Investment bankers make things happen. Whether it’s brokering huge deals or helping a company go public, these financial whizzes ensure that money is moving, and the wheels of business are turning.
As technology continues to disrupt traditional financial models, investment bankers are on the front lines, working to find new and innovative ways to keep the money flowing.
A 2017 study conducted by PwC revealed that 82 percent of financial institutions expect to increase fintech partnerships between 2020 and 2022. Additionally, 77 percent will increase internal efforts to innovate, and 30 percent will already invest in artificial intelligence (A.I.).
Drawing from the above findings, it’s safe to say that the role of investment bankers will continue to evolve as fintech changes the landscape of finance. To make it in the competitive and cutthroat world of investment banking, you need to understand what the job entails.
This complete career guide will give you an overview of the industry, including salaries, job descriptions, and skills required. Whether you’re just starting or are considering a career change, read on for everything you need to know about investment banking.
What Is an Investment Banker?
Let’s start with the basics—who is an investment banker?
Investment bankers are the middlemen of the financial world, working with individuals, corporate clients, and the government. As key players in the securities industry, they are responsible for the underwriting and selling of stocks, bonds, and other financial commodities.
In simpler terms, investment bankers act as a link between the companies that issue securities and the investors who buy them.
Giving up-to-date financial advice, acting as go-betweens in merger and acquisition negotiations, and helping to get companies listed on stock exchanges are just a few among the many duties that an investment banker may be responsible for.
These sharp-witted professionals typically work with banks, securities firms, or large accounting firms. But insurance companies, venture capitalists, and the government also employ them. Working long hours (sometimes into the night and over weekends) is par for the course, as is a high-stress level.
But for those who thrive under pressure and have a knack for numbers, a career in investment banking can be exciting and rewarding.
In today’s technology age, investment bankers are more in demand than ever before. With the development of online trading platforms and mobile apps, investors now have easier access to information and can trade securities with the click of a button.
This has created a more competitive landscape, and to stay ahead, investment banks are turning to technology to help them speed up the process and close deals more quickly.
As a result, investment bankers need to have more than just financial know-how. They must also be well-versed in the latest Fintech Trends and understand how to use new technologies to their advantage.
How to Become an Investment Banker
There is no one-size-fits-all answer when it comes to becoming an investment banker. But the most common path is to obtain a bachelor’s degree in business, economics, or any finance-related field from an accredited university. Many investment bankers pursue a master’s degree in business administration (MBA) or a related field.
While having an MBA is not a prerequisite for the job, it can give you a leg up on the competition and help you advance your career more quickly. Suppose you’re looking to specialize in a particular area of investment banking, such as mergers and acquisitions (M&A) or venture capital. In that case, there are now MBA programs that offer concentrations in these areas.
In addition to formal education, it’s also essential to have strong analytical and problem-solving skills. Being able to interpret data and financial reports and create presentations and pitch decks is critical. After all, as an investment banker, you’ll be dealing with numbers daily.
Other steps you can take to become an investment banker are:
- Join professional organizations, such as the Chartered Financial Analyst Institute (CFA Institute) or the Financial Industry Regulatory Authority (FINRA).
- Get certified in financial modeling. You can sign up for online courses that will teach you the basics of Excel and more advanced topics like valuation and capital markets.
- Stay up to date on the latest Fintech Trends. This includes everything from blockchain to robo-advisors. By understanding the applications of these technologies in the securities industry, you’ll be better equipped to advise your clients and help your firm stay ahead of the competition.
- Network, network, network! Attend industry events and meet as many people as you can. The more contacts you have, the better your chances of landing a job in investment banking.
- Don’t forget to brush up on your math skills. It’s common knowledge that investment banking involves working with numbers, and a significant amount of math is involved. So, if you’re rusty on your algebra or calculus, now is the time to brush up!
- Develop yourself in your current role. If you’re not currently working in investment banking, that’s ok. There are still things you can do to develop your skills and knowledge. For example, if you’re in sales, start reading up on financial analysis and valuation. Start learning about investment banking products and services if you’re in marketing.
By developing yourself in your current role, you’ll be better prepared for a career in investment banking when the time comes.
Investment Banker Degree
While no one specific degree will guarantee you a job as an investment banker, several degrees will keep you ahead of the competition.
The most common degrees and certifications for investment bankers are:
- Bachelor of Science in Business
- Bachelor of Science in Economics
- Bachelor of Science in Finance
- Master of Science in Business Administration (MBA)
- Master of Science in Finance
- Doctorate in Business Administration (DBA)
- Certified Public Accountant (CPA)
- Chartered Financial Analyst (CFA)
- Certified Financial Planner (CFP)
- Doctor of Philosophy in Economics and other related fields.
Some courses that investment bankers would need to take to acquire any of the above certifications are:
- Corporate finance
- Financial accounting
- Managerial accounting
- Financial Markets
There are also some online degree programs available, which serve as a great option if you cannot attend a traditional brick-and-mortar school. These programs offer flexibility, and you can complete them at your own pace.
