How To Become An Investment Banker
Investment bankers help corporations that want to raise capital to fund their operations. They help find securities like stocks and bonds to raise the capital the corporation needs. Investment bankercan also help companies with mergers and acquisitions. An entry-level position will require a bachelor’s degree, although many places will want to see a master’s degree.
Why Become An Investment Banker
Investment banking is considered one of the most prestigious jobs on Wall Street. They work at some of the most well-known financial institutions in the United States, including Goldman Sachs, Merrill Lynch, Morgan Stanley and more. Many people are drawn to investment banking because of the prestige and the lucrative salary. However, it is also a high stress job and requires long hours.
Investment bankers have a wide range of responsibilities. They assist in large financial transactions for corporate clients. These include acquisitions, mergers, or sales for clients. They help to underwrite stocks and bonds in order to raise capital for the needs of a corporation. Corporations turn to investment bankers for advice on how to plan their financial development of their company. Investment bankers identify risks involved with a particular financial project. They look at trends and are able to gauge the investing climate. They assist with pricing financial instruments and navigating regulations.
This is a good job for somebody who is good at math, enjoys looking at data and making complicated decisions, has excellent business and negotiation skills, and has an energetic personality.
Investment Bankers should possess the following qualities and skills:
- Knowledgeable
- Enjoys Data
- Analytical
- Decision Making Skills
- Business Skills
- Communication Skills
- Mathematics
Investment Banker Work Environment
Most investment bankers work at large financial institutions. Investment bankers are most likely to find work in major financial centers like New York City and other economic epicenters. Investment bankers spend much of their time in an office setting, on the phone talking with clients, or in meetings with clients.
They work with clients trying to sell products and services for their investment portfolio. Investment bankers travel quite often to meet with clients and companies. It is quite common for investment bankers to work long hours in this field between meetings, research and travel, sometimes 80 or more hours a week.
Investment Banker Salary
The median annual wage for investment bankers was $85,000 in 2017, according to the United States Bureau of Labor Statistics. There are many factors to consider when thinking about salary. One is the industry in which a person works. Investment bankers that worked in securities, financial investments and commodities made a median salary of $100,000 in 2017.
On the lower end of the spectrum, those who worked for insurance companies or credit card companies earned $77,000 in 2017. It is important to take industry into consideration when thinking about salary. Additionally, experience and education will help an investment banker get promoted and earn a higher salary.
Average Investment Banker Annual Salary
$97,440
The average annual salary for investment bankers is $97,440 a year. Salaries start at $33,060 a year and go up to $208,000 a year.
Average Investment Banker Hourly Wage
$46.85
The average hourly wage for a investment banker is $46.85. Hourly wages are between $15.89 and $100 an hour.
Stats were based out of 389,610 employed investment bankers in the United States.
Highest Paying States For Investment Bankers
- 1. New York $78.15 / hr $162,550 / yr
- 2. Rhode Island $62.52 / hr $130,040 / yr
- 3. Connecticut $60.62 / hr $126,080 / yr
- 4. Massachusetts $55.78 / hr $116,030 / yr
- 5. Vermont $54.58 / hr $113,520 / yr
Top Paying Cities For Investment Bankers
- 1. Florence, AL $67.89 / hr$141,210 / yr
- 2. Bridgeport, CT $67.82 / hr$141,070 / yr
- 3. Worcester, MA $64.37 / hr$133,880 / yr
- 4. Brockton, MA $60.93 / hr$126,740 / yr
- 5. Peabody, MA $59.14 / hr$123,020 / yr
Data provided by the Bureau of Labor Statistics (BLS).
Investment Banker Career Outlook
Employment of investment bankers is expected to grow 11 percent from 2016 to 2026, a bit faster than most other occupations in the United States. There are certain areas of the country where investment bankers will be more likely to find jobs, especially large financial centers such as New York City.
Demand for investment bankers will increase as overall economic activity continues to prosper. They are needed to evaluate investment opportunities for clients. Emerging markets around the world are providing new investment opportunities.
Technological improvements allow investment bankers to access better data, manage finances, identify trends, and deliver better services to clients.
