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When you look at small businesses, medium businesses and even companies so big they’ve become household names, most entrepreneurs share something in common: They worked with investment bankers to make their dreams a reality. Investment bankers are key players in bringing any company to the stock market.
Investment banking is the glue that connects businesses, investors and financial markets. Investment bankers help their clients facilitate IPOs, increase revenue, balance their books and identify opportunities for growth.
If you want to learn how to get into investment banking, read on. From educational and licensure requirements to investment subfields and necessary skills, this article will tell you everything you need to know about breaking into this profession.
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What Is an Investment Banker?
Investment bankers are financial professionals who help companies gain capital resources through a variety of activities, such as connecting businesses to investors and supporting initial public offerings (IPOs).
What Does an Investment Banker Do?
Investment bankers provide an array of financial advisory services to institutional clients. A typical day in the life of an investment banker ultimately depends on the banker’s experience and the client’s needs. However, most investment bankers work long, sometimes stressful hours.
Capital raising is a large component of being an investment banker. This process includes selling securities to investors, facilitating IPOs and book building—the practice of estimating a company’s value before it goes public on the stock market. Investment bankers also facilitate mergers and acquisitions and provide hedge, mutual and pension fund advisory services.
Salary and Job Outlook
The average salary for investment bankers is around $118,200 per year, according to Payscale data from January 2024. The U.S. Bureau of Labor Statistics (BLS) projects that securities, commodities and financial services sales careers—which include investment bankers—will grow by 7% from 2022 to 2032. This projected growth is faster than the 3% growth projected for all occupations nationwide.
Because the U.S. is an international center for finance, the BLS projects that the growth of foreign economies will lead to further employment in the American financial industry.
Responsibilities
Investment bankers must perform many duties, typically in fast-paced, high-pressure environments. Their responsibilities include conducting financial analysis and research, creating client-facing presentations, developing relationships with new and existing clients and performing valuations.
Types of Investment Banking
There are various kinds of investment banking. We explore two subcategories below:
Corporate Finance
Corporate finance deals with all financial matters of a business organization. Corporate finance professionals find ways for companies to grow, make acquisitions and plan for enterprises’ financial futures. They manage the company’s money, helping clients find ways to cut costs and increase revenue.
Industry Coverage
Industry coverage refers to investment banking for a specific industry. For example, investment bankers may provide financial advisory services to clients in the technology or healthcare industry with deep-rooted expertise in that specific field.
Important Skills for Investment Bankers
Investment bankers need sharp mathematical and analytical skills as well as solid communication capabilities. Here are some of the top skills investment bankers should bring to the table.
Analytical Skills
Investment bankers must analyze financial models, trends, documents and other data to advise clients.
Attention to Detail
Investment bankers work with complex sets of data, many of which impact organizations’ financial health. These professionals need attention to detail so they can provide clients with accurate information and prevent errors from damaging companies’ finances.
Confidence
Investment bankers work in high-stakes scenarios. In many cases, they work with large companies and big industry names. Confidence is critical to ensuring they can perform in challenging environments to close deals and ensure funding for their clients.
Decision-Making
Because they often work in fast-paced environments, investment bankers must think on their feet and make snap decisions. They need to make wise financial choices on behalf of their clients.
Math Skills
Investment bankers should have a good grasp of basic math skills and be able to do quick calculations when necessary.
Knowledge of Ethics and Compliance
Financial institutions are subject to state, federal and international regulations. Investment bankers must ensure their activities comply with all applicable laws. Understanding how to make ethical financial decisions is also vital to forming healthy relationships with clients and building a more responsible business model.
How To Become an Investment Banker
What does it take to become an investment banker? The process requires several years of school, earning a license and obtaining experience on the job.
Earn a Bachelor’s Degree
Investment bankers start by earning a bachelor’s degree, usually in a field like business administration, finance or statistics. A bachelor’s degree typically takes four years of full-time study. Students can also pursue an internship or gain work experience while completing the degree.
Consider Graduate School
Investment bankers can pursue a graduate degree after earning their bachelor’s. These professionals can earn an M.B.A. is common, which can lead to higher-level positions and increased salaries. If you need flexibility in your degree, you can pursue an M.B.A. online.
Gain Experience
Many investment bankers receive training on the job. That can include attending conferences and training seminars.
Register With FINRA
All investment bankers are required to obtain a license from the Financial Industry Regulatory Authority (FINRA). This license gives holders the right to sell investment products and services.
Earning a FINRA license involves passing a series of qualification exams. After receiving their license, investment bankers must enroll in continuing education to maintain industry standards and practices.
Frequently Asked Questions (FAQs) About How To Become an Investment Banker
How long does it take to become an investment banker?
Investment bankers must earn at least a bachelor’s degree and obtain FINRA licensure. Completing a bachelor’s program usually takes at least four years; completing licensure exams and certifications thereafter is generally ongoing.
Is it hard to become an investment banker?
Becoming an investment banker requires several years of higher education in addition to licensure. It also requires strong mathematical and analytical capabilities, which may be challenging for some people. In addition to a bachelor’s degree, investment bankers may need a master’s in finance or an M.B.A. degree, which poses its own challenges.
Do investment bankers get paid well?
Actual salaries vary by location and experience level, but the average annual salary for investment bankers nationwide is approximately $118,200, according to January 2024 Payscale data.
Can I become an investment banker with an online degree?
Yes, multiple schools offer online degrees that can lead to investment banker careers. Earning a degree online can provide greater flexibility for those with more demanding schedules.