To further increase your chances of getting hired as an investment banker, it’s good to get some work experience under your belt. Many banks offer internships and entry-level positions, which can give you a taste of the job and help you decide if it’s the right fit for you.
These internships usually last for a defined period and offer the opportunity to learn about the different aspects of investment banking. While internships are not required, they are highly recommended if you want to break into the industry. They provide valuable experience and can give you a competitive edge when applying for jobs.
Another way to make yourself more attractive to potential employers is to enroll in an investment banking boot camp. These boot camps are designed to equip you with the skills and knowledge you need to succeed in the industry. They usually last for a few weeks or months and are offered by various online and offline institutions.
What Does an Investment Banker Do?
An investment banker is responsible for a wide variety of tasks, all of which are vital to the success of their firm.
Some of the most common duties of an investment banker include:
- Originating and executing transactions: They work with clients to identify their needs and then develop creative solutions to satisfy those needs. This can involve issuing new debt to advising on mergers and acquisitions.
- Business development: Investment bankers are always looking for new business opportunities. They network with potential clients, identify new business opportunities, and pitch their firm’s services to those clients.
- Financial analysis: Investment bankers are top of their game when we talk about financial interpretation and analysis. Their in-depth knowledge of financial markets and products can identify relevant opportunities and potential pitfalls. They also advise on the actionable steps to further mitigate business risks.
- Portfolio management: An investment banker plays a vital role in managing and growing their firm’s investment portfolio. They decide which assets to buy or sell and when to do so. They also monitor the portfolio’s performance and make necessary adjustments to ensure that it meets the firm’s objectives.
- Creating and presenting financial models: A large part of an investment banker’s job is creating financial models. These models are used to assess the viability of potential transactions and decide whether or not to proceed with them. As an investment banker, you need to be able to create complex financial models from scratch and present them clearly and concisely.
A typical day in the life of an investment banker involves a lot of number crunching, analysis, and presentation. They are known for working long hours and juggling multiple projects at any given time.
Investment Banker Job Description
Any organization looking to raise capital can benefit from the services of an investment banker. The day-to-day job description of an investment banker on a job board will include:
- Identifying and soliciting potential investors.
- Developing different financial models to value equity and debt for acquisitions, mergers, and equity funding transactions.
- Preparing and delivering presentations to clients.
- Advising clients on the best way to raise capital.
- Negotiating on behalf of clients to get the best terms for their transactions.
- Executing transactions by working with clients, investors, and other bankers.
- Coordinating due diligence activities.
Investment bankers can occupy a variety of positions within an organization.
These roles range from the office of a junior-level analyst up to the position of a managing director. The job title will depend on the firm’s size, the type of clients they work with, and the transactions they are involved in.
Some of the most common job titles are:
- Investment Analyst
- Investment Associate
- Vice President
- Managing Director
With the rise of technology, many investment bankers can now do their jobs remotely. Various remote and onsite job openings can be found on job boards such as Indeed, LinkedIn, and Glassdoor. This has opened up a whole new world of opportunities for those who want to enter the field but may not be able to do so in a traditional office setting.
The salary of an investment banker will vary depending on the size of the firm they work for, the type of clients they work with, and the transactions they are involved in. However, according to Glassdoor, the average salary for an investment banker is $187,382 per year.
And the top employers of investment bankers are typically large banks, financial institutions, and technology enthusiasts like:
- Goldman Sachs
- JP Morgan
- Morgan Stanley
- Barclays Capital
- Deutsche Bank
Investment Banker Qualifications
An investment banker’s job is fast-paced, challenging, and exciting. If you’re considering a career in investment banking, you’ll need to have:
- A degree in business, economics, or a finance-related field
- Strong analytical and quantitative skills
- Excellent verbal and written communication skills
- The ability to work long hours and meet deadlines
- Excellent mathematical skills
- Excellent written and verbal communication skills
- The ability to work well under pressure
- Problem-solving skills
- The ability to work independently as well as part of a team
It would help if you also had a solid understanding of the financial markets and the securities industry.
Career Outlook of an Investment Banker
According to a Bureau of Labor Statistics report, jobs in the securities, commodities, and financial services industry will grow by 8.4 percent from 2014 to 2024. This is higher than the average growth rate for all occupations.
The report attributes this growth to the increasing complexity of financial products and the need for more sophisticated advice. As more businesses expand into new markets, there will be greater demand for investment bankers to provide advice on mergers, acquisitions, initial public offerings, and other complex financial transactions.
Technology is also playing a crucial role in the changing landscape of investment banking. The use of computer-based models to value companies and securities has increased the accuracy of investment decisions. And at the same time, with mobile devices and social media, investment bankers can effortlessly connect with clients and potential clients.
In summary, the future of investment banking looks bright, and there are plenty of opportunities for those who are willing to work hard and stay ahead of the curve.