What Does an Investment Banker Do?
- Is Being An Investment Banker Difficult?
- Job Responsibilities
- Job Skills
- How To Start An Investment Banker Career
- Top Companies In The Field
- Salary Ranges
- Benefits Of Becoming a CFA
What Is Investment Banking?
An investment bank is not the same as a bank where you set up your checking and savings accounts—those are called retail banks. In the simplest terms, investment banks help corporations raise money. When a corporation wants to buy or sell something, they work with an investment banker to figure out how to invest or attain the funds they need to get it done.
What is an Investment Banker?
Investment bankers help their corporate clients secure funds in the capital markets, act as financial advisors, and occasionally help companies navigate mergers and acquisitions. Investment banker positions vary from entry-level to high-level executive.
Is Being an Investment Banker Difficult?
Being an investment banker can be hard because the day-to-day operations are long and stressful. Getting enough sleep and reducing stress can be a challenge for investment bankers, especially at the beginning of their careers. Investment bankers who make it through the adjustment period early in their job will often have long and financially rewarding careers in the industry.
Investment Banker Responsibilities
Investment bankers are ultimately responsible for the success of their clients. In some roles, they take on many responsibilities while others specialize in one or two specific areas. All positions are responsible for raising money for their clients primarily through issuing debt and selling equity in capital markets.
Debt Capital Markets
When a company wants to raise capital by issuing debt in the form of bonds, it often has a hard time finding qualified investors with enough money to invest. Investment bankers will help these companies find qualified investors within their large network and structure how the bonds get issued.
Equity Capital Markets
When a company plans to hold an initial public offering (IPO) to sell stock to the public, investment bankers will help that company find large investors to ensure their IPOs are purchased for the highest price possible.
Mergers and Acquisitions
Investment bankers also help broker mergers and acquisitions. The process often involves them lending their expertise to make sure things go smoothly. Investment bankers will advise their clients by presenting their research with recommendations about the best opportunities.
Investment Banker Skills
Investment bankers need many skills to be successful in the investment banking industry. Learning how to make financial forecasts and develop relationships on both sides of the transaction is key to advancing throughout your career.
Investment bankers often develop various types of financial models to value debt and equity for mergers, acquisitions, and capital-raising transactions. The process often involves using Excel or other software programs to make smarter investment decisions in an efficient manner.
Knowing how to develop and maintain working relationships with clients is an important skill for investment bankers. It’s common for investment bankers to work long hours and be available to their clients as needed when large deals are in process. Ultimately, investment bankers have a responsibility to expand their firm's book of business and meet the needs of their investors.
How To Get Started in Investment Banking
The interview process for entry-level investment banker positions usually goes quick and requires you to be prepared to answer common questions like “Why do you want to work in investment banking?” and demonstrate your technical skills like financial modeling.
How Long Does It Take To Become an Investment Banker?
Top Investment Banking Companies
Top-rated firms that hire investment bankers to provide financial services around the world often pay them high salaries and expose them to global markets. Currently, there are over 100,000 investment bankers employed in the US however the amounts each year fluctuate based on market conditions.
Investment Banker Salary Ranges
Investment banking positions are highly competitive in part because of their high salaries and bonus potential. The bonus is a large part of an investment banker’s total compensation package. Yearly bonuses have the potential to be over double that of the investment banker’s base salary and continue to rise with more responsibilities.
Investment Banking Role
|Analyst||$85,000 - $100,000||$50,000 - $100,000||$135,000 - $200,000|
|Associate||$100,000 - $120,000||$80,000 - $130,000||$180,000 - $250,000|
|Vice President||$120,000 - $150,000||$100,000 - $250,000||$220,000 - $400,000|
|Managing Director||$300,000 - $1,000,000||$200,000 - $10,000,000||$500,000 - $11,000,000|
Benefits of Becoming a CFA
- The CFA designation is recognized globally.
- Some job descriptions for investment positions say “prefer CFA” or “CFA required.”
- You become a member of a global organization and can optionally join a local CFA Society for networking and further learning opportunities.
- CFA Institute and local CFA Societies Compensation surveys have found that CFA Charterholders have higher median compensation than non-CFA Charterholders.
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