One reason that you see this sort of behavior in the first place is that very few people are able to successfully become lifetime bankers. The skillset required to be an excellent investment banking analyst is extremely different than the skillset needed to be an investment banking vice-president (or higher). Modeling skills and pitchbook formatting knowledge will do little for you if your job is to try to bring business to your bank. Analysts know that the internal track will end at the associate level (or, more likely, they'd be booted out after two years with no internal promotion to associate at all). Therefore, it makes sense for them to jump ship, and the subsequent prisoner's dilemma also makes sense.<p>What's interesting is that a similar thing happens after two years as a private equity associate, in that almost all PE associates are booted out after two years, being told that they don't have the skillset to be promoted within the shop. At this point, I believe that many employees move onto internal corporate development, but my knowledge here is pretty incomplete about what happens after that break in the track. ("Greatness", perhaps?[0])<p>[0] <a href="http://www.leveragedsellout.com/2007/07/breaks-in-the-track" rel="nofollow">http://www.leveragedsellout.com/2007/07/breaks-in-the-track</a>
The whole time I read this article, I could only think of PG's "The Submarine."<p><a href="http://paulgraham.com/submarine.html" rel="nofollow">http://paulgraham.com/submarine.html</a><p>This article describes a process that's being going on for decades, but manages to do so while imbuing a "drama" that only a headhunting firm could truly muster (or the guy who wrote the book selling for $299).<p>It's true, that the pressures have ramped up over time as private equity becomes a monster approaching the size of the banks themselves.<p>But at root, this article is about people in one great job, looking to go to another great job. News, indeed! Nice work to the press people who put this together.
I can't speak for the PE side, but on the IB side be prepared to work with some truly awful tech and systems. Seriously crappy. Given the tech budgets and spend, it is amazing how much duct tape and band-aids hold together the IT systems across the bank.
This situation is always painted as a "prisoner's dilemma" because otherwise talking about coordinating with regards to hiring smacks of anti-competitive collusion. However, I don't think the timeline is, on the net, disadvantageous to recruits. It's hard to argue that folks on a two-year contract at a bank are somehow disadvantaged by being able to line up their next gig a year or more in advance. It's also hard to ignore the fact that the long lead time gives recruits a lot more margin for error, because they get to make a run at private-equity well before their contract runs out at a bank.
I'm currently working in science, and ultimately interested in science and entrepreneurship. I don't have a PhD yet, and the financial situation in science and with startups makes me pretty nervous. Is it feasible for someone without a finance/business background to jump to an IB/PE job for a few years? I just want to feel more financially settled, before moving on with other things. I'm not quite 30-something, and if it helps at all my microecon professor in college apparently called my parents to get them to convince me to major in econ (I must have been the only one in the class who cared).
Sorry to be a cynic, but:<p>"Promising to take a job with a particular firm can create a conflict of interest for an investment bank analyst, especially one assigned to work with private-equity firms on deals, bankers say."<p>Really, I don't think there will be too much hand wringing for these folks.
The Epicurean Dealmaker's thoughts (he's an MD for some big shot bank):
<a href="http://epicureandealmaker.blogspot.com/2014/07/you-go-first.html" rel="nofollow">http://epicureandealmaker.blogspot.com/2014/07/you-go-first....</a>
I think it's important to dispel a certain myth about this sector of finance.<p>Around and past an IQ of about 135, work boredom is a chronic risk and sometimes a disability. If you're in this set, entry-level banking ("analyst" programs) and private equity aren't where you want to go. Past 135 (much less at 140, 150, or even 160) even 8 hours per day of grunt work is impossible, much less 17.<p>There are plenty of 135+ in finance, but either they go for trading and quant or even IT roles, or they move to "the soft side" at a higher level: usually at least VP.<p>So, yes, these people are above average in talent, but they're not "the most talented" in our generation. Depending on bonuses, they're not even the best paid. Oh, and they're the ones who go on to become VCs (not you, programmers, despite your superior talent).<p>The 23-year-olds making half a million in private equity do exist, but they're (a) uncommon, and (b) not especially smart, just connected and unusually able (top 1%) to grind out hours. If you want to become a Master of the Universe, the optimal IQ is probably in the low-mid 120s: enough that you can build something in Excel, but not near the level that brings boredom or anti-authority risk.