An Investment Banker's job description and compensation are shown below.
A typical investment banker's job description may include a wide range of duties and responsibilities. Financial advisors who work with investment banks help their clients raise capital through the issuance of debt or the selling of stock. Other roles include assisting customers with mergers and acquisitions (M&As) and providing guidance on specialized investment opportunities such as derivatives, among other things.
The Allure of a Career in Investment Banking
Finance students fresh out of college who are outspoken and ambitious are usually driven to investment banking by the promise of high salaries and a high level of prestige. In this field, a 22-year-old with only a bachelor's degree can earn six figures in their first year out of college, which is a rarity in most other fields. Aside from that, investment banking is sometimes utilized as a stepping stone into lucrative and well-known careers in venture capital, private equity, or wealth management. as The reason is that the big Wall Street banks are fully aware that their presentations will be warmly welcomed by eager financial students at Ivy League colleges, as well as other elite schools such as Harvard, Yale and Stanford. Duke and The University of Chicago, they recruit aggressively at these institutions.
Misconceptions about the Investment Banking Industry
Many people believe that anyone who is good with statistics is a good fit for investment banking. This is a common misconception. Despite the fact that quantitative ability is a highly desirable trait, it does not guarantee success in the investment banking industry on its own. Additionally, the best investment bankers are persuasive, forceful, quick-witted, and have steadfast work ethics. They are also math whizzes, which helps them stand out from the crowd.
Investment bankers make a lot of money, but the job is not without its challenges. The financial crisis of 2008 harmed the reputations of investment banks, despite the fact that they worked tirelessly in the years following the crisis to repair public attitudes. They made cultural adjustments, such as making their workplaces more family-friendly, to better serve their employees. While an investment banker's work week, particularly during the first few years, is rarely less than 60 to 70 hours, this has resulted in better hours, greater flexibility, and more time with family at some firms as a result of the increased demand. Following the results of an internal study conducted in 2021, an investment banker in his or her first year at the Wall Street firm Goldman Sachs works on average 98 hours per week.
The obligations of investment bankers
Investment bankers are involved in a wide range of projects for the benefit of their clients. The banking industry is divided into two camps: those where each banker wears many hats and those where personnel is divided into separate roles, with individual bankers executing different jobs. Each and every investment banking position revolves around raising capital for customers. Most of the time, this is accomplished by one of two methods: issuing debt or selling shares in the company.
When debt is issued, bonds are sold to investors to cover the cost of the debt. In essence, when an investor acquires a corporate bond, they are lending money to the issuing company for a specified length of time, usually at a predetermined rate of interest. After the bond's term has expired, the issuing company pays the investor interest on the bond's principal and returns it to the investor at the end of the term.
Finding qualified investors with a large amount of money to invest is often one of the most significant challenges a company faces when attempting to obtain financing through the issuance of debt securities. Investment banks have entire floors staffed with aggressive salespeople, each of whom has an extensive contact list from which to solicit investment business from their clients. This is where an investment banker comes into play. Investment banks are engaged by companies that want to raise capital by issuing bonds. They do so not only to aid with bond structuring, but also to gain access to the bank's extensive network of potential investors, among other things.
When selling equity or stock in order to raise funds, the process is the same as described above. When a company announces an initial public offering (IPO) in order to sell stock to the general public, investment bankers are among the first people to receive a call from the company's executives. The performance of newly public companies' initial public offerings (IPOs) is scrutinized to the point of insanity, according to some analysts. The success or failure of an initial public offering (IPO) typically sets a company on an irreversible path, for better or worse. As a result, firms hire investment bankers to aid them in locating high-profile investors and positioning their initial public offerings (IPOs) in the best possible position to succeed.
Customers gain from the services of investment bankers in a variety of ways. They assist in the brokering of mergers and acquisitions, bringing their knowledge and experience to bear to ensure that everything goes smoothly. In situations where clients are looking for investment alternatives that are outside their areas of expertise, financial advisors can assist them in locating the most suitable opportunities.
These are the qualifications you'll need to be a successful investment banker.
At first glance, it appears that the entry requirements for a position in investment banking are relatively low. The educational requirements aren't unduly demanding in this case. Despite the fact that an MBA is a highly sought-after qualification in the industry, many investment bankers hold merely bachelor's degrees, with a small number holding even lower qualifications. While the tests required to get various securities licenses, such as the Series 79 and Series 63, are not easy, In comparison to the bar exam or the Certified Public Accountant examination, they do not have the same level of prestige.
When it comes to being a successful business owner, the investment banking industry is a very competitive field. Because the income is so high and the profession is so well-known, candidates outnumber job openings on a yearly basis, especially in high-demand cities like New York and Chicago. Having the requisite skills and abilities, as well as the ability to exhibit them, is essential for obtaining employment. One of the first perks is the opportunity to attend a highly regarded institution. A degree from an Ivy League institution is required for any aspiring investment banker, and other famous universities such as Duke and The University of Chicago also see a significant amount of recruitment activity from the major financial institutions.
