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How to Become an Investment Banker

how to become investment banker

How to Become an Investment Banker

Investment banking is becoming a lucrative career for many people, especially those with previous banking experience. Although the job may require long working hours and the competition may be tough, this is definitely a nice career for those who want to get a big paycheck.

Knowing the investment banker job description is a must for those who want to try this field. This job involves raising the debt capital and equity for different companies. You’ll need to provide financial service to clients, like raising capital and underwriting. When raising capital, you will act as a middleman between the issuer and the investors. An investment banker may also help clients in restructuring their company for debts in order to ease out financial stress.

Merger and acquisition services are also included in the investment banker job description. You’ll have to attend to the buying and selling parts of the deal. This means that you will have to take a client company to the market and find a way to sell the company in a strategic way or help another client in looking for an ideal company to purchase.

Even if you can handle the investment banker job description, you also need to possess the right skill that will make the job easy for you. You need the work stamina to make through the long working hours. You need to be able to stand through the tough tasks of the job. There will always be something challenging that will come up to your day at the office.

Investment Banker Job Description

Having good, if not excellent communications skills will prove to be helpful in the industry. This is needed in communicating with your team and also with clients, lawyers, and other consultants. Being able to communicate and express your intentions and messages well despite the hot-tempered clients or the difficulty in dealing with top-ranking executives is a much-needed skill. This sometimes is the only way to achieve your goals and finish the tasks at hand.

Valuation is another necessary skill that an investment banker must possess. Estimating the value of companies and future cash flows is a must when in the industry. One may need to do these tasks often, especially when analyzing these figures for publishing and recommendation to clients. You have to assess the future scenarios of the business and perform competitive and risk analysis of the business. Data regarding the rates of return, tax ramification, costs of capital, debit, and equity also have to be collected in order to supply an adequate understanding of the business and industry.

Being able to fulfill these tasks and possessing the right educational background and skills will definitely help you go a long way in this field. Those who are interested in marketing and finance can also be a good fit for the job. Make sure that you secure leadership and managerial experiences in different organizations or businesses before applying for an investment banker position. It may not be explicitly stated in the investment banker job description but possessing these skills is a huge plus.

An investment banker, also known as a merchant banker or investment broker provides commodities, securities, and financial services for well-to-do people, institutions, companies, corporations, and government agencies. They aid prospective clients in maximizing their investments and properly financing their businesses.

What You Need to Know About Investment Banking

You have heard the phenomenal success of corporate people in the investment banking industry. And, you are keen on knowing what would it take to help bring you attain that stature as well. First of all, it’s a must that you get well educated to meet the high demands and strict requirements of the investment banking profession. After pursuing an investment banker degree, you would eventually have enough training to take whichever role or position you might be occupied with, ranging from positions concerning income generation, risk management, operational and technical management.

The key thing that motivates anyone to take up an investment banker degree is: money. Yes, it’s all about the money, precisely in the same manner as clients of investment banker companies, they want to earn more money through leverage. But to do so, you need to have a very solid training and the character to make it in the world of investment banking.

Being aware of the requirements to get this rather high paying career would mean that you should enroll in a reputable university or college offering degrees relevant to the profession. Companies usually go after potential employees who are graduates of respectable schools. Planning to go further with a masters degree? All the better; it will definitely raise your chances of landing a good position in the investment banking industry.

investment banker degreeYou should know, too, that companies don’t only look into the subjects that you have taken, the lessons in the four corners of the classroom. They consider candidates who have extra-curricular activities and other pertinent experiences. Showing your relevant skills and entrepreneurial aptitude will allow your prospective employer to see that you have the capabilities to make all the crucial steps to make money. Make your application shine by writing all the organizations or clubs that are appropriate to be mentioned. Since an investment banker degree is an extremely demanding and stressful job, other than having the technical skills, therefore, you should recognize the value of your personality. A sharp mind, a quick wit, the grit to be persistent and a generally strong and pleasant character.

Whether you are applying for an internship or for a full-time job, subjects on languages are becoming as important as subjects concerning numbers. Investment banker degree is composed of a range of diverse roles since the aspects of the investment industry is also varied. Other than Mathematics, having subjects like Economics, the Sciences, Computing, Engineering, Politics and Business, etc. are taken into consideration. Make use of the internet to help you search for colleges or universities offering programs or courses for an investment banker degree. Most schools have their edge in producing future successful investment bankers, and most likely, companies are more discerning in hiring potential applicants from schools known for its training and education in the field of business.

How to Become an Investment Banker

In general, to become an investment banker, you should have a keen memory for all things finance related such as current events, facts, and trends. You should also have strong decision making skills, strong written and verbal communication skills, great math and analytical skills, and take pleasure in cutthroat negotiation deals. You must also take into consideration the information below if you want to start a career in investment banking.

