Career Track of an Investment Banker – A Detailed Guide

Name: Investment Banking Course
Brand: IIM SKILLS
SKU: IBMC-06/23
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September 8, 2023 Sana Aijaz Courses, Investment Banking, Jobs, Knowledge

Do you desire to achieve financial success? Do you have a burning desire to understand everything there is to know in this extraordinarily difficult industry? My opinion is that you have come to the right spot. If you’re considering a career in investment banking, this article, Career Track of an Investment Banker, might help you decide the best course of action. For those who appreciate dealing with statistics, interacting with clients, and supporting others in reaching their objectives, investment banking offers a fulfilling, prosperous, and difficult professional path.

In that case, let’s explore this more if you are considering this career route.

First of all, let’s try and understand what is investment banking?

Explanation of Investment Banks and Investment Banking:

An investment bank is a type of financial institution that helps people, businesses, and governments raise money by underwriting or representing the customer in the issue of securities (or both). Investment banks are financial institutions that help businesses, governments, and other organizations make sound strategic decisions about their capital needs and investment choices. They also arrange for the raising of capital on terms that are most advantageous to the company. They provide advice on corporate growth, project financing, mergers and acquisitions, and investment appraisal, among other things. For their services, they want payment. Investment firms work with major investors as well, assisting them in managing their portfolios across various asset classes, products, and geographical locations.

Investment banking is a type of financial service offered by a finance company or a branch of a bank. It aids in the creation or raising of cash for wealthy people, businesses, or the government. Before his customer invests time and money, he assists in identifying the hazards related to the initiatives. Thus, the profession of investment banking involves carrying out unusual financial transactions, such as raising money for various enterprises and offering them financial counseling services. Investment banking, on the other hand, is a subset of banking that is distinct from conventional banking services and excludes the general public as a whole, therefore it should not be confused with general banking. Even if anyone can invest, there are restrictions on the quantity and size of such a project.

One of the primary goals of an investment bank is to act as a go-between for businesses looking to obtain capital through the issuance of securities and private or institutional investors eager to swap cash for securities. Investment bankers are solely in charge of these transactions.

For college grads and people switching careers, investment banking is a continuously popular career path.

Investment banking has the advantage of exceptionally high salary, bonuses and remuneration as well as position and reputation, especially as you move up the career ladder, despite the fact that the hours, stress (and even boredom) may be notoriously taxing.

Why is Investment banking Important?

Most people are unaware of the modern economy that is a large worldwide network. It’s evident that many of the things you use are created elsewhere in the world, but it’s less obvious that the money you deposit and withdraw also goes across the globe.

When you use ATM to deposit or withdraw cash, money is transferred to and from your neighborhood bank. The answer to the question of where your local bank obtains its funds, however, is that it does so from the worldwide network. When you purchase a plastic toy, a Chinese factory receives your payment. If the factory in China decides to spend the money, it will likely return to someone in the US. Alternately, they may decide to preserve that money, which would result in the purchase of an investment in the US and the payment of either a mortgage or a Medicare-covered hospital cost.

The way that the government “prints money” is by electronically purchasing US Treasury bonds. The government purchases and sells US bonds through a network of banks who purchase and sell those bonds from their clients because it does not want to keep track of who wants to purchase them.

As a result, you have a type of virtual network through which tens of billions of dollars pass. Investment banks form the “money superhighway” in the global economy, handling billions of dollars in transactions like shipping goods to Walmart in Hong Kong and handling payments back. That means investment banks serve as the entry point for the payments back, totaling billions of dollars.

One of the best things about the system is that the “money grid” functions like a power grid or internet, often unnoticed, but its failure can cause significant disruption.

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Why Choose an Investment Banking Career?

A lot of people choose a career in investment banking just for financial reasons.

Some people are interested by transaction technicalities, while others are drawn to the thrill of deals and high-stakes discussions with influential people like CEOs and board chairs.

