There are many reasons why people want to learn how to become an investment banker. According to industry insiders, many find the lure of a high profile lifestyle and seemingly abundant income to be irresistible. Technically, a bachelors degree is the only post-secondary education needed to enter the world of finance, but a masters-level education helps candidates stand out in a highly competitive field. Read on to find out more about how to become an investment banker.
According to the United States Bureau of Labor Statistics (BLS), investment bankers work with specialized companies that help buyers and sellers meet within the confusing world of financial markets. They have the power to sell or trade financial interests, known as securities. Investment bankers also work closely with companies to help them find investors for increased financial support.
The job is extremely high pressure, and candidates can expect to work far beyond the 40-hour workweek. As of May 2013, BLS experts predict average industry growth until the year 2020. Average annual salaries are approximately $70,190 United States dollars (USD), with additional revenue via commissions and bonuses.
Working as an investment banker is not for everyone. According to a retired banker, the industry tends to attract certain personality types. The following items continue to motivate the next generation of investment banker prospects.
- Crisp suits and shiny cars attract younger collegiate students getting by on ramen noodles and tap water.
- Financial prosperity remains a universal motivator and the prospect of substantial bonuses draw many into the banking lifestyle.
- A chic lifestyle is more important to some than just having money in the bank. The right contacts make exclusivity part of the norm.
- The job generates occupational prestige due to the fact many view bankers as financial superiors and assume they have superior financial resources.
A select few hope to continue family tradition or express a love of numbers, but they remain far and few between. Talking with former and current investment bankers, many agree that the money remains a major draw.
A solid education is not enough to create a successful investment banker. Candidates must possess a combination of analytical and social skills that allow them to easily decipher financial information and relay it back to people in a non-condescending manner. Contacts are the difference between successful and struggling bankers. According to industry insiders, the following attributes make work life a lot easier:
- High amounts of people, communication, analytical and synthesizing skills.
- Investment bankers need lots of creative talent.
- Moderate amounts of sales ability and initiative.
It is important to note that each investment company has different expectations for their bankers, and some may require that candidates exhibit strong sales acumen. Aspiring bankers need the ability to function well in a team setting. Some mathematical talent is highly recommended in such a numerical field. People who “get things done” rise quickly within the industry.
addition to a golden tongue and personable nature, investment bankers need a solid education. Some smaller firms take candidates with a high school diploma, but chances for rapid advancement and bigger revenue are extremely slim. Most candidates take undergraduate courses with a focus in business finance. This is bare bones qualification in many well-known firms.
Many people now choose to obtain their Masters in Business Administration (MBA) in an effort to make their resume stand out to potential employers. The approach works well when students attend a well-regarded school and perform some type of pre-graduation onsite training. Other popular routes include obtaining post-graduate law (J.D) or medical degrees (M.D), but experts believe the education over-qualifies candidates for entry-level positions.
Despite attending the best schools, candidates can still find themselves without employment. Recent data indicates there are approximately 20,000 positions available internationally on an annual basis for investment bankers. Close to 200,000 applicants vie for those spaces. Due to the industry’s competitive nature, every prospective banker boasts sterling credentials and equally hungry ambition. A strong networking system is the only true means to employment within the industry.
Most investment bankers start out as financial analysts or Associates if they already have an MBA. According to a BLS description, analysts help others make investment decisions and track investment performance. Unlike bankers, they cannot sell or trade securities. As of May 2013, median annual pay is approximately $74,350 USD and experts predict faster than average growth until the year 2020. Analysts do not receive bonuses or commission.
On average, candidates remain analysts for two to three years before furthering their education or receiving a promotion to the Associate level. Newly hired Associates remain in their position for a period of three to four years before receiving a promotion. This period can differ based on company size and employee performance. In many cases, this interim period filters out people who cannot endure the hectic investment banker lifestyle.
Conquering the Interview
After extensive networking, some simple faux pas can ruin a coveted interview. Financial experts recommend having solid knowledge on the following items:
- Candidates need a firm grasp of basic finance. They should be able to explain the correlation between balance sheets, income and cash flow statements.
- Knowledge about corporate valuation in the form of discounted cash flow (DCF), multiples approach and comparable transactions is essential.
- Interviewers expect candidate familiarity with debt and equity.
In addition to highlighting their intelligence, candidates need to show how much they know about a particular company by discussing current and / or previous deals. Information and opinions on the financial market show a person is in-tune with present-day conditions. Smaller touches let an employer know that candidates have a passion for the jobs that goes beyond financial gain.
Achieving the title of investment banker is not an easy feat. Extensive schooling, the right connections and long hours make the sky the limit. For the right person, this numbers-oriented job evolves into a solid career.