GIPHY / istock / getty

How to Become an Investment Banker

Investment banking is a lucrative field where even entry-level positions come with six-figure salaries. But rising to the top of the heap where the millionaires reside requires a potent combination of education, ambition, skill, and connections.

  • Investment bankers make the big bucks, but stepping into the position isn’t as simple as getting any old degree
  • Most investment bankers hold degrees in accounting, business, computer sciences, or even law – and bankers at the best firms usually go to the best schools
  • Gaining experience in school – often via an internship – and networking are crucial to getting hired into lucrative positions straight out of school
  • In addition to hard skills and networking, becoming an investment banker requires ambition, a well-polished personality, and self-discipline

What is Investment Banking?

Investment banks serve as the intermediaries between companies, the financial markets, and public and private investors. These institutions have a hand in making big-ticket financial prospects happen, including:

  • Helping companies go public
  • Facilitating mergers and acquisitions
  • Underwriting securities releases for corporations and municipalities

And while these contracts lumber their way through the regulatory system, bankers also provide advice, trade securities, and research the latest financial trends in their day-to-day.

A Day in the Life of an Investment Banker

The term “investment banker” can mean many things. For instance, an investment banker may stick with buying and selling securities for wealthy clients, or they may help those securities go public in the first place.

Other potential duties include:

  • Handling legal and regulatory compliance with agencies such as the SEC and FINRA
  • Working with entities to raise funds for expensive projects
  • Consulting with companies and individuals on the best opportunities to meet their goals
  • Running financial models and analyses to ensure that mergers, acquisitions, and IPOs benefit the parties involved

Moreover, many investment bankers don’t set their sights solely on domestic clients. In fact, many work internationally – leading to plenty of late-night phone calls and fluctuating schedules.

What’s the Difference Between an Investment Banking Analyst and an Associate?

Most individuals fresh out of bachelor programs don’t become an investment banker immediately. Instead, you can usually expect to be hired on as a banking analyst for 2-3 years. In this position, you’ll cut your teeth by:

  • Researching investment opportunities
  • Analyzing budgets, investment needs, and investment performance
  • Evaluating industry trends and generate earnings and trend reports  
  • Arranging meetings and presenting information to clients and bankers

Working as a banking analyst provides a chance to learn the ropes and further your financial education. Once you’ve impressed the right people, your firm may promote you into a banking associate role or send you for additional training before extending an offer.

However, if you apply for a role fresh from a graduate or MBA program, you might step straight into an investment banker role and bypass the analyst position altogether.

Crucial Skills to Hone

To become an investment banker – especially a successful one – you’ll need to polish certain skills. While math and critical thinking are integral to the day-to-day job, you’ll also need:

  • Intellectual curiosity to innovate creative solutions to complex problems
  • Self-discipline in spades
  • Cultural competence (and perhaps fluency in a second language)
  • Strong social and interpersonal skills

Q.ai Says: At the top of the investment banking world, it’s not uncommon to handle millions or even billions of dollars in client finds. As such, maintaining a well-kept appearance and keeping your nose clean are crucial.

Investor typing on laptop

How Much Can You Make as an Investment Banker?

Investment bankers make an average of $68,000 per year or more in their first few years, according to Indeed. But this number is just an average – it doesn’t account for location, firm, or clientele.

In fact, many institutions, such as Bank of America, CitiGroup, and Selby Jennings, report earnings of $180,000 per year or more. And for those at the top of the heap, netting a cool mil isn’t unheard of.

Pros and Cons of Becoming an Investment Banker

In the banking world, top-dollar pay requires top-dollar commitment to your firm.

As such, investment bankers often work long hours, sometimes netting 40-60 hours of overtimein a single week. This translates to 14-hour days, no weekends off, and the occasional late-night phone call in your few precious hours away from the office.

For those who desire a healthy work-life balance, this field isn’t for you – there is none. But if you seek financial security, powerful connections, and a hand in making the financial markets turn, investment banking provides all that and more.

How to Become an Investment Banker in 5 (Not-So) Easy Steps

Knowing what an investment banker does is one thing. Knowing how to become an investment banker is another entirely.

1. Start with a College Degree

Typically, most investment bankers start out by getting a college degree relating to finance, math, or economics. For instance, accounting, business, and computer science degrees are all common backgrounds, while some law students also transition into investment banking.

Q.ai Says: While a bachelor’s degree can get your foot in the door, obtaining an MBA, or Master of Business Administration, may substantially improve your prospects.

Additionally, attending an Ivy League or other school of excellence can better your prospects of being plucked for a position at top investment firms. The Universities of College London, Cambridge, Oxford, and Warwick, as well as the London School of Economics, are all top picks.

2. Get the Proper Certifications

To become an investment banker, you’ll need to register with FINRA as a representative of your respective bank. This involves passing an exam or series of exams based on your field of expertise – which means even after your studies are finished, you’re not finished studying.

3. Gain Some Experience

Real-life experience is crucial to making it in the banking world.

Internships are one of the most common ways to get a foot in the door, as students and recent graduates can gain critical exposure, work experience, and of course, the chance to impress potential employers. Some advanced programs may even require you to complete an internship or place you in one to obtain your degree.

4. Network, Network, Network

Nepotism is usually frowned upon in polite society – but in the investment world, networking is essential. Anytime you have a chance to rub elbows with the powerful (or soon-to-be-powerful) individuals in your field, take it. That includes your older peers, college professors and guest speakers, your bosses during your internship, and any upper-level managers you can get to give you the time of day.

Q.ai Says: Remember to mix and mingle with the right people when you network. Analysts and low-level investment bankers probably don’t have pull in the hiring division. But having the ear of higher-up managers, directors, vice presidents, and even bigwigs at rival companies can make all the difference. And if you have family or friends in high places, a well-placed word never hurts.

5. Perfect Your Resume

Investment bankers spend their days selling their business, their products, and their abilities. And to convince Fortune 500 companies to trust you with millions of dollars in mergers, IPOs, and other big-ticket contracts, selling yourself is the first step. And it all starts with a well-written resume that highlights your banking and financial skills (and ignores that time you worked as a camp counselor in 9th grade).

Becoming an Investment Banker Isn’t Easy – But the Payoff is Sweet

Education, networking, a killer resume, and of course, top-notch math and analytic skills are crucial in becoming an investment banker. Once you have those down pat, it’s all about dazzling the bosses and advancing through the ranks – all while slogging through 80+ hour workweeks.


Disclosures

Q.ai offers advisory services through Quantalytics Investment Advisors, LLC ("QIA"), a Registered Investment Adviser. This is solely for informational purposes. Advisory services are only offered to clients or prospective clients of QIA . Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Comments by viewers or third-party rankings and recognitions are no guarantee of future investment outcomes and do not ensure that a client or prospective client will experience a higher level of performance or results. Adviser has reasonable belief that the content posted by a Third Party does not contain untrue statements of material fact or misleading information regarding its advisory services.

Hands-free approach to investing

Our AI manages your money with commission-free, institutional-grade, AI-powered investment kits.
Sign up for Q.ai