Yet more people are drawn to jobs in investment banking by the exit chances, particularly those that are open to junior bankers like Analysts and Associates.

Given the money, status, contacts, and skill set you acquire, investment banking is a popular career choice for many job seekers.

In other words, investment banking is a financially rewarding job option. Working in this sector is extremely prestigious and competitive.

University grads and job changers frequently choose investment banking as their field of employment.

So, conclusively investment banking does have the advantage of exceptionally high salary, bonuses and remuneration as well as status and reputation, especially as you move up the professional ladder, despite the fact that the hours, stress (and even boredom) can be notoriously taxing.

Who is an Investment Banker?

Investment bankers connect buyers and sellers and are involved in the stock markets. An investment banker is a person who frequently works for a financial institution and whose main responsibility is to raise finances for businesses, governments, or other organizations.

Employers of investment bankers include Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America Merrill Lynch, and Deutsche Bank (GS, MS, JPM, BAC, DB).

Key Takeaways:

The main responsibility of an investment banker, who works for a financial institution, is to raise money for businesses, governments, or other organizations.

Investment bankers must be adept at crunching numbers, have strong oral and writing communication skills, and be able to put in long, arduous hours.

Theoretically, an investment banker is an industry authority with a pulse on the state of the market for investments. An investment banker can help a customer save time and money by warning them of potential risks before they commit to a project.

Investment bankers are frequently sought after by businesses and nonprofit institutions for guidance on the most effective development strategies.

Required Skills of an Investment Banker:

The qualifications and skills required for an investment banker are:

Good networking, interpersonal, and communication abilities.
An MBA (for an Associate job) or equivalent education, training, and work-related experience.
A bachelor’s degree from the target school, or an equivalent degree, is required for analyst employment.
• At least three years of experience (Associate position) in the financial or business sphere, with a concentration on the quantitative side.
• The capacity to function autonomously in a setting that prioritizes efficiency and teamwork.
• A demonstrated history of success with Microsoft Office programs, particularly Excel and VBA.
Financial modeling expertise;
Thorough understanding of deal structuring and closing procedures.
Outstanding research, analytical, and quantitative skills, especially when describing market events.
The ability to prioritize frequently changing tasks and assignments while organizing and managing projects and assignments.

As a general rule, these are the requirements. In order to work as an investment banker, one must currently have a bachelor’s degree. This degree may be sufficient to land a job as an entry-level analyst and may also allow one to advance to the position of senior banker in any investment bank without needing to finish a master’s degree. A master’s degree, however, will assist someone in advancing their career and securing a mid-level or senior staff position in this industry. The beginning of an investment banking career would benefit from a master’s degree.

A master’s degree holder additionally has more sway than an undergraduate candidate throughout the hiring process at an investment bank. Consequently, it may be inferred that the majority of investment banks prefer candidates with education and experience in finance, accounting, business administration, and other related subjects.

Duties of an Investment Banker Include:

Investment bankers help institutional clients with tasks like mergers and acquisitions and capital raising by utilizing their knowledge of the financial services sector, analytical abilities, and persuasive skills.

The following tasks can be performed by an investment banker:

Conducting financial analysis
Creating financial models to value debt and equity for transactions, mergers, and acquisitions
Carrying out valuation techniques
Keeping up with client relationships
Making investment pitches, presentations, and other materials to aid clients
Drafting advice for mergers and acquisitions, private equity deals, and valuations

Investment banks primarily work with large corporations and government agencies, assisting clients in selling securities through ‘underwriting’, a process used to raise investment capital, rather than working with individuals.

Investment banks offer clients safe, efficient investment advice, making profits through fees or commissions on securities sales, similar to consulting, where teams assist clients in making significant financial decisions.

Investment banks now offer services beyond underwriting, including mergers and acquisition, risk management, wealth management, and proprietary trading, with teams supporting clients for their own gain.

