Is a Career in Investment Banking Worth It? (2024)

FAQs

Is a Career in Investment Banking Worth It? ›

Being an investment banker is one of the best-paying jobs available today, excellently. Meaning, when it comes to salary, it surpasses other jobs by far. It's also one of the hardest jobs possible, in every way you can think of.

Investment banking is an exciting and lucrative career, but it isn't right for everyone. You may have a desire to earn over $100,000 a year as a first-year analyst in New York City, but you need to remember that investment banking is not just a high-paying job, but is also a high-stakes, high-pressure job.

It is a high risk, high reward career that demands a high degree of commitment, and a herculean ability to juggle your work-life balance.

As global markets increase levels of investment and baby boomers move into their retirement years, demand for investment bankers' expertise is expected to grow.

Can you become a millionaire as an investment banker? It is possible to become a millionaire as an investment banker, but it is not easy. Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year.

Hours: Without question one of the biggest drawbacks are the hours that Investment Bankers work. It is not unusual to be expected to work through the night when deal flow is high. Working weekends is also common when deals are close to being struck. The markets might be closed but the Investment Bank is open 24/7.

Managing the pressure

There is no doubt that there will be times when you'll be under a lot of stress, even though the high stakes and fast-paced way things are done in an investment bank may make the learning process so speedy. It's not only about working long hours; you also need to put in high-quality work quickly.

There's addition, subtraction, multiplication, and division… and occasionally built-in Excel functions like IRR, Mean, and Median. You never use calculus or differential equations or even geometry / trigonometry. Just arithmetic and sometimes algebra.

Investment banking is not a normal 9-to-5 job — investment bankers can work anywhere from 60 to over 100 hours per week, depending on the company and the deals at hand. According to a 2021 Working Conditions Survey by Goldman Sachs, first-year investment banking analysts work more than 95 hours per week, on average.

Across the industry, even at the firms which saw slight year-on-year falls, the norm seems to be that the crude percentage chance of getting accepted to an investment banking graduate program is a bit more than 1%, but significantly less than 2%.

Is JP Morgan hard to get into? ›

JP Morgan's hiring standards are very high, so you should put a lot of effort into meeting its expectations. Candidates for internships should have good grades and extracurriculars that set them apart from other students.

For a hefty fee, they bring industry, financial, and transactional expertise. They are basically gatekeepers — a company that wants to issue stock, issue debt, buy other companies, or sell itself has to engage with an investment bank (though some tech firms are working on ways around this).

Investment Banking Levels and Salaries

A successful analyst will likely pursue their MBA and become an associate, making closer to $200,000 per year before potentially rising to VP, managing director or partner status. Executives in investment banking can make upward of $300,000-$500,000 per year.

Most investment banks prefer degrees in finance, accounting, business administration, and other business disciplines. Undergraduate degree subjects are less influential in the hiring process if a candidate has a master's degree in business administration, finance, or another highly relevant subject.

Investment banking hours are much longer than those in other jobs because of four main reasons: Huge Clients Pay Your Bank Huge Fees: When a company is paying your bank $50 million, $10 million, or even $1 million to advise on a deal, you have to do whatever it wants at any time of the day.

Even with education, experience, and enthusiasm, investment banking might not be for you. Lack of work-life balance is one reason to avoid becoming an investment banker. Investment bankers must also be able to manage high-pressure situations.

The average age of an employed investment banking associate is 39 years old.

Sure, if they can find time for being social with colleagues and networking with senior bankers, then it can help their careers, but introverts often thrive given the types of tasks junior investment bankers are typically assigned.

Are You Too Old? This is a vague question, so the only reasonable answer is: “It depends.” You will not win an IB Analyst or Associate role if you're a 40- or 50-year-old accountant, but if you want to make more money while doing something related to finance or deals, there are options.

Is it harder to be a lawyer or investment banker? ›

Key Takeaways. Of the two careers, investment banking requires greater quantitative acumen and skills in math. The educational requirements for becoming a lawyer are much more rigid than those for becoming an investment banker.

Most commonly, investment bankers obtain either a master's of finance or an MBA with a specialization in finance.

Generally, you will need at least a bachelor's degree in a finance-related field to enter this field, but there are many opportunities to advance and develop your skills on the job. The following steps outline the typical path many investment bankers take.

