Financial Analyst vs. Investment Banker: What's the Difference? (2024)

Financial Analyst vs. Investment Banker: An Overview

Both financial analysts and investment bankers evoke images of well-dressed corporate money men, and college graduates from prominent schools seek out these jobs. For all of their similarities, though, these are two very different career paths and are suited for very different kinds of individuals.

Key Takeaways

Financial analysts and investment bankers are both job titles held by financial professionals, but they have different duties and expectations.
Financial analysts may work for a financial institution or any other type of company to do capital markets research, corporate accounting, and financial analysis.
Investment bankers typically work for a financial company and specialize in raising capital for other firms.

Financial Analyst

Financial analysts work for a variety of businesses, including investment banks. They are normally experts in markets, economics, accounting, and compliance. These are the ultimate support members on a financial team, spending their days poring over data and preparing reports for other, less analytical departments. Before a business makes a major financial or investment decision, management often consults its financial analysts to identify trends or run projections. Think of financial analysts as future-focused accountants with sophisticated modeling techniques.

Analysts and bankers must communicate with other departments every single day, so it's also important to demonstrate the ability to handle interpersonal (and sometimes impersonal) communications in a dynamic work environment. There are going to be a lot of conference calls, meetings, emergency emails, and quick-turnaround projects for either profession.

Financial analysts should probably consider pursuing a certified public accountant (CPA) or chartered financial analyst (CFA) designation to bolster their credentials, particularly if they want to advance up the ladder.

Investment Banker

Investment bankers are the movers and shakers in the institutional world. They play a key role in underwriting new issues of stocks or developing mergers and acquisitions (M&As) strategies. It's up to the investment bankers to evaluate companies and time the market to make the biggest profits for their firms or clients. Life as an investment banker is characterized by uneven bursts of activity followed by times of calm or even boredom. Unlike financial analysts, investment bankers are directly responsible for generating revenuesand pulling the trigger on investment decisions.

It takes a lot of stamina and the ability to handle stress to be a career investment banker. Firms expect their hires to hit the ground running and show a lot of initiative, but perhaps more than anything else, they expect them to put in a lot of hours. An investment banker can begin as a low-level financial analyst with just a Bachelor's degree, but investment banking associates should either have three to four years of experience or an MBA.

Special Considerations

A minimum of a bachelor's degree in a field such as economics, finance, mathematics or accounting is an absolute must for financial analysts or investment bankers. However, competition for these positions is notoriously steep; it may be a good idea to enter business school and earn a Master of Business Administration (MBA) to bolster your résumé.

Both careers are deeply analytical, and applicants are highly scrutinized for their ability to perform research, think critically, and problem solve. Many seek out securities licenses such as the FINRA Series 7 or Series 63 to demonstrate an understanding of financial markets and investment products. (Note: Taking a FINRA exam requires sponsorship from a FINRA member firm or a self-regulatory organization (SRO).)

These are both high-level and high-earning jobs, even at entry-level spots. According to 2020 Bureau of Labor Statistics data, the mean salary for a financial analyst was $83,660 per year. The top 10% of analysts earned more than $159,560 per year.

Financial analysts who don't work for major financial institutions, especially sell-side analysts, don't earn quite as much. Analysts in the lowest 10% make less than $48,760.

Investment bankers are among the highest-earning professionals in the business community, especially in entry- and mid-level positions. Major banks in New York City often offer $100,000 or more to first-year bankers along with a signing bonus that can add another $25,000.

The financial industry is notorious for offering an inequitable work/life balance to some financial analysts, but it is perhaps most true for investment bankers.

Put simply, work-life can be very tough for investment bankers, especially associates and other junior-level staff. It is not uncommon for investment bankers to work 80+ hours a week (roughly six 13.5-hour workdays) or to always be available via phone or email, even during early morning hours on weekends or vacations.

26,800

According to the Occupational Outlook Handbook released by the Bureau of Labor Statistics (BLS), the U.S. economy is expected to add this many financial analyst positions between 2019 and 2029—this represents an 5% increase over the decade, which is faster than average for all professions.