  • Finish a 4-year undergraduate degree, not an associate degree, at an accredited university of college. While there’s no specific major you have to take to become an investment broker, it is generally advised that you choose a major associated with investment banking like business, finance, accounting, or economics.
  • Majority of agents also opt to obtain an MBA or Master of Business Administration degree since top companies in the finance industry offer higher salaries and higher positions to those who have MBAs. This will take you an additional two years to accomplish.
  • Finish your internship at a respectable and well-known investment bank or firm. Also consider showing up at every extracurricular activity available to you such as investment banking-related seminars and joining professional and college societies or organizations to build your contact list of possible clients or employers.
  • Firms more often than not recruit those who have just gotten out universities or business schools, but they also offer temporary employment during summertime even when the aspiring investment banker is still finishing school. Those who have impressed the company usually hire the person right after graduating.
  • Once finished with your studies, you should then register with FINRA or the Financial Industry Regulatory Authority and pass a series of exams called the Series 7 or General Securities Registered Representative Examination to get a license. This license is important since it authorizes you to sell various investment services and offerings.
  • In addition, you can also consider taking additional exams such as the Series 65 or Uniform Investment Advisor Law Examinations and Series 63 or Uniform Securities Agents Law Examination since these are required by majority of the states. Likewise, you can opt to get additional certification to boost your credentials. One such certification is the CFA or Chartered Financial Analyst certificate.

Investment Banker Salary

When you think of earning an investment banker salary, you could readily equate it to making tremendous amounts of money. That is common knowledge; however, most of us did not really take into account the amount of time an investment banker spends on the job to earn those large figures.

As of recent data, next year’s (2013) projected entry level investment banker salary could range from $100,000 to $150,000 after bonus for those with a bachelor’s degree. These are usually assistant or junior analyst positions. Associate positions could expect an after bonus salary range of $120,000 to $220,000. Major banking institutions in New York City offer a starting salary of $75,000 and a signing bonus of $15,000 to $20,000.

Where you and your firm are located is a significant varying factor as well for these figures. As mentioned above, for example, a New York City investment banker earns $75,000 base salary – that is $6,250 monthly. However, the same investment banker’s salary will be subjected to a 34-35% rate in federal, state, and city taxes (around $2,100). Whereas, a Houston-based investment banker can expect generally lower federal and city tax rates with zero state taxes. The same differing scenario could also apply in non-US locations. Investment banker salary in London could very well compete with those in NYC but would entail a higher cost of living expense. However, those in the same role in Dubai could easily save up on their earnings – thanks to no taxes and generous housing stipends.

Investment Banker Salary Levels

  • Entry $75,000
  • Mid $150,000
  • Top $220,000

There is a lot more diversity in compensation levels now than commonly thought. The old notion that the more prestigious a firm is, the higher the compensation, does not necessarily apply nowadays. With the recent financial reforms and legislation, certain areas like institutional equity sales and securitization are under pressure. However, a different case is true for other areas like health care financing which sees positive outlook. It translated to more stable compensations levels. Further, firms tend to apply industry-level compensation and salary figures compared to what it was before the economic downturn.

Earning six-figure investment banker salary is nice but not if you spend 120 hours on the job per week to get it. You must also take into consideration the amount you can save with the salary you are earning as well as the expenses associated with living close to your workplace. You can easily spend more than what you earn simply by not making smart and calculated decisions outside of the office. Work-related expenditures like spending lunch for a potential client could very well add up to your personal expense. Transportation and housing as well as clothing and food could potentially be a factor in you relying on your credit card instead of your pay.

In today’s financial environment, it may be better off for you to accept a lesser investment banker salary. This is true for entry-level positions. You are initially after the more important experience and the strength and quality of work you could be exposed to. You could maximize on these areas first, then pursue for more challenging positions once you’ve built on your skills and credentials.

Job Opportunities for Investment Bankers

Basically speaking, investment banking is entirely about money. Investment banks take part in different functions in the business industry, nevertheless, the main point for prospects is to make sure they earn money. There are various financial tools and transactions which they can use in order to earn top dollars for their clientele.

Unlike regular financial institutions, investment banks don’t provide you the typical saving and checking accounts, loans and mortgages. On the other hand, they deal with corporations and individuals, facilitating them to earn money, evaluate investment opportunities, and seal deals.

Investment banks primarily perform in the background to carry out their operations. They represent a multi-billion dollar trade with the sole purpose of producing earnings for those concerned. Working in investment banking companies is very demanding, unpredictable and fast paced. Nevertheless, you will equally be able to have a very handsome income in spite of the job’s strenuous and taxing nature. So, you have to be more persistent than you normally do.

Consequently, the rivalry is generally difficult for those who are aspiring to join the profession. As soon as you are on the job, anticipate that you’ll be working for difficult bosses who wants you to meet deadlines at all times.  However, in addition to significant paychecks, most investment banker companies can offer profound familiarity to quite a number of industries, understanding of the most sophisticated financial transactions and the pleasure of realizing they have assisted companies and investors reach their objectives.

For graduates who are on the search for a quick training in the ins and outs of trading as well as corporate dealings, registering with a financial institution will certainly place you in the field whereby vast amounts of money are being controlled by way of corporate valuations along with the sale of companies.

It is extremely important to note that due to the varied changes in the market, investment banks can be affected by the altering move in the market. Hence, if they are not going to exhaust all means, closure can be an outright result. With this, it can only add more to the already present competition for entry-level employees.  Most candidates can have their edge by enrolling in business schools for their masters as those with MBAs are occupying the majority of first-year investment banking jobs.

Whilst the ones holding a bachelor’s degree are most likely to be offered with a research analyst position. But note that it is expected that going back to school for more studies is a requirement for considerable advancement in the career.

So, having a career with investment banks may be a tall order and not for those who are more used to a lighter and more conventional environment. Along with the risk of this high profile profession is the vast perks of having a high paying salary, which can be rewarding in the long run just as long as you have the smarts and grit to do it.