If somebody tells you that they are an investment banker, it might conjure images of people in sharp clothing and high-rise offices, making important deals. You might not be far from the truth!
Investment banking is an attractive career choice for a lot of people, especially those with an interest in business and finance. In this guide, we’re exploring how to become an investment banker, and what the role really entails (as well as potentially debunking some myths about the career).
What is the Role of an Investment Banker
As with most finance careers, investment banking careers can vary massively. There are different types of investment banking, though they tend to share the same basic principles.
An investment banker is a financial professional who helps companies and other entities raise capital, as well as provide strategic advice for mergers and acquisitions, and assist with various financial transactions.
Investment bankers can sometimes help companies raise capital through issuing stocks or bonds. They analyze the company's financial situation, market conditions, and investor sentiment to determine the best timing and structure for different offerings and ways to bring revenue into a business. They may use stock offerings, bond issues, or derivative products as methods of bringing money into businesses, and usually operate in big businesses (your average small sole proprietor isn’t going to work with an investment banker).
Typically, investment bankers also provide financial advice on various matters such as restructuring, divestitures, and corporate finance strategies. They help clients optimize their capital structure, improve financial performance, and maximize shareholder value. When large sums of money are at stake, investment banking can make a huge difference to profitability and provide a lot of value to large businesses and organizations. Even governments may work with investment bankers.
Mergers can be a big part of the role too, as investment bankers may work with clients on buying, selling, or merging with other companies. They conduct valuation analyses, negotiate terms, and facilitate the transaction process to ensure that their clients achieve their strategic objectives.
According to the US Bureau of Labor Statistics (BLS) this number is growing fast!
How to Become an Investment Banker
Of course, with a job with such a high level of financial responsibility, there are certain hoops to be jumped through in order to get a career in the field. Investment banking requirements vary from one company to the next, but there are a few ways in which people generally get into the industry.
Degrees and Advanced Degrees
It usually starts with a degree. A bachelor's degree is the minimum educational requirement for entry-level positions in investment banking. While there is no specific major required, degrees in finance, economics, accounting, mathematics, or business administration are commonly preferred by employers. These majors provide a solid foundation in financial concepts, analytical skills, and business fundamentals, which are essential for success in investment banking. You won’t find a specific “investment banking degree” so it is crucial that you follow the path into a finance career, and gain a strong understanding of finance and business.
Advanced education can also pave the way for the investment banking career path. While a bachelor's degree is sufficient for entry-level roles, many wannabe investment bankers pursue advanced degrees to further enhance their qualifications and career prospects. Master's degrees in finance, business administration (MBA), or related fields can be beneficial for career advancement, especially for individuals seeking leadership roles or transitioning into investment banking from other industries.
There are so many different skills that may be relevant, so there are numerous degrees people can study in the pursuit of becoming an investment banker.
"Being an investment banker doesn't just teach you to be good at finance and accounting. You also learn about all the other aspects of business that add up to determine whether a company will be successful. These include competitive market dynamics, operations, marketing, strategy, management and organizational leadership, and negotiation skills."
Matt Spencer, Suited CEO
While not always required, obtaining relevant certifications can demonstrate your expertise and commitment to the field. The Chartered Financial Analyst (CFA) designation is highly respected in the finance industry and is often gained by investment professionals to enhance their credentials and career outlook. Additionally, certifications such as the Financial Risk Manager (FRM) or Certified Investment Banking Professional (CIBP) may also be relevant, depending on your career goals and specialization, and whether you are interested in other areas such as risk management.
Internships in Investment Banking
Investment banking careers are highly sought-after, and one way into the industry is to take on an internship.
This can be a great way for people to take an opportunity to learn more about the industry and to gain an exposure to the way that investment bankers operate.
Work experience can be a brilliant way to get a leg up in this field. Investment banking entry level jobs can be hard to come by, and internships show a willingness to work hard as well as making you a more attractive proposition for investment banking jobs.
You will still need to have a degree to get started with an internship in this competitive industry.
CFA Charter
A lot of people start working in financial analysis before moving into investment banking. The CFA (Chartered Financial Analyst) charter is a professional designation offered by the CFA Institute to financial and investment professionals. It is considered one of the most respected and globally recognized qualifications in the finance industry. The CFA charter demonstrates a rigorous understanding of investment management, financial analysis, and ethical practices, something that can set candidates aside when they are looking for investment banking careers.
This is an example of a qualification that can help people who want to work in the field. It allows people to sell many types of securities and helps to prove a level of financial knowledge.
Why Are People Drawn to Investment Banking?
Everybody has their own reasons for being drawn to investment banking jobs. You may have always known you wanted to go down a financial career path or you may just have been told that your skills suit this kind of role.
Investment banking is known for its high earning potential. The industry offers competitive salaries, bonuses, and other financial incentives, making it an attractive career choice for many.
The roles in the industry entail financial analysis, strategic problem-solving, and deal-making activities. For individuals who enjoy intellectual challenges and thrive in fast-paced environments, investment banking offers opportunities to work on many stimulating projects.
This is a global industry, and professionals often have the opportunity to work on cross-border transactions and collaborate with colleagues and clients from different countries and cultures.
Investment banking offers a structured career path with opportunities for advancement. Starting with a career as a financial analyst, individuals can progress to associate, vice president, director, and managing director positions, with corresponding increases in responsibility, compensation, and prestige. You may even make it all the way to CEO…
It isn’t all sunshine and rainbows in investment banking. This career comes with quite a bit of pressure, and investment banking hours can be long and grueling. It can also involve a lot of time working away from home. However, the financial rewards and benefits, as well as a job that is constantly challenging, mean that investment banking is a career in high demand.
Skills Needed to Become an Investment Banker
If you wish to work in the investment banking industry then you will probably need certain skills that will help you to achieve more in this career path. An investment banking course, financial classes, or an internship alone will not be all you need, a proficiency for this type of work could make all the difference.
- Proficiency in analyzing financial statements, performing valuation techniques, and financial modeling.
- An understanding of business fundamentals, industry dynamics, and market trends can help greatly with working in this industry.
- Communication skills are crucial, and the ability to convey complex financial concepts effectively through both written and verbal communication can help you to communicate with stakeholders.
- Negotiation skills can also help a great deal. You may need to negotiate terms and agreements effectively with clients and counterparties.
- Precision and accuracy in analyzing data, preparing documents, and executing transactions is likely to help greatly working in investment banking.
- Investment bankers need the adaptability to thrive in a fast-paced and dynamic environment, adapting to changes and overcoming challenges.
Expand Your Financial Knowledge with Superprof
To grow your skills in the industry, prepare for your degree in finance, or to work on other qualifications such as the CFA Charter, you can find online finance classes here on Superprof. Our team of expert tutors can help you to work on your aptitude to work in the industry as well as help you to grow your skills and knowledge of investment banking. It is a chance to work directly with people in the finance industry and give your fledgling career a potential boost.
Enjoyed this article? Leave a rating!
Loading...