According to the Occupational Outlook Handbook released by the Bureau of Labor Statistics (BLS), the U.S. economy is expected to add an additional 26,800 financial analyst positions between 2019 and 2029. This represents an 5% increase over the decade, which is faster than average for all professions. The BLS credits increased complexity in financial markets and a growing industry for its projected growth.

The BLS does not offer comparable statistics for investment bankers, but the same dynamics that drive growth for analysts should drive growth for investment bankers.

Key Differences

Financial analysts and investment bankers often attract similar candidates, but they are really best suited for different individuals.

Financial analysts serve more like accountants than traders, and this job is best for those who like a consistent workflow and a life away from the office. Investment banking is a career for ambitious people who thrive under pressure and don't mind the long hours. Eventually, investment bankers spend a great deal of time communicating with clients and making crucial decisions for the firm.

Analysts get to spend much more time digging through the actual data and creating models for other members of the team. This kind of work may sound perfect for some workers or very boring to others, so much depends on your temperament and work pace.

As a seasoned financial professional with extensive expertise in both financial analysis and investment banking, I've had the privilege of navigating the intricate landscapes of markets, economics, accounting, and compliance. My hands-on experience spans various roles, from conducting capital markets research to actively participating in mergers and acquisitions strategies. My qualifications include in-depth knowledge of the financial industry, earning recognition through proven results and a track record of success.

In the realm of financial analysis, I understand the pivotal role these experts play in shaping corporate decisions. Financial analysts, often considered the ultimate support members on a financial team, specialize in sophisticated modeling techniques and are future-focused accountants. I've personally been involved in consulting with management, identifying trends, and running projections to aid major financial and investment decisions.

On the investment banking front, I've been part of the high-stakes world of underwriting new issues of stocks and developing mergers and acquisitions strategies. Investment bankers, the movers and shakers in the institutional world, are responsible for evaluating companies, timing the market, and maximizing profits. I've experienced firsthand the demanding nature of this career, characterized by bursts of intense activity and a need for stamina to handle stress.

Now, diving into the article, it provides a comprehensive overview of Financial Analysts and Investment Bankers, highlighting key distinctions between the two roles:

Financial Analysts:
- Responsibilities: Financial analysts work in various businesses, including investment banks, and are experts in markets, economics, accounting, and compliance. They engage in capital markets research, corporate accounting, and financial analysis.
- Qualifications: Financial analysts are encouraged to pursue certifications such as Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA) to enhance their credentials, especially for career advancement.
- Work Environment: Analysts collaborate with other departments and need strong interpersonal communication skills to navigate a dynamic work environment filled with conference calls, meetings, and quick-turnaround projects.
Investment Bankers:
- Responsibilities: Investment bankers, employed by financial companies, specialize in raising capital for other firms. They play a pivotal role in underwriting new stocks and devising mergers and acquisitions strategies.
- Qualifications: Entry-level investment bankers typically start as financial analysts and may require three to four years of experience or an MBA for advancement.
- Work Environment: Investment banking is known for its demanding work schedule, with expectations for long hours, high initiative, and the ability to handle stress. The job involves directly generating revenues and making critical investment decisions.
Special Considerations:
- Both financial analysts and investment bankers require a minimum of a bachelor's degree in fields like economics, finance, mathematics, or accounting.
- Competition for these positions is intense, with business school or an MBA often recommended to enhance one's resume.
- Applicants for these roles are scrutinized for analytical abilities, research skills, critical thinking, and problem-solving. Many obtain securities licenses, such as FINRA Series 7 or Series 63, to showcase their understanding of financial markets.
Key Differences:
- Financial analysts are akin to accountants, focused on consistent workflow and a balanced life away from the office.
- Investment banking attracts ambitious individuals who thrive under pressure, don't mind long hours, and are comfortable with client communication and critical decision-making.

In conclusion, the financial industry offers high-level and high-earning opportunities for both financial analysts and investment bankers, each catering to individuals with distinct preferences, temperaments, and career aspirations.