Investment Banking Analyst – Part 1: Sleep Deprivation

This will serve as the first post in a two part series examining the health and aging effects of the lifestyle of an investment banking analyst.

An investment banker has two primary job functions: to advise on major transactions and to raise capital for businesses. These business transactions include mergers and acquisitions activity – essentially buying or selling other firms – and the capital raising activities include raising money through stock and debt offerings. An analyst in investment banking is the most entry-level position, whose job responsibilities include industry research and extensive use of Excel in creating financial models. Investment banks are often as thinly staffed as possible to cut costs and increase returns, so analysts often work an exorbitant amount of hours per week. A typical analyst week might include an all-nighter or two, and not uncommonly totals 120 or more hours of work per week.

This job includes a number of negative health consequences; chief among them is sleep deprivation. When the work load calls for being at the office for two complete days straight without sleep, the effects of sleep deprivation begin to take effect. Of the effects, headaches, irritability, and memory losses will cause a decrease in work quality, productivity, and ability to work in a team. A recent Gallup poll suggested sleep deprivation can cause as much of a detrimental effect on job performance as the consumption of alcohol. Although investment banks surely realize this, I believe banks want to squeeze every ounce of work out of an analyst as possible. Despite the analyst’s productivity decreasing as they go without sleep, they are still producing some work, and the investment bank wants to squeeze every bit of work out of the analyst in the shortest amount of time they possibly can.

As it relates to aging, one would struggle to find an analyst who would disagree in saying that they have physically aged more quickly as an analyst than they would have otherwise aged at a 40-hour-per-week job. Investment banking analysts commonly work in banking for two years before jumping to another career opportunity. The benefit of working so many hours is that analysts get four years of work experience in two years’ time. However, analysts frequently feel as though they have aged four years in two years’ time. A Gallup poll suggests that about 30% of Americans say they do not feel well-rested, but virtually all investment banking analysts feel this way. This appearance and demeanor with which analysts carry themselves could have negative consequences further along in the aging process.

Another downside of working those extreme numbers of hours in a week is the inability to provide caregiving services. Although analysts are frequently in their early twenties and do not have relatively high caregiving demands, 120 hours of work in a week almost completely preclude any opportunity at all. Many religions and cultures ask for young adults to take care of aging parents or grandparents, which is almost impossible to do as an investment banking analyst. With very little sleep and virtually no free time, an analyst cannot even find the time to take care of a pet.

While sleep deprivation is a very serious downside of working in investment banking as an analyst, perhaps the most taxing con is yet to be discussed – stress. Stress will be discussed in part 2, which will be up shortly.