What is Investment Banking and How to become an Investment Banker? (2024)

FAQs

What is Investment Banking and How to become an Investment Banker? ›

Investment bankers work to issue securities and facilitate complex financial transactions. Investment bankers need to study finance, with many earning master's degrees. Investment banking is highly regulated, and bankers need to pass licensing exams.

The lucrative and fast-paced career of an investment banker is a highly competitive one. For instance, in a recent year, 236,000 applicants competed for roughly 3,500 internships at Goldman Sachs. This is common across the industry where acceptance rates for programs are typically less than 2%.

What Is an Investment Banker? Investment bankers are investment professionals who combine financial services industry expertise, analytical prowess, and effective persuasive communication skills to support institutional clients in activities like capital raising and mergers and acquisitions.

Investment banker, investment broker and financial services professional are some of the highest-paying positions in the finance industry. These roles typically require a bachelor's degree in a related field, such as finance or business, and may require additional certifications or licensing.

No matter what major you pursue, investment banking will require strong math and analytical skills with a firm understanding of economics and how it affects corporate finance. Also, internships during your bachelor's program can help you build working experience and enhance networking in the financial field.

For those seeking a career in investment banking, a bachelor's degree in finance is a prerequisite. Other potential acceptable majors include economics or business supplemented with a minor in finance. In a bachelor's in finance program, student's learn how to perform financial analyses and forecasts.

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.

Many Analysts might be working more like 80-90 hours per week rather than 70-80. That may not sound significant, but it's the difference between 12.5 hours per day for 6 days with one day off and 12.1 hours per day with no days off.

In the U.S., the top investment banking companies include the Big Four Banks — JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.

How many hours a week does an investment banker work? ›

How Many Hours Do Investment Bankers Actually Work? 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.

Investment banks earn commissions and fees on underwriting new issues of securities via bond offerings or stock IPOs. Investment banks often serve as asset managers for their clients as well.

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.

If you have more than 2 – 3 years of full-time work experience after university, it will be very difficult to get in at the Analyst level (estimated age cut-off of 25, but it may be more like 27 – 28 depending on when you started the degree).

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.

Investment Banker salary in India ranges between ₹ 1.8 Lakhs to ₹ 38.8 Lakhs with an average annual salary of ₹ 4.0 Lakhs.

Yes, many companies still rely on macros and Excel reporting, but this is slowly being phased out as businesses adapt to cloud server storage. Therefore, if you're trying to get into banking now, Python is the skill that's needed.

Even when you are working with financial models, none of the math is complex. 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.

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.

What degree do most investment bankers have? ›

Investment Banker Education Requirements

There are several education requirements to become an investment banker. Investment bankers usually study business, finance or accounting. 69% of investment bankers hold a bachelor's degree and 19% hold a master's degree.

How Much Sleep Do You Get in Investment Banking? Investment Bankers who average 80-hour work days will likely get around 7 hours of sleep per night assuming that they go to bed at around 2 AM and wake up around 9 AM.

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.

New York City is typically considered the finance capital of the world. Many of the largest investment banks, including Goldman Sachs,14 Morgan Stanley,15 and Merrill Lynch,16 are headquartered in New York City. So too are several large banks, including Citigroup and JPMorgan Chase.

Other investment bankers take Ritalin or Adderall, which are given to children with ADHD but which are stimulants for adults. But the mainstay is probably coffee, energy drinks and other concoctions containing caffeine.

The work includes three primary tasks: presentations, analysis, and administrative. After two years of working for the investment bank, top performing analysts are often offered the chance to stay for a third year, and the most successful analysts can be promoted after three years to investment banking associate.

3. Investment banking. Tier 1 investment banks are the largest globally across multiple product categories. They include JP Morgan, Goldman Sachs, Citigroup, Morgan Stanley and Bank of America.

Some people end up in investment banking because they are looking for a rigorous, skilled job that doesn't require a graduate degree, specific work experience, or specific academic experience.

What is the most prestigious bank? ›

Bankers continue to regard Goldman Sachs as the world's most prestigious bank, followed (as always) by Morgan Stanley and JP Morgan. Credit Suisse and UBS lost the most ground in 2022 while LionTree Advisors' reputation improved the most in the eyes of bankers.

On a resume, what resonates with Investment Banking recruiters in terms of academics and achievement is your GPA, the clearest indicator of how committed you were over four years to your studies. Generally, anything above a 3.5/4.0 is considered good, while a 3.7+ is looked at very favorably as an excellent GPA.

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.

The typical investment banker has a graduate degree in business from an Ivy League school or other top-tier university and superior educational credentials [i.e., excellent grades (minimum 3.50 GPA), active participation in business and investment clubs, and participation in at least one internship or summer program at ...

Working in the financial industry can be a potentially lucrative career choice, and the average national salary for investment bankers is $66,493 per year . Successful investment bankers can earn both high base salaries and significant commissions.

Becoming an investment banker involves at least four years spent earning a bachelor's degree, plus additional time spent preparing for and earning FINRA licensure. Mid-level and advanced investment bankers typically earn master's degrees, which can take an additional two years to complete.

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.

Wall Street is both an actual street and a symbol. It's home to a variety of financial and investment firms, along with institutions like the NYSE and the Federal Reserve Bank of New York.

Goldman Sachs is one of the oldest and most prestigious investment banks on Wall Street. With hundreds or thousands of applicants for every job opening, getting into this company is notoriously hard.

To become an investment banker, it is absolutely essential that you earn a college degree. Usually, it doesn't matter which college you go to as long as there are plenty of opportunities for you to complete internships and make plenty of connections.

Do investment banks only hire Ivy League? ›

Most of the investment banking target schools are Ivy League schools and top liberal arts colleges. However, you may be surprised to know senior bankers at investment banks tend to recruit candidates from the schools that they attended!

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.

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.

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.

High Levels of Competition

One of the biggest disadvantages of Investment banking is the stiff competition. Investment banking may be a very competitive industry due to the high pay available within the sector and the competitive nature of investments.