Persuasion, tenacity, and, perhaps most importantly, an unwavering work ethic are all characteristics that are essential in this position. However, while a degree in economics or finance provides a strong intellectual basis, it is also necessary to possess extra skills such as persuasion, tenacity and, probably most importantly, a tireless work ethic. After a job offer has been given, the competitiveness of the sector remains. The first few years are unpleasant because they serve to weed out a large number of people who do not belong in the community. A great deal of time is spent on the phone, recruiting potential investors and selling investment projects. Individuals with thin skin, who are unable to talk eloquently, or who become fatigued easily may suffer as a result of their job duties.
Hours and Compensation
The base compensation of an investment banker is around $83,660 per year. In the case of a first-year banker, bonuses can significantly raise their earnings, and the better they perform, the more money they will receive. A acceptable total income aim for an investment banker in 2020 is expected to be more than $160,000 per year for the top ten percent of earnings in 2020, according to most estimates. 1
This money does not appear without a significant investment of time and work. Anyone who is unable or unwilling to work weeks that consistently surpass 80 hours should definitely look for another career in a different industry. Investing bankers who come at the workplace until midnight or later but need to be at their desks before the opening bell the next morning may be accommodated in bed rooms provided by some financial institutions. Investment banks have worked to improve work-life balance as part of a culture change they hope will aid the industry in its efforts to repair its image following the financial crisis of 2008. However, the day when investment banking is no longer a nine-to-five career is still a long way off, if it ever happens at all.
A description of the responsibilities of an investment banker
Investment banks aid businesses and governments in raising cash through the issuance of stock or the borrowing of funds from financial institutions and other sources. In mergers and acquisitions, they also act as advisors and middlemen between the parties.
The capital markets are a high-stakes, fast-paced, and closely regulated industry that requires constant attention. Companies in various industries require the services of investment bankers to manage financial transactions while their own employees are otherwise occupied.
Who Actually Requires Them?
Investment bankers are employed by firms seeking to go public, huge corporations contemplating mergers and acquisitions, and existing corporations seeking to raise capital for substantial expansions and acquisitions. Professional bankers act as a link between a company's investors and the rest of the world.
In the year 2019, Goldman Sachs was involved in the sale of Symantec's enterprise division to Broadcom, the acquisition of Tableau Software by Salesforce, and the sale of Ultimate Software to a private equity consortium, among other transactions.
It is necessary to have good social skills.
Despite the fact that these firms have trading and sales divisions, an investment banker's traditional duty entails meeting with customers, preparing offers, making financial predictions, and working on pitchbooks, which are sales books aimed to recruit new clients to the organization.
Investment bankers are distinguished from the majority of their counterparts in the financial business by the requirement for exceptional interpersonal skills. While many business students are capable of completing the technical functions of an investment banking associate, only a small number possess the stamina and social graces necessary to effectively engage with clients in the real world. It is quite beneficial if you have the suitable personality.
In the morning, I follow a routine.
After surviving the first chaos and worries of the job, a new colleague can begin to establish a pattern of behavior. Emails, text messages, and office meetings are all common activities that take place in the early morning hours.
Messages may be a real pain in the neck, especially when they are long. In the middle of the night, JPMorgan analysts have been said to wake up panicked and check their phones because they are afraid of getting fired if they do not answer each call within 15 minutes. It is possible to send messages to clients, employees, and senior bankers in order to request that every status report, presentation, and calculation be double-checked.
Unless the day is exceptionally hectic, lunch is a leisurely 45-minute or hour-long break at a neighborhood deli or the company cafeteria where you can unwind. These are typically spent with coworkers who are on the same level as you. The hierarchy is typically rigid and unyielding.
When the colleagues return to their workstations, they usually discover that the models and presentations created by the analysts on their team have been altered. These materials are analyzed by the associates before being returned to the analysts, who then make any necessary revisions or comments.
This is a time-consuming process for associates who want to demonstrate their ability to contribute to the transaction, as well as for analysts who understand the requirements of the managing directors or directors but do not have a lot of time to make revisions.
During the period between lunch and evening, the second part of the workday is divided into two halves. Dinner is almost always served at the workplace.
Work is more ordered and predictable before supper, and analysts want associates' work to be completed by early evening so that it may be examined once again.
On a typical day, the first thing that happens after dinner is that everyone reviews the previous day's work. During the last few hours, analysts and senior bankers have been analyzing information and providing "comments," which frequently entail significant revisions to the pitchbook.
Investment banking associates and analysts cooperate with a wide range of specialists, including equity research analysts and sales representatives, to complete their work.
A member of the Programming Group
Evenings are spent working closely with the desktop publishing teams, on the other hand. Computer-aided design (CAD) is an area of investment banking that employs specialists who are proficient in the use of PowerPoint, Photoshop, and other software to effectively explain complex financial data. When it comes to revising pitchbooks and other marketing materials, analysts heavily rely on this group.
The revision-comment-correction cycle may repeat itself twice or three more times before the night is out. Associates and analysts must think and work quickly in order to ensure that modifications are made appropriately and on time.
The majority of banks have business vehicle services in place to bring associates and analysts home from work in the wee hours. In some cases, older bankers may leave the office by 10 pm; in other others, youthful banking professionals may return home in the wee hours of the morning to catch up on sleep before starting their days anew the following morning.