THE INSIDER: Would you be better off as a management consultant?

Several years ago, Goldman Sachs gave a presentation to its MBA summer interns listing 10 reasons why they should not join their greatest competitor. That competitor was McKinsey & Co.

This may seem strange, but the employees of top investment banks and top consultancy firms are a lot more interchangeable than you may think. There are number of former consultants in investment banks, and similarly there are number of former investment bankers in consulting firms. Having worked in both, here's my audit of their desirability.

CV power

Having a top investment bank, or a top management consulting firm on your CV is a powerful ticket for the future. Both amount to a significant statement of candidate caliber. Management consulting, however, will equip you with a broader array of transferable skills for the future.

Compensation

Surely investment banks kill management consultants when it comes to pay? Well, that depends on a few things. In the first couple of years out of university or business school, investment banks' advantage is not that obvious - particularly if there's a bear market.

As an ex-banker, I joined McKinsey after business school while one of my best pals joined Merrill Lynch in corporate finance. This was during a horrible bear market post the dotcom crash. I out earned my Merrill friend for the first two years; only in year three did he start to pull away.

Once you've got through the first three years, it's almost certainly true that the average performing corporate financier/sales person/trader will substantially out earn their consultant counterparts. However, once you reach MD level in an investment bank, compensation starts to plateau.

In an investment bank, you are also subject to substantial volatility, both from the market and personal performance. Meanwhile, consultants in the top houses are on a very consistent trend upwards. Each year brings low double digit earning growth, with some inflexion points when you make partner and senior partner. Sure, there can be dips - no-one is immune to the economic cycle - but they are no where as extreme as in investment banks and a lot less frequent.

Compensation really kicks in for consultants at the senior partner level. Then, you are close to an i-banking mean, with much lower volatility. Take median compensation for 15-20 year veterans and I bet McKinsey or BCG senior partners would come out on top.

Lifestyle

Interesting one. I naively thought management consulting would be an easier ride than my analyst years in corporate finance. I got that mostly wrong. The only difference is that you tend to get your weekends in consulting, unlike in corporate finance. Compared with sales and trading, consulting is way tougher in terms of hours. The weeknights are a write off - if you get home before 10PM you're lucky - and that assumes you are in your home city. The travel is a killer - you're on the road non-stop unless you get a plush home city assignment.

Management consultancy careers are great for Air Miles and loyalty programmes, but not so great for social life.

Stress

I found consulting consistently higher stress than investment banking - which I wasn't expecting. Corporate finance deals have serious stress peaks, but plenty of down time. By comparison consulting is non-stop; the deliverables for the client are not an IPO or a completed acquisition, but are ongoing. In many ways, tthe culture is also a lot more brutal in consulting: your every action is so heavily scrutinised.

Almost every new McKinsey consultant feels that they can't do a thing right for the first year. Reviews in banks are pretty much a joke - if you are doing well you feel the love, if you're not you don't - it's that simple.

Work content

Another interesting one. Many bankers scorn consultants for having no skin in the game. Consultants are commentators standing on the sidelines with no accountability. This isn't entirely unfair, but consultants do get to work on a very wide range of business issues.

If you're an M&A or ECM banker, ok you get to do deals in different industries, but you're always looking through the same lens and running the same process - you never grapple with deep business issues. Sales? Every day talking about the rates market, for example, and pitching 2s 10s steepeners or flatteners. Trading - even worse - the same screens day in day out? Overall, aside from the skin in the game point, consulting has to win that one hands down if you have any degree of intellectual curiosity.

The choice

If you're half sane, you'll probably go for neither. My personal observation is that the brasher, more arrogant, more money focused gravitate to the banks, and the more bookish, prestige focused tend to gravitate to the top consulting houses.