Investment banks’ competitive advantage lies in their robust research teams, which help forecast future trends and investment opportunities. However, it’s crucial for these functions to operate independently from the business to avoid potential conflicts of interest, as demonstrated by the Enron scandal.

Investment bank success is closely tied to global economy fluctuations. Successful bankers must predict market cycles, be excellent analysts, problem solvers, communicate effectively, and have impeccable attention to detail, even after hours of Excel spreadsheet use.

Career Track of an Investment Banker:

An investment banker is a person who works in a financial institution primarily focusing on the responsibility of generating capital for their businesses, governments and other entities.

Many investment bankers complete internships at investment banks when they are undergraduate students to get their start in the field. An internship is a fantastic way to start, even though it is not required to do one in order to work in the profession. Because an internship is like a prolonged job interview, many investment banks choose them as a recruiting strategy.

Now that you’ve completed an internship, you’re a member of the investment banking industry. Next, what happens? There is some industry-wide agreement on the Investment Banking Career Track. This is how a career typically develops:

Intern
Assistant
Investment Banking Analyst,
Investment Banking Associate,
Vice President (VP),
Director, or Senior VP (SVP)
Managing Director (MD)

The Job Roles:

Career Track of an Investment Banker as an Intern:

Investment banking interns gain industry exposure and learn college tools through various positions like accountant, finance operator, and research assistant. The stipend depends on skills, projects, and duties, with a minimum of Rs. 20,000 per month. Interns at the mid-level earn up to Rs. 30,000, while exceptional interns might make up to Rs. 40,000.

Career Track of an Investment Banker as an Analyst:

They are experts who are often grouped by the sectors in which they work, such as manufacturing, banking, healthcare, or developing markets. They have a responsibility to speak with investors and company leaders and try to persuade them to support or oppose investments in particular companies or industries.

As an analyst, individuals are in charge of PowerPoint and Excel work as well as administrative duties like monitoring the data room and deal documents, keeping track of buyers and sellers, and responding to client and potential client inquiries.

They work 70-85 hours per week, with significant downtime and less on weekends, sometimes with protected weekends.

The majority of the job is performed by analysts because they are at the bottom of the hierarchy. The work consists of three main tasks: administrative, analytical, and presentational.

Career Track of an Investment Banker as an Associate:

The Associates are like the “middle-man” and as a “middleman,” their primary duties include setting up client meetings, generating and formatting slides, and conducting financial analyses. They typically develop considerably more elaborate financial models than analysts do, and they also take on more difficult issues.

As an Investment Banking Associate, individuals are more skilled with more life experience, more pay, and work that is a little more intriguing.

The Associate on the team assigns the work, reviews it, and occasionally jumps in to do some Excel and PowerPoint, particularly in more sophisticated presentations and models. The Analyst on the team will handle the most of the grunt work.

Despite the fact that they are less likely to play “speaking roles” in most meetings, associates do attend more meetings and communicate with clients.

While some Analysts are promoted to Associate status, others are recruited from prestigious MBA programs.

Analysts often departed the bank after a few years, whereas Associates were historically thought of as long-term hires.

Their working hours ranges from 65-80 hours per week.

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Career Track of an Investment Banker as Vice President (VP):

These professionals when they want to ascertain their goals and turn them into actionable activities, they consult with the Directors and MDs. At least when the VP gets older and progresses up to the SVP or Director level, he or she also forges connections with new potential clients.

Vice Presidents of investment banking tend to take on more of a “project management” role and do not go as deeply as Analysts and Associates. The VP will find out what the MD wants, for instance, and then tell the Associate and Analyst to complete it if the MD wants to pitch a possible customer on a certain contract.

VPs engage with clients far more frequently, and they may call prospective buyers to persuade a customer that the bank is selling, whereas Analysts and Associates would do so infrequently, if at all.

The range of age is more likely to be between 28-40 and their working hours tend to be between 55-70 hours per week.

Career Track of an Investment Banker as Director:

Directors may also be referred to as “Senior Vice Presidents” (SVPs) or “Senior VPs,” and there may be additional versions such as “Executive Directors” (EDs) or “Principals.”

