Investment bankers generally work for investment banking firms. An investment banker’s responsibilities can be quite diverse, depending on the type of financial transaction they are negotiating and the clients they are working for. They are responsible for initiating financial ventures for their firm, or may act as an advisor to a client’s company. Investment bankers also frequently work for large commercial banks.
The work of an investment banker is very specialized, and as such the position is highly compensated. Investment bankers generally have an advanced degree, plus specialized training depending on the needs of their position.
The employment outlook for investment bankers remains good, due to the high demand for the services they provide. However, the recession and the recent collapse in the financial industry have dampened the job market somewhat, at least temporarily.
Salary doesn’t tell the entire picture when considering the earning power of an investment banker, due to the fact that they receive bonuses and commissions. According to the U.S. Bureau of Labor Statistics, the average weekly wages for an investment banker is well above the average for most other industries. Although the average salary for an investment banker is between $58,000 and $97,000, the earning potential is even greater for those who excel in the field and move on to more advanced positions.*
Additionally, an investment banker can expect bonuses, profit sharing and commissions, which can be significant. Good job performance translates into good financial returns for the company or client, which is then highly rewarded with bonuses and commissions. Based on national salary data, annual bonuses often average between $9,840 and $49,276, with commissions averaging between $3,500 and $36,000.*
*According to the BLS, http://www.bls.gov/oco/
Job Description and Outlook
Investment bankers can have a wide diversity of responsibilities, depending on the specific financial needs of the client. Corporate mergers, acquisitions and sales are often negotiated by an investment banker. They also frequently analyze financial situations for companies, such as in the case of a company that has failing operations, a budget deficit, or other financial difficulties. Investment bankers often work to find buyers for a company’s stock shares, such as when new stock is issued by a client company.
Those just starting out in the field often work as part of a team. Writing reports, performing research, analyzing spreadsheets and handling trades are all common daily responsibilities. Dealing directly with clients is usually reserved for the more experienced investment bankers. The daily work load is often heavy, and long hours are often required in order to succeed. In fact, in some cases it can almost seem like a 24/7 job, due to the grueling work load. Good people skills, analytical abilities, bargaining skills, market savvy, and a lot of energy and stamina are key requirements for success in the field of investment banking. Although the job is highly compensated, it’s usually recommended that a person not get into the field of investment banking just for the money, due to the demanding lifestyle. In order to succeed in the field, it’s important that a person really love the work itself, which is fast-paced, detail-oriented, and often intense.
There has been a significant amount of consolidation in the banking industry during recent years, which has served to limit job opportunities for investment bankers somewhat. However, there are still opportunities at major banks, leading financial institutions, and of course in Wall Street and other money center areas such as San Francisco. The competition for these positions has increased, which means education credentials are even more important.
Training and Education Requirements
To become an investment banker usually requires a master’s degree in business administration, ideally from a top school. Classes in advanced mathematics and advanced financial theory are recommended for individuals who aspire to become an investment banker. A good understanding of accounting is also a requirement. There are cases where firms will hire individuals with less specialized training, such as a liberal arts degree, but these trainees generally go on to achieve a business-related graduate degree as they progress with their career. A bachelor’s degree is generally required even for trainee positions, in addition to specialized training depending on the position. It’s not always easy to get started in the field of investment banking, as the competition for these positions can be intense. This is one field where education level can really garner a higher salary and more prestigious position. Those who have a MBA degree, especially with a strong focus on finance, can expect to receive a higher salary.
Certifications required will vary depending on the employer. For positions with a strong focus on securities analysis, the Chartered Financial Analyst (CFA) credential is usually required. The Certified Management Accountant credential is generally needed to work as a financial analyst. There are also a series of qualification exams offered by the Financial Industry Regulation Authority, Inc. (FINRA). Some investment banking jobs require multiple certifications, especially for key positions. Some of these certifications must be renewed by re-testing on an ongoing basis.
- CFA Institute – Provides educational programs and other resources for members.
- Investment Management Consultants Association (IMCA) – Provides resources, educational opportunities and certifications.
- New York Society of Security Analysts – Leading forum for the investment industry
- Association for Financial Markets in Europe (AFME) – Resources for the global financial market.
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