A career in investment banking may include various activities, including selling, underwriting, and trading securities, managing assets, and providing financial advisory services. Investment bankers cater to a diverse group of entities including governments, companies, non-profit institutions, as well as individuals. They help their clients raise funds on the capital market. Investment bankers perform the following major functions for their clients:
Investment banks were once very different than commercial banks, where individuals mainly deposited their money and tried to get commercial and retail loans. Recently, though, the two types of banks have become much more similar; commercial banks today are offering more and more investment banking services as they attempt to provide a more comprehensive offering to their clients.
- Lend and invest banks' assets
- Serve as trading intermediaries for clients
- Provide advice on mergers, acquisitions, and other financial transactions
- Issue, buy, sell, and trade stocks and bonds
- Research and develop opinions on securities, markets, and economies
- Manage investment portfolios
Investment banks are not the same as brokerages and broker-dealers, even though they are often thought of as one and the same. A brokerage firm recieveds a commission for assisting in the sale and purchase of bonds, stocks, and mutual funds. A broker-dealer operates in a similar fashioh to brokerages, but unlike a brokerage it also trades for its own account; for instance, when you buy a stock, you can buy it through an exchange or the dealer's own account (and you'll pay the current market price no matter what the dealer paid for it). An investment bank actually is a broker-dealer that provides corporations with financial services, such as mergers and acquisitions, assistance with initial public offerings, and strategic planning.
If you're really set on becoming an investment banker, get ready to move New York City, the world's center for investment banking, or some other major city such as San Francisco. There are a few other money centers around the world - Hong Kong, London, Tokyo, Moscow, and Singapore, etc. - but as the finance and banking industry consolidates the list continues to get smaller. Leading investment banks include Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, Credit Suisse First Boston, Citigroup, and JPMorgan Chase. These investment banks, as well as smaller regional and boutique banking firms, regularly send their recruiters to college and universities campus career centers across the nation in search of talent.
Experience, Education, and Skills
Investment banks typically hire individuals with strong interpersonal communication and analytical and skills. Investment banks are very picky about who they hire. They only hire individuals they are very confident will enjoy the work itself, since lots of hours and lots of stress are common in this high-risk, yet high-reward career. Investment banking is definitely challenge and rewarding - the salary and bonus may be high, but if the economy's in a recession, an investment banker may find himself unemployed.
Undergraduate college students can break into the investment banking field by apply and getting accepted to a two-year analyst positions, which requires the ability to work with teams, dedication, indepth understanding of Excel spreadsheets, and quantitative and mathematical skills. After completing the analyst position, most aspiring bankers pursue MBAs or other professions within the investment banking industry. MBAs are often recruited by investment banks for higher-paying associate positions, and international assignments are often available for those interested in working overseas. Very few mid-career professional transition into the investment banking industry from other career fields, but it is possible - especially if you're able to leverage a background in law or one of the sciences.
Traditionally, the investment banking recruiting process is quite formal and extremely competitive. It's difficult for most students and aspiring professionals to get an investment banking job without relevant experience, preferably gained through an internship or analyst position. However, networking can help immensely useful when trying to land an investment banking job. Knowing the right people can make all the difference in the world. One of the most effective ways to get an investment banking job is through on-campus recruiting at your college. And if you're selected for an interview, make sure to stress your analytical and abilities as well as your ability to communicate effectively. If you're attending a college where investment banks don't actively recruit or you're earning a degree online and don't have the opportunity to participate in on-campus recruiting activities we highly recommend taking a trip to New York and setting up your own interview wity investment banks. Showing that you're a go getter will go a long way to landing you a job with a top investment bank.
Top 10 Most Prestigious Investment Banking Firms
- Goldman Sachs & Co.
- The Blackstone Group
- Morgan Stanley
- Lehman Brothers
- JPMorgan Investment Bank
- Merill Lynch
- Citi Markets & Banking
- Credit Suisse Investment Banking Division
- UBS Investment Bank
Career Education Finder
Get information on career education programs that could help you increase your earning power.