Investment banking is a popular field for recent graduates, particularly among business and finance majors. Although it's definitely a competitive field, a lot of its appeal comes from the fact that it's also a field with a lot of opportunities and a high earning potential.

Investment banking analysts generally work 80-110 hour workweeks – expect to have very little free time outside of the office, especially during the first year on the job.

For most prospective investment bankers, paid time off (PTO) isn't likely a key factor in deciding between firms. But once the job starts and the long hours begin adding up, a bank's vacation policy can take on a new level of importance.

Client Management:

Since investment banks work for customers across the world, investment bankers need to travel a lot to service their customers and maintain relationships with their firm's largest accounts.

Grades below those levels don't necessarily mean that banks will reject you right away, but they do make it harder to win interviews through the normal process. But there are limits to that statement; for example, if you have below a 3.0 GPA in the U.S., then banks may reject you just based on that.

For investment banking analysts however, it is actually very difficult to get fired – although out of an analyst class about 10% of the class somehow manages to get fired every year.

What is the hardest investment bank to get into? ›

Goldman Sachs is generally regarded as the leading investment bank in most business areas, and is the toughest Bulge Bracket investment bank to break into. Goldman has a very strong reputation within the industry and among corporations. They advise on the majority of high profile M&A deals and other major transactions.

A: We value diverse degree backgrounds and experiences and while a GPA 3.2 (or equivalent) in your undergraduate degree is preferred it is not required. Our training programs are designed to allow everyone, regardless of major studied to succeed.

As for GPA requirements, they vary by business unit, but most are in the 3.2 to 3.5 range. Grades are clearly important – we do look at those – but beyond meeting the minimums we try to be open about it. Different people have different circ*mstances.

U.S. students joining Goldman Sachs and JPM, may not be the very, very brightest, but they're still incredibly bright. The average GPA at each firm was at least 3.72 (93%).

#1 Centerview - $220,000

Centerview Partners is an elite boutique investment bank known for paying the absolute top dollar for first-year bankers on Wall Street.

Investment banks regularly take on undergraduate and graduate interns and provide them with training and mentorship. Interns typically perform the same kinds of duties that analysts and associates perform, including gathering data, working with financial models, and interacting with clients.

Unless the goal is senior management, most people in finance are out of there by age 50. That's not at just the biggest investment banks, either. In January, Charles Schwab Corp.'s Chief Financial Officer Christopher Dodds announced plans to quit in May, at age 47, to pursue greater "work-life balance."

Investment bankers meet with clients, prepare offers, run financial projections, and work on pitchbooks, that help generate new clients. The work is lucrative but the days are long and stressful. Superior social skills are required for success in the field.

In summary, I think you can generally expect most of your weeks in investment banking to be between 60 and 80 hours. I'd say 60 hours is doable, while 80 hours will really start to push you. I think anyone who says that they work 100 hours on average is probably lying.

How do you survive working in an investment bank? ›

Across the industry, even at the firms which saw slight year-on-year falls, the norm seems to be that the crude percentage chance of getting accepted to an investment banking graduate program is a bit more than 1%, but significantly less than 2%.

Investment Banking Managing Director Salary + Bonus: Base salaries are in the mid-six-figure range, with total compensation in the high six figures to low seven figures. An MD doing decently should earn between $1 and $3 million per year, and sometimes a low multiple of that (as of 2022).

Most investment banks prefer degrees in finance, accounting, business administration, and other business disciplines. Undergraduate degree subjects are less influential in the hiring process if a candidate has a master's degree in business administration, finance, or another highly relevant subject.

A Day in the Life of a Investment Banker. Investment bankers advise their clients on high level issues of financial organization. They manage the issuance of bonds, recommend and execute strategies for taking over and merging with other companies, and handle selling a company's stock to the public.

How Hard Is It to Land a Job at JP Morgan? In a word, hard. JP Morgan's hiring standards are very high, so you should put a lot of effort into meeting its expectations. Candidates for internships should have good grades and extracurriculars that set them apart from other students.

There's addition, subtraction, multiplication, and division… and occasionally built-in Excel functions like IRR, Mean, and Median. You never use calculus or differential equations or even geometry / trigonometry. Just arithmetic and sometimes algebra.

Accordingly, investment banking firms are incredibly selective with new hires. To become an investment banking analyst, you need the right education. Investment banking firms recruit top-performers from the most prestigious schools, preferring a select few schools.