against IB, what should you do instead?

Many people would tell you to become a plumber or electrician or go to medical school, and I suppose these are options.

But if you want more of a traditional office job, I recommend focusing on careers with lower barriers to entry and sales/relationship skills that are difficult to automate.

For example:

• High-Ticket Sales in industries like pharmaceuticals, luxury goods, or industrial equipment.
• Wealth Management – yes, I know, people look down on it, but if you’re good and stick with it, it can be just as lucrative as IB.
• Commercial Real Estate – Not all roles, but anything that requires in-person visits, on-the-ground work, and high-end property sales will always have a human component.
• Corporate Banking – It’s less competitive than IB, offers better work/life balance, and potentially turns into more of a “relationship” role earlier in your career.

I would avoid fields with less of a client- or deal-facing element, such as FP&A and even certain hedge funds and prop trading firms.

I don’t think any careers are going uphill in 2026, but you can avoid ones with the steepest downhill dives.