How to get into investment banking – Forbes Advisor

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Becoming an investment banker requires training, certification, and experience. These professionals provide financial advice, helping private and public organizations increase their capital through investments and equity portfolios.

Although their work can take place in very stressful situations and environments, investment bankers can earn above-average salaries and often find their work fulfilling. This guide offers an overview of how to get into investment banking, including key skills, typical education paths, and certification requirements.

What is an Investment Banker?

Investment bankers work in finance, linking companies looking to raise capital with investors who own capital. These professionals help companies obtain financing through initial public offerings (IPOs) and assist with the buying and selling of securities as consultants.

The term “investment banker” is broadly applied to entry-level and management positions. At all levels, these professionals perform demanding and highly stressful work with long days and weeks. This role is suitable for individuals who are data-driven, career-focused, analytical, confident and committed to helping their clients succeed.

Salary and job prospects

This demanding role often involves workdays of 12 hours or more, totaling up to 100 hours per week. However, it also offers high salaries – even entry-level investment bankers can earn six figures every year. Salary range data indicates that investment bankers earned an average annual salary of approximately $102,000 as of August 2022.

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

The BLS attributes this strong projected growth to the aging of the population and the resulting decline in traditional pensions. However, the agency also warns that the consolidation occurring within the financial services industry – as well as auto-trading systems – could slow the growth of investment bankers over the decade.

Responsibilities

Investment bankers use their knowledge of finance and markets to raise funds for organizations, companies, individuals, and government entities.

Types of Investment Banking

Investment banking generally falls into two subsets: corporate finance and industry coverage. Within brokerage firms, companies assign investment bankers to work in these subsets. This section explores two types of investment banking services.

business Finance

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

Industry coverage

This subset of investment banking focuses on specific businesses or types of trade. Professionals need to keep abreast of any changes or trends in their industry. Professionals working in industry coverage often report their findings to stakeholders.

Important Skills for Investment Bankers

Analytical skills

Investment bankers need analytical skills to observe large sets of economic data and draw conclusions from their findings.

Attention to detail

In this very stressful working environment, even a small mistake can mean the difference between a successful business after receiving capital and a business becoming insolvent. Investment bankers need great attention to detail to meet the high stakes of their job.

Trust

Investment bankers must project trust to clients who provide or require large amounts of financing. Staying calm and assertive in high-pressure situations can benefit professionals in this field.

Communication

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

Decision making

Investment bankers must make crucial decisions for their clients. Individuals and organizations seek advice from investment bankers, who need to know how to analyze trends and forecasts to make sound investment decisions.

Math skills

Investment banking requires advanced math skills to calculate numbers for funding opportunities. These professionals also need a solid working knowledge of economics.

Knowledge of ethics and compliance

These professionals must have a thorough understanding of the regulations and laws that apply to investments. Some clients may want more ethical investments, so these bankers can benefit by identifying sustainable opportunities and striking while the iron is hot.

How to Become an Investment Banker

Earn a bachelor’s degree

A bachelor’s degree is the minimum education required to become an investment banker. Future professionals can seek a bachelor’s degree in business administration or a bachelor’s degree in accounting. Other relevant majors include 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, such as New York, can provide more internship and networking opportunities.

Consider the graduate school

Employers generally seek investment bankers with an MBA or other master’s degree for intermediate and advanced level roles in the field. Although you can become an investment banker with just an undergraduate education, earning a master’s degree can help you stand out from the competition and receive more job opportunities.

Gain experience

In addition to developing professional experience in the field, students can enter the world of work by doing internships. Interns can make lasting connections with employers and mentors for future job opportunities. Experience is also essential for moving into investment banking roles with more 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 securities 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, which candidates have three hours and 45 minutes to complete. Investment bankers taking the Series 79 exam must answer 75 questions in 2.5 hours. Aspiring investment bankers typically spend 60-100 hours preparing for Series 79.

FAQs on how to become an investment banker

How long does it take to become an investment banker?

Becoming an investment banker involves at least four years spent earning a bachelor’s degree, plus additional time spent preparing for and earning a FINRA license. Intermediate- and advanced-level investment bankers typically earn a master’s degree, which can take an additional two years.

Is it difficult to become an investment banker?

It can be. Most investment firms seek applicants from prestigious schools, which typically have high tuition fees, restrictive admissions policies, and rigorous coursework. However, people with a bachelor’s degree from any school can still land an entry-level investment banking job.

Are investment bankers well paid?

Generally speaking, yes – investment bankers earn high salaries. Even entry-level professionals in this field can earn upwards of $100,000 per year. However, investment bankers work long days in very stressful environments.


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