What Does an Investment Banker Do?
Learn About the Salary, Required Skills, & More
Investment bankers raise funds for corporations and government agencies by structuring the issuance of securities such as stocks and bonds. They also advise corporations that are contemplating mergers and acquisitions. Careers in investment banking require strong quantitative abilities combined with excellent sales skills, a willingness to work hard, excellent people skills, and a competitive nature.
Investment Banker Duties & Responsibilities
As part of their day's regular responsibilities, investment bankers may perform some or all of the following duties and tasks:
- Assist companies, organizations, and other entities in raising public or private funds through equity or debt offerings.
- Build detailed financial models to analyze and support Merger and Acquisitions (M&A) transactions and Financial Planning and Analysis (FP&A) work.
- Perform business valuation analyses by using transaction comps, discounted cash flow, and leveraged buyout methods.
- Conduct company and industry research to prospect for clients and bring in new business.
- Participate in and manage all stages of a transaction, from the opening pitch to the closing investment contract.
This fast-paced, pressure-packed job is also noted for its long hours and extensive travel requirements. In particular, junior associates should expect to be on call virtually 24/7 for their first few years. The payoff for those who survive the grind is two-fold. Investment bankers have the ability to help businesses raise money to grow or keep their doors open.
This business knowledge leads some bankers to invest in businesses or run their own enterprises if they decide to leave banking. Additionally, investment banking compensation packages can be extremely lucrative, allowing successful workers to build a fortune within a relatively short period of time.
Investment Banker Salary
The Bureau of Labor Statistics (BLS) includes investment bankers among a group of occupations called Securities, Commodities, and Financial Services Sales Agents. However, the BLS also notes that Securities, Commodities and Financial Services Sales Agents involved in what it terms "other financial investment activities" are the highest-paid subcategory, with the median compensation of $108,250. This seems to correspond most closely to investment bankers and represents about 11% of total employment in the broader job category.
The following salaries represent compensation averages for the overall group of financial workers.
- Median Annual Salary: $64,120 ($30.82/hour)
- Top 10% Annual Salary: $208,000 ($100.00/hour)
- Bottom 10% Annual Salary: $34,360 ($16.52/hour)
Source: U.S. Bureau of Labor Statistics, 2018
Investment bankers as a subgroup have a compensation model that includes a base salary, and some or all of the additional forms of compensation: Profit sharing, commission, and bonus. It's not uncommon for an investment banker's bonus to exceed their base salary, and in profitable times, more senior investment bankers may take home six-figure bonuses.
Education, Training & Certification
The investment banker position involves fulfilling education and training requirements as follows:
- Education: Investment banks require a bachelor's degree as the minimum educational qualification for an entry-level analyst position. It's possible in some investment banks to move up to a senior investment banker role without getting a master's degree. However, in some investment banks, a master's degree is required to gain entry to the firm's career advancement track. Most investment banks prefer finance, accounting, business administration, or other business degrees. An undergraduate degree matters less in the hiring process if an individual has a master's degree in finance, business administration, or another relevant area. Courses in economics, finance, and mathematics are highly recommended.
- Experience: Investment banks don't require first-year hires to have experience, although relevant internships can help during the hiring process. If applying as a candidate that has a master's degree, previous work experience may give an edge, especially if it's relevant to the industry or the company.
- Licenses: Investment banks may require certain securities licenses such as a Series 63 and Series 79, issued by the Financial Industry Regulatory Authority (FINRA) after passing an exam.
Investment Banker Skills & Competencies
In addition to education and other requirements, candidates that possess the following skills may be able to perform more successfully in the job:
- Analytical skills: Employees must have strong analytical, numerical, and spreadsheet skills.
- Team player: Individuals must possess excellent team leadership and teamwork skills.
- Interpersonal skills: Candidates must have excellent communication and interpersonal skills.
- Time and project management: Investment bankers must be able to manage both time and projects well.
- Hard worker: The investment banking role requires commitment, dedication, and high energy.
- Confidence: The job requires individuals to have self-confidence and an ability to make difficult decisions, usually while under a deadline.
The job outlook for securities, commodities, and financial services sales agents is about average. This group includes investment bankers. Job growth will be driven by a continuing need for investment banking services such as initial public offerings and mergers and acquisitions as the economy grows. However, ongoing consolidation in the financial services industry will offset this growth to some degree.
The U.S. Bureau of Labor Statistics predicts that employment in these jobs will grow about 6% from 2016 to 2026, which is about as fast as the average job growth of 7% for all occupations through 2026.
Investment bankers work in an office environment, and may also spend time working in the offices of a client, or the conference room of a law office. Because of the work's deadline-driven nature and extensive hours required, bankers may also work in other locations, such as while traveling on an airplane to a client site or while riding the train into work.
Investment bankers, especially entry-level workers, work full time, and typically work long hours, which often exceed 75 hours or more per week. This includes evenings, weekends, and most likely holidays as well. Investment bankers may also travel a great deal, sometimes for extended periods.
How to Get the Job
While you're in school working on a finance or related degree, finding a relevant internship can give you an edge over other applicants. Find internships through your school's career center or online job search sites.
Find an internship at an investment bank and work so that you can secure a permanent position with the firm. Intern during your undergraduate or graduate school program, or intern after you graduate. If you are transitioning from a legal or consulting career, or have recently completed time in the Army, this extra expertise can make you stand out from the other candidates.
Before you apply for investment banking jobs, get your cover letter and resume in order. Review and update your resume to include education, work and volunteer experience, and skills or certifications that may be applicable to the job. It also helps to prepare by rehearsing answers to common investment banking interview questions, as these interviews can be grueling.
Use sites such as Wall Street Oasis to research investment banking jobs and learn how to make yourself an optimal candidate. Also, learn about different specialty areas within investment banking, which may help refine your job search.
Investment banking job applicants greatly outnumber the number of available positions, so be persistent and ready to apply more than once or twice. Find job opportunities through your school's career center or by approaching investment banks directly.
Comparing Similar Jobs
People interested in investment banking also might consider one of the following career paths, listed with median annual salaries:
Source: U.S. Bureau of Labor Statistics, 2018