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Notes -
The most important thing to understand about investment banking analysts (and associates) is that they do - in the purest, Graeberian sense of the word - a bullshit job. Moreso even than consultants.
Investment banking is a critical part of a market economy. But the role of the analyst and associate is a curious historical oddity. Before modern investment banking emerged in the 1980s the role didn’t really exist; junior bankers were clerks and then the good ones quickly became dealmakers. It emerged because every major investment bank can handle the same IPOs, M&A, secondary offerings and so on in exactly the same way. There is no functional difference whatsoever between hiring Goldman Sachs and hiring Morgan Stanley, or Barclays or Citigroup for that matter, to IPO your big tech business or to issue debt for your public athleisure company. They know the same people at the same funds, can structure the same things in the same way etc.
At the boutique and mid-market level, and in niche markets where capital is harder to find and more picky (like the one I work in), actual skill on the part of bankers is required because it’s not guaranteed that you’ll actually be able to raise money (for example). But at the major bank (‘bulge bracket’) level, even the most retarded banker of all time is not going to have any issue IPO’ing Arm or issuing equity on behalf of Nvidia or Shell.
This led to a strange arms race starting in the late 1980s among bankers about who could add the most ‘value’ to their client offering. The banks operate as a soft cartel in fee terms, so Barclays isn’t going to undercut Goldman by offering half the fees in basis point terms on a deal. But they can compete on flair, and on pitch decks. This, in turn, led to the pitch deck arms race that exists today, where junior bankers work 100 hour weeks making up bullshit numbers for PowerPoint slides that nobody reads in the hope that this will surely lead to us getting the deal and not the shitstains at MS or Bank of America and so on.
In the 1980s, a pitch deck might be a few hastily Xerox’d pages stapled into a booklet. Today it’s a 200 page brochure. No bulge bracket bank can opt-out because then you look like amateurs next to Goldman’s production design (all BB banks have large graphics departments that work on this stuff, not even outsourced to India but often actually in NYC/London). Clients don’t care because they pay the same fee regardless (as mentioned), so they might as well take the brochure.
The analyst economy works for banks. Most analysts leave after a couple of years, either because they’re forced out or go to private equity, those who are good enough and don’t want to leave can stay and eventually rise to become actual dealmakers (above VP you’re essentially working a normal corporate sales job most of the time).
Beyond the fact that the need for the role is nonexistent (analysts perform no intellectual labor, just downloading and copy-pasting from Bloomberg/Factset), I think one of the best things AI could do would be to get everyone to realize how pointless pitchbook inflation has been. But it’s more likely this is just an excuse for layoffs because deal volume is down since 2021.
I work in an industry where I end up having to read pitch books. Man do they say a lot without saying a lot. Buzzword on top of buzzword.
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