Investment banking is a high-profile financial career that requires a great deal of analytical, mathematical, and critical thinking skills to be successful in this field.
Many investment bankers rely on their backgrounds and skills to succeed in this job.
If you’re interested in working as an investment banker, preparation is essential. The following guide will offer insights about investment banking, including those within this field, and how to get into this line of work if investment banking might be a career for you.
What Is An Investment Banker?
Investment bankers help companies raise capital by financing stocks or borrowing money. They are the connection between the public and private companies and investors.
You’d offer financial advice and consultation for stocks and bonds on what kind to issue, when and how to issue them, and what price to set for each security.
You would help investors with services and advice on purchasing those securities. Investment bankers also perform underwriting for municipal bonds and assist with acquisitions and mergers.
What Does An Investment Banker Do?
An investment banker executes procedures involved in investment ventures that companies take part in. The income generated by an investment enterprise depends on the requirements of its consumers. Investment banking is an international career, so you can work with clients from around the world.
Investment bankers usually work varied schedules under high-pressure circumstances. The work is challenging, but it can pay off in staggering salaries.
Several job duties these professionals perform include:
- Working with companies, organizations, or other entities to raise public or private funds by issuing securities, underwriting municipal bonds, or through equity and debt offerings
- Consulting with companies and advising them on which securities to issue to investors
- Managing initial public offerings (IPOs) and creating supporting documentation.
- Handling necessary legal and compliance processes with financial regulatory agencies, including the United States Securities and Exchange Commission (SEC)
- Setting initial stock prices that attract investors to invest in companies raising funds for growth and development.
- Coordinating mergers and acquisitions, including building financial models to analyze and support the merger or acquisition
Types Of Investment Banking
There Are Two Distinct Types Of Investment Banking That You May Consider When Pursuing Your Career:
Industry Coverage
An investment bank may divide its employees into different departments that specialize in different parts of the market.
A managing director oversees the Industry Coverage Team, whose members are responsible for keeping track of developments in the market, the interaction between different companies, and new regulations that affect competition within their industry.
Smaller teams may design special initiatives to handle special projects.
Corporate Finance
Corporate finance helps companies receive approval for new projects or funds for ongoing operations by helping them raise funds through equity investments, stocks, and bonds. Investment bankers working within corporate finance assist with IPOs, conduct security trading between companies or facilitate mergers and acquisitions.
How To Become An Investment Banker
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.
- Earn A Bachelor’s Degree In Finance Or A Related Field
First, earn a bachelor’s degree from an accredited college or university and focus on a finance major. Helpful fields of study for potential investment bankers include accounting, economics, mathematics, analytics, corporate finance, business administration, and data analytics.
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.
- Consider A Graduate Degree Or MBA
Many investment bankers complete their master’s degree in a financial field, including business administration, corporate finance, or related financial fields.
While you can enter this field as a financial analyst at an investment bank, many employers prefer associate bankers and others in mid-level roles to hold graduate degrees.
Do your research to find which graduate schools have a high hiring rate for their graduates. They have strong internships and networking already in place, so take advantage of those.
A lesser-known program will still provide you with a Master’s of Business Administration or an advanced math degree, but it may not be as impressive to future employers.
- Register With FINRA And Obtain a Certification
As you enter your career as an investment banker, you’ll need to register as a representative of your respective bank with the Financial Industry Regulatory Authority (FINRA).
To qualify for registration, you’ll need to pass a specific exam based on your field of expertise. You can also pursue optional certifications, such as the Chartered Financial Analyst (CFA) certification, which involves completing the CFA program and passing an exam.
- Take Part In On-The-Job Training
In an entry-level position, you will typically start in an analyst role and complete an employer-supported training program before beginning your job.
Depending on the financial institution, this training generally covers the principles of accounting, markets, risk, financial analysis, statement analysis, and financial modeling.
The training you’ll learn on the job should also help you develop your negotiation, presentation, and communication skills.
Additionally, many employers also provide continuing education for entry-level investment bankers, further supporting their career advancement.
- Advance your career
You can advance your career in a variety of ways once you start working as an investment banker. For instance, if you enter the field with a bachelor’s degree in a financial field, your employer may help you continue your education, obtain certifications or provide you with training during your first few years working in the field.
As you gain more experience working in corporate finance and investment banking, you’ll have opportunities to advance into higher-level roles.
For instance, an entry-level investment banker can advance into management roles like vice presidents or directors, where they’ll be responsible for managing analysts and associates under them. Read more articles on activateenter.
Top Skills For Investment Bankers
- Critical thinking
- Self-discipline
- Cultural competence
- Relationship building