How To Get Into Investment Banking – Forbes Advisor

Becoming an investment banker requires education, certification, and experience. These professionals provide financial advice and help private and public organizations raise capital through investments and stock portfolios.

Although their work can take place in high-stress situations and environments, investment bankers can earn above-average salaries and often find their work fulfilling. This guide provides insight into getting started in investment banking, including key qualifications, typical educational paths, and certification requirements.

What is an investment banker?

Investment bankers work in finance, connecting companies looking to raise capital with the investors who have capital. These professionals help companies raise financing through initial public offerings (IPOs) and act as advisors in buying and selling securities.

The term “investment banker” applies broadly to entry-level and senior positions. At all levels, these professionals perform demanding, stressful work with long days and weeks. This role suits individuals who are data-driven, career-oriented, analytical, confident and determined to help their clients succeed.

Salary and job prospects

This demanding role often entails workdays of 12 hours or more that add up to 100-hour workweeks. However, it also brings high salaries — even entry-level investment bankers can earn six figures each year. Salary scale data shows that as of August 2022, investment bankers earned a median annual salary of around $102,000.

The career prospects also seem promising. The Bureau of Labor Statistics (BLS) reports projected job growth of 10% from 2021 to 2031 for sales representatives in securities, commodities and financial services. This category includes investment bankers. This is faster than the 5% growth rate forecast for all occupations nationally.

The BLS attributes this projected strong growth to an aging population and a consequent decline in traditional pensions. However, the agency also warns that consolidation in the financial services industry — along with automated trading systems — could slow growth for investment bankers over the decade.

responsibilities

Investment bankers use their knowledge of finance and markets to raise money for organizations, corporations, individuals, and government agencies.

Types of Investment Banking

Investment banking typically breaks down into two sub-sectors: corporate finance and industry coverage. Within brokerage houses, corporations assign investment bankers to work in these subgroups. This section examines two types of investment banking.

corporate finance

In corporate finance, investment bankers help individuals and organizations raise capital through stocks, bonds, and other investments. They oversee mergers, acquisitions and the preparation of IPOs.

Industry Coverage

This subset of investment banking focuses on specific companies or types of trades. Professionals need to stay abreast of any changes or trends in their assigned business sector. Professionals working in industry reporting often report their findings to stakeholders.

Important skills for investment bankers

Analytical skills

Investment bankers need analytical skills to monitor large amounts of economic data and draw conclusions from their insights.

attention to detail

In this stressful work environment, even a small mistake can mean the difference between a company that thrives on receiving capital and one that goes bankrupt. Investment bankers need attention to detail to do the high demands of their job.

trust

Investment bankers must show trust to clients who provide or require significant amounts of financing. Remaining calm and confident in high-pressure situations can benefit professionals in the field.

communication

These professionals interact with many different stakeholders on a daily basis, including colleagues, managers and customers. The ability to communicate clearly with diverse audiences is key for all investment bankers.

Make a decision

Investment bankers have to make important decisions for clients. Individuals and organizations seek the advice of investment bankers who need to know how to analyze trends and forecasts in order to make wise investment decisions.

Mathematical Skills

Investment banking requires strong math skills to come up with numbers for funding opportunities. These professionals also need in-depth knowledge of economics.

Knowledge of ethics and compliance

These professionals must have a deep understanding of the regulations and laws that apply to investments. Some clients may want more ethical investing, allowing these bankers to capitalize by identifying sustainable opportunities and hitting them while the iron is hot.

This is how you become an investment banker

Earn a bachelor’s degree

A bachelor’s degree is the minimum education required to become an investment banker. Aspiring professionals can pursue a bachelor’s degree in business administration or a bachelor’s degree in accounting. Other relevant majors are finance and economics. Aspiring investment bankers can also tailor their electives to corporate finance.

Attending a school near a city with a thriving financial sector like New York City can provide more internship and networking opportunities.

Consider grad school

Employers typically seek investment bankers with MBAs or other masters degrees for intermediate and advanced positions in the field. Although you can only become an investment banker with an undergraduate degree, earning a master’s degree can help you differentiate yourself from the competition and gain more job opportunities.

gain experience

In addition to gaining professional experience, students can enter the profession through internships. Interns can form lasting connections with employers and mentors for future employment opportunities. Experience is also key to advancement to investment banking positions of greater responsibility.

Register with FINRA

Every candidate must register with the Financial Industry Regulatory Authority (FINRA) to enter the world of investment banking. All prospective professionals working in the securities field must pass the Series 7 exam. Investment bankers must also pass the Series 79 exam to register with FINRA.

The Series 7 exam consists of 125 questions that test takers have three hours and 45 minutes to answer. Investment bankers who take the Series 79 exam must answer 75 questions in 2.5 hours. Aspiring investment bankers typically spend 60 to 100 hours preparing for the Series 79.

FAQ about becoming an investment banker