The directors meet with new companies that may turn out to be customers in the future, listening to their worries and addressing their inquiries. To discuss their portfolio companies and which ones could need to be sold, go public, or raise funds, they also meet with private equity and venture capital firms.

The duties of this level fall somewhere between those of VPs and MDs, and they vary based on the bank and organization.

Directors may concentrate on cultivating relationships and gaining clients, while other times they handle more project management and execution tasks like VPs.

Their age range between 32-45 years and the working hours drop to 50-60 per week.

Career Track of an Investment Banker as Managing Director (MD):

Managing directors answer directly to the CFO, COO, CRO, or CEO and are in charge of the daily operations of their respective groups.

The majority of managing directors are in charge of managing the directors, vice presidents, associates, and analysts in their group as well as bringing in clients and concluding deals.

Except for the top executive positions like CFO, COO, and CEO, managing directors are at the highest levels in an investment bank’s corporate hierarchy. Managing directors are frequently in charge of a group’s numerous divisions. For instance, a managing director could be in charge of the credit risk division, supervising day-to-day operations and reporting to the chief risk officer (CRO).

Directors, vice presidents, associates, and other managing directors are only a few of the people who report to them. Making it rain is all that Managing Directors want to do.

They are frequently on the road as they spend their time cultivating relationships, meeting businesses, and earning clients

All of the lower-class individuals serve and obey the MD, who rules the jungle as its king.

In order to close deals, MDs occasionally participate in negotiations, particularly when the deals are significant or entail special ties.

So, these were the career track of an investment banker.

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Frequently Asked Questions Related to Career Track of an Investment Banker:

Ques 1. What would the investment banker’s primary duties be?

The following are the main duties of an investment banker:

Aiding businesses and other departments in raising capital for growth and progress.
They also coordinate equity funding and stock sales.
They assist clients in building their financial portfolios and helping them choose beneficial investments for their money.
They serve as a client’s advisor and handle transactions for the company.
They carry out trades in stocks, bonds, currencies, options, or futures on behalf of significant institutional investors.

Ques 2. What are some of the best courses that students might choose to pursue to become investment bankers?

The top courses available to students are the BA in finance, BBA in Finance and Investment, MBA in Investment Banking, as well as a few more certificate and diploma courses. These classes will give students specialized understanding in investment banking and related fields.

Ques 3. Is investment banking a viable career option?

If you are motivated and have a strong interest in finance, then yes investment banking is a wonderful career choice. You interact with actual decision-makers while earning a lot of money and picking up highly practical skills. There are only two requirements to get started in investment banking, despite the fact that it is a highly competitive field “Drive and Determination”.

Conclusion Regarding Career Track of an Investment Banker:

So, this comes to an end to my article Career Track of an Investment Banker. A job in investment banking may be thrilling and challenging at the same time. This may be an excellent option for you if earning money is your only priority in a work. Given the lengthy hours and intense competition, the field of investment banking may prove to be stressful However, if you have the necessary desire and steadfast resolve to enter this field, then, of course, no one can stop you from advancing your career and dominating. In order for you to succeed, I hope this article helps you get on the correct track.

All the best.

Author: Sana Aijaz

Hi. I’m SANA AIJAZ, a former teacher with a passion for communication and language. I am currently residing in Saudi Arabia. While I enjoyed teaching, I realized that I wanted to explore new career opportunities that align with my interests and skills. That’s why I enrolled in a content writing course by IIM Skills to give my career a boost. I believe that the demand for digital marketing is on the rise, and I want to be part of the growing industry. My goal is to create engaging content that captivates audiences and drives business growth. In my free time I enjoy reading and writing, which has helped me hone my writing skills and develop a strong foundation in language and communication. I’m excited to take on new challenges and contribute my skills to the world of content writing.

Career Track of an Investment Banker – A Detailed Guide