Investment Banker Degree
An investment banker is required to have a bachelor’s degree. Undergraduate programs in mathematics, business, economics, finance, or similar majors are all good for getting a basic understanding of this career field. An undergraduate program will help you decide if a career as an investment banker is a good choice for you.
During college, this is also a great opportunity to take advantage of an internship program. Many colleges will help set you up with an internship at a major financial institution. This can help with getting a better understanding of the industry and potentially getting a job later.
Due to the competitive nature of the industry, many employers want to see that candidates have a master’s degree before they are hired. An MBA (Master’s of Business Administration) is the most common degree pursued for this type of career.
Investment bankers typically go through an on-the-job training program with their employer. This involves introducing new bankers to concepts of markets, accounting, risk assessment, financial modeling and more. Their employer also works with them on public speaking and negotiation skills.
Investment Banker Coursework
Financial Management: In this course students will look at the basic concepts of finance. They will learn about investment decision making, capital, budgeting, working in capital management, securities, interest rates, liabilities, risk and return, and more. The course will look at the formation of capital structure, and the choice of structure on the value of a company.
Marketing Management: This course provides an in-depth look at marketing. Students look at the flow of goods between consumers and clients, marketing environments, competitive markets, and more. Students learn about market identification, strategic planning, and the nature and development of products, pricing, distribution, and promotion.
Investments: In this course, students gain more in-depth knowledge about investments. They will learn about asset allocations, global investments, securities markets, asset pricing models, portfolio management, and models of risk and return. Students learn to analyze financial statements, and take the valuation of stocks and bonds. They will examine derivative markets such as forward, futures, options, swaps, and other derivatives.
Investment Banker Career Path
An investment banker is a great choice for a career. There are many opportunities for advancement in this field. When you start in investment banking, you are an analyst. After a couple of years of work, there is potential to become an associate banker at a company.
| Career | Overview | Responsibilities | Education Required | Benefits |
|---|---|---|---|---|
| Analyst Banker | An analyst banker is the most entry-level position at an investment firm. | Their responsibilities include handle the financial transactions of large corporate clients, send emails, call clients on the phone. | A person must have a bachelor’s degree. | This is a great way to get your foot in the door and slowly work your way up the world of banking. |
| Associate Banker | An associate banker works as a junior banker in an investment firm, such as Goldman Sachs, Morgan Stanley, and others. | Their responsibilities include managing the work of the analysts at the firm, and being in more direct contact with clients and working on projects. | A person must have a bachelor’s degree, although a master’s is preferred. At least three years of experience as an analyst is required at an investment bank. | This is a great way to advance in the finance world from junior banking to more advanced positions. |
| Vice President | This is one of the more advanced titles within an investment banking firm. | Their responsibilities include managing deals and pitch books, discussing the needs of directors, and making sure trades get handled by associates and analysts. | A person must have a master’s degree. Also, at least three to five years of experience as an associate banker is required at an investment bank. | This is an advanced role in an investment firm. Vice presidents have a lucrative salary and bonuses take up a large percentage of their income. |
| Director | This is one of the most senior positions within an investment banking firm. | Their responsibilities include developing relationships with clients, bringing onboard new clients, and project management. | A person must have a master’s degree and have worked for 3 to 4 years as a vice president in an investment firm to reach this level of promotion. | A person in this position has many years of experience. This is a good role for somebody interested in management and committed to a career in investment banking. |
| Managing Director | This is the highest title at an investment banking firm. | Their main responsibility is to bring in new business, develop relationships with clients and network for the company. | A managing director has achieved this position through a lifelong career in investment banking, and being promoted through the ranks. | This is a lucrative position, with managing directors making potentially millions of dollars each year, depending on how many deals they close. This is a good job for people who enjoy management. |
Related Investment Banker Careers
An investment banker is an excellent career. If you are interested in becoming an investment banker, you may also want some other interesting, related careers. Below we have listed some careers which are similar to this one.
Financial Advisor: Financial advisors provide advice on investments, insurance, mortgages, estate planning, retirement and more, in order to help their clients manage their finances.
Financial Manager: These managers are responsible for directing the financial welfare of a company. They develop strategies and plan the long-term financial goals of the company, along with other heads of the company.
Financial Analyst: Financial analysts provide guidance to companies on making investment decisions, involving stocks, bonds, and other types of investments for their portfolios.
