Bulge Bracket vs. Boutique Bank: Which Has Better Career Opportunities?

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 are boutique 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 can be based on three things: future employment prospects, salary, and work/life balance.

Just because a bulge bracket is bigger does not necessarily mean it pays more or offers more substantial employment prospects. Carefully consider your opportunities and options before making any employment decision.

Key Takeaways

• Bulge bracket banks are the largest banking institutions in the world and regularly handle multi-billion dollar deals. Employee satisfaction is not a paramount concern.
• Boutique banks tend to specialize in certain areas of investment banking, aiming to give more personalized service to clientele and personal attention to employees.
• Work-life balance at bulge brackets tends to be less enticing, but the resumé power and skills learned from large deals can have enormous benefits for an employee’s career trajectory.
• Bulge bracket banks tend to offer more powerful training options and 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. In addition, they commonly have investment banking divisions that handle large mergers, acquisitions, and underwriting services that private companies need for their initial public offerings (IPOs).

Working at a bulge bracket bank means you are part of an immense machine with many moving parts. Employees working at these types of banks can expect to see large deals happen often. They can acquire experience working with exceptionally large sums of money and assets.

Bulge bracket banks include Bank of America Corp. (BAC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), Barclays Plc (BCS), BNP Paribas SA, Deutsche Bank AG (DB), and HSBC Holdings Plc (HSBC).

Note

The term “bulge bracket” may refer to the group of big, prestigious investment banking firms listed as underwriters in large, or bulging, type compared to other firms on the prospectus for an IPO.

Boutique Banks

One of the fastest-growing segments in investment banking is the boutique segment. Boutique banks are smaller than bulge bracket banks 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 resumé power of a bulge bracket bank, 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 bank if they so choose.

However, having a powerful, attention-grabbing name on your resumé is something employees usually have to forego when they accept employment at a boutique bank.

Some popular names in this category are Evercore (EVR), Lazard Ltd. (LAZ), Moelis & Company (MC), Piper Sandler (PIPR), Qatalyst Partners, Houlihan Lokey, Greenhill & Co., Inc. (GHL), and Perella Weinberg Partners (PWP).

Important

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. Those seeking to join investment banks should consider these factors 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 experienced employees during this time period and real preparation for the job rather than classroom teaching. While this can be an advantage, the disadvantage is less focus on foundation building through the formal, structured training that bulge bracket banks offer.

Experience

A boutique bank is more likely that a bulge bracket bank to offer new hires a wider range of opportunities to gain experience, such as greater involvement in processes, be they deals or asset management. At a boutique, a new banker would be able to take on more responsibility and have 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 that at a bulge bracket bank, but these banks offer more room for negotiation on remuneration going forward, as the employee isn’t one of many at the same level working for the organization.

Bulge banks tend to offer more competitive salaries and are more likely to offer a relocation package and higher bonuses. However, an employee’s influence on his or her pay 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 while their bulge bracket peers can. In addition, 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 in the normal course of business.

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.

What Type of Banking Do Investment Banks Do?

Investment banking involves advising and managing for clients, whether companies or governments, complex financial transactions such as mergers and acquisitions, IPOs, debt issuances, and corporate restructurings.

Do Boutique Banks Focus on a Particular Niche?

Yes, their objective and size mean that boutique banks tend to focus on particular areas of investment banking where they can offer exceptional expertise, custom solutions, and personal service.

Where Are Bulge Bracket Banks Primarily Located?

They’re located in the major financial centers around the world, such as New York, London, Hong Kong, Singapore, Paris, and Beijing, among others. Normally, they have offices in all global regions.

The Bottom Line

Career opportunities can be found at both boutique investment banks and larger, industry-leading investment banks sometimes referred to as “bulge bracket banks.”

However, each investment banking firm offers a workplace environment that can attract or disappoint candidates, based on more than salary.

Bulge bracket banks are large financial institutions with many employees that may offer starting workers less interaction with experienced managers and fewer opportunities for meaningful involvement in deals. But their names can be eye-catching on resumés.

Smaller boutique banks provide specialized expertise to clients, and can usually offer new hires more in the way of in-depth work experience, work-life balance, and employee satisfaction.

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