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Become an Investment Banking Analyst

By: Kaplan Schweser
December 22, 2020
How to Become an Investment Banking Analyst
Investment banking careers, although demanding, are some of the most rewarding financial career opportunities available. For one, you have a hand in real-time financial markets and help companies, government organizations, and other clients succeed financially. You also have great opportunities for future career growth and satisfaction; investment banking is an incredible stepping stone to more prominent careers in finance. Read on to learn more about investment banking, investment banking careers, and how to become an investment banking analyst. 

What Is Investment Banking?

Investment banks serve as intermediaries between companies and the financial markets. Investment banks help their clients become publicly traded, facilitate mergers and acquisitions, provide financial advice, trade stocks, and research market trends to help clients make lucrative financial decisions. 

About Investment Banking Analyst Jobs

An investment banking analyst evaluates and researches investment opportunities with the aim of finding the investment that best meets the goals of their corporate clients. Investment banking analysts assess opportunities and recommend investments based on client needs and goals. They are usually part of an investment team and are likely to report to an investment banker who will ultimately guide clients to their final decision.

The corporate clients can be new investors, existing investors, or even the analyst’s own company. If the clients are new, the analyst gathers and processes data, investigates opportunities, and presents the findings to the team and sometimes the client. For existing clients, the analyst evaluates their investments based on performance and makes recommendations for keeping or replacing them. If the client is their company, analysts assess business assets, earnings reports, industry trends, and more to make investment recommendations for their institution.

Other investment banking analyst responsibilities include the following:

  • Reviewing and analyzing data for investment portfolios, including the performance of stocks and bonds, credit trends, and other transactions
  • Presenting the results of their research and investigation to the investment banking team, an investment banker, or even clients
  • Handling administrative tasks such as arranging meetings, generating reports and other materials, and making sure the team operates smoothly

What’s the Difference Between an Investment Banker and an Investment Banking Analyst? 

Most investment bankers start out as investment banking analysts and hold that position for 2–3 years before moving on to an associate position. If you have just graduated with a degree in finance and want to work in an investment bank, your most likely entry point will be as a financial banking analyst.

Investment bankers are critical to corporations and communities who want to raise money to fund their activities. Investment bankers underwrite securities and help corporations navigate through some of the most difficult business processes, such as mergers and acquisitions and initial public offerings. They act as intermediaries between their banks and their corporate clients, assisting in complex financial transactions and issuing securities as a way of raising money. They also use sophisticated financial modeling to determine cost estimates of financial instruments and identify potential risks, project possible earnings and prepare documentation on behalf of their clients.

How to Get Investment Banking Analyst Jobs

Investment banking analyst jobs are highly competitive, but if you get an offer and do well, you’ll have a highly rewarding job with upward mobility. Follow these steps to increase your chances of landing an investment banking analyst job. 

Earn Your Bachelor’s Degree

The first step toward becoming an analyst in investment banking is completing your undergraduate degree. Common majors for future analysts include accounting, finance, and math. That being said, some successful investment banking analysts majored in something totally unrelated, such as a foreign language or science. No matter what you major in, make sure you can market the skills you developed in your undergrad in your interviews for investment banking analyst jobs.

Complete an Investment Banking Internship

Internships have several advantages. First, internships provide you with real-world practical experience. Immersion is truly the best way to learn and become acclimated to the life of an investment banking analyst. Secondly, the experience and skills you gain in an internship will make you more attractive to potential future employers. Think of your internship like a long-form job interview; investment banking interns often earn the opportunity to be considered for a position as an analyst after graduation, based on the great work they did during their internship. Finally, internships provide a valuable environment to make connections and build your network. It may lead to future opportunities in the firm where you’re interning, or it could lead elsewhere, as the people you work within your internship move on to other banks.

Register With FINRA and Pass Applicable Securities Exams

In order to operate as an investment banking analyst, you are required to register as a representative of your bank with the Financial Industry Regulatory Authority (commonly called FINRA). In addition, depending on the type of work you will be doing, you need to prepare for and pass any applicable securities (series) licensing exams to qualify for registration.

Stand out With the CFA® Charter

While not required, prospective investment banking analysts often start their CFA exam prep while they are still in their undergrad or soon after they graduate. The CFA charter is globally recognized as the most respected investment management designation you can earn. The program focuses heavily on investment valuation, company analysis, and portfolio management. 

Earning the CFA charter requires you to pass three levels of exams. This process typically takes several years. Candidates study an average of 300 hours per level. In order to earn the charter, you must also demonstrate that you’ve logged 4,000 hours of applicable investment work experience. But you don’t need any experience to start, so it’s common for individuals to complete the examinations while earning their required experience.

A major benefit of earning the CFA charter is that it can help you build your network through CFA Institute and local CFA Societies.

Considering the CFA Charter? Download this free Before You Decide to Sit for the CFA Exam eBook.

Investment Banking Analyst Salary

What could you make as an investment banking analyst? How much you earn as an investment banking analyst depends on where you live, how long you’ve been working, and what company you work for. As of 2020, the average investment banking analyst salary in the United States is $86,643, but that can vary widely. 

In addition to an annual salary, investment banking analysts receive an annual bonus based on their personal performance and the performance of their employer. You can expect this bonus to exceed $50,000, and it can even exceed your annual salary in some cases. Keep in mind, though, that although investment banking analysts can earn a huge amount of money right out of college, they are also working incredibly long hours. It’s not uncommon to work 90–100 hour work weeks

Why Investment Banking?

People often go into investment banking for the wrong reasons. If you’re drawn primarily by the prestige and earning potential, you won’t find satisfaction in your work and might even burn out quickly. Below are some reasons why investment banking might be a good fit for you:

  • You’re interested in the skills you’ll gain as an investment banking analyst, such as Excel, and financial modeling
  • You want to learn more about high-profile transactions, financial markets, and how a company makes financial decisions.
  • You thrive in a fast-paced environment with long hours.

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