How to Become an Investment Banker

Excellent academic skills, financial knowledge, and a strong work ethic are all required to become an investment banker.

A job as an investment banker is viewed as one of the most sought after in the financial services industry.

An investment banker is both a financial expert and a strong negotiator, and they are responsible for orchestrating large financial transaction on behalf of banks, governments, and other large business organizations.

An investment banker (often known as an ibanker) is employed by an investment banking firm.

A firm will be contracted by companies when they are required.

An investment banker could be called on to negotiate a company merger, help to float a company on the stock market for the first time, or to help find a way to salvage a company facing financial hardship.

Education Requirements to Become an Investment Banker

To become an investment banker you will most likely require postgraduate qualifications.

Many that work in this field are recruited by firms straight out of college.

If you’re in high school, work on getting good grades and look for a place in a leading college.

You’ll need to start out by completing a bachelors degree in business administration, commerce, accounting, or finance.

Investment banking firms prefer to hire candidates with a masters in business administration, or an MBA.

So after you complete your undergraduate degree, you might wish to take steps towards achieving this.

In some instances, graduates from other fields such as business or law, are employed by investment banking firms and trained on the job.

Usually these candidates go on to complete postgraduate qualifications while they are still working.

Preference will be given to those that attend the leading schools in the country.

Also, taking part in extracurricular activities can make you stand out during the hiring process.

Completing internships while you are studying is of the utmost importance if you would like to become an investment banker.

Many investment banking firms will give summer jobs to students as a trial for a full time job after graduation.

Investment Banker Job Description

An investment banker is responsible for negotiating financial transactions between businesses.

For instance, a merger or a buy out between two companies would involve a investment banking firm there to negotiate the deal.

An investment banker will also be contracted by a company to advise them on ventures they may be considering.

An investment banker will often be called into a company facing financial hardship to look at ways to get them out of the red.

When you become an investment banker, you will need to draw on a broad range of skills.

Firstly, you must have plenty of knowledge regarding finance, and the way that businesses operate.

This will allow you to understand the companies you work with, and to be able to find ways to improve them.

You also need to be a strong negotiator.

The contracts that investment bankers work on often involve multiple parties that do not always see eye to eye.

Here are some of the duties of an investment banker:

  • Analyzing financial data
  • Preparing reports on findings
  • Negotiating mergers
  • Weighing risk and reward on financial ventures
  • Financial risk management

Investment Banker Salary and Career Path

When you become an investment banker, you will most likely be employed straight from college to work within an investment banking firm.

There you will be trained on the job while you work as a junior banker.

With experience, you could expect to be promoted to the role of an ibanker.

You could also rise to become the head of department.

Many investment bankers go on to become company partners, vice-presidents, presidents, and chief executive officers later in their career.

The starting investment banker salary is around $48,000 a year, while the median salary is $85,000 a year.

Top performers in the industry make well in excess of $100,000 per year.

A good source of further information on careers in banking is the American Bankers Association.

Some similar roles to that of investment banker include:

If you are looking for a challenging role within finance that will allow you access to some of the top jobs in the financial industry, then you might like to become an investment banker.

While you will need to work hard at your studies to attain the role, there is a very good earning capacity and good job security available, as well as good opportunities for advancement.

Frequently Asked Questions

What does an investment banker do?

The main aim of an investment banker is to raise capital for companies, governments, and so on.

Specialists can do that by assisting corporations in raising funds in the debt and equity markets; by issuing and selling securities (in the primary market).

Investment bankers can also give advice to clients on various types of financial transactions.

Even though an investment banker can be offering a lot of services, the main difference between such a specialist and regular bankers is that investment bankers work only with entrepreneurs and investors.

A professional might specialize in one of the three spheres (or offer services in all of them) – trading, research analysis, and corporate finance.

In case you want to become a successful investment banker, you have to be ready to spend over 80 hours per week at work (and sometimes even stay up all night).

How much do investment bankers make?

On average, investment bankers earn a little more than $70.000 per year in the United States.

In case you want to choose this career path, you can expect to earn anywhere between $38.000 and $130.000 annually (sometimes even more).

The salary would depend on your experience, education, the company or individual that you have decided to work for, and the overall success of the services provided.

Entry-level investment bankers typically earn around $18 per hour; while top-level professionals make over $62.

How much does it cost to become an investment banker?

There is no specific bachelor’s degree for investment bankers, so you might want to consider going for a more specific undergraduate degree.

However, some companies might be looking for candidates with a bachelor’s degree in finance or business.

A year in a university will cost you anywhere between $8.000 and $30.000; however, the largest companies look for future specialists that have graduated from the best universities in the country (you might end up spending hundreds of thousands on those).

You can also go for a master’s degree ($30.000 and over) and for various certifications (the cost of a Chartered Financial Analyst program, for example, starts at $2.400).

What is the demand for investment bankers?

Between 2016 and 2026, the investment banker job market is expected to grow by 9.6%, which is close to the national average.

The industry is going to provide relatively weak job opportunities in the near future because of the high levels of competition.

Of course, the candidates with a master’s degree or those who have graduated from the Ivy League universities will have more chances of getting the highest-paid position.

The industry is mainly concentrated in Texas, Florida, and California.

How long does it take to become an investment banker?

It will take you four years to earn a bachelor’s degree and an extra year or two to acquire a master’s degree.

It is recommended to look for an internship while you are still at university, in order to gain the valuable on-job experience (internships typically last all summer).

A lot of future specialists start their careers as financial analysts and become investment bankers in a few years.

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