What is investment banking?
Investment bankers are the all-stars of the finance world. The A-team. And why, you ask? Because investment banks only take the brightest minds from the best universities to advise the Googles of the world on how to spend their money.
Remember when the two largest beer companies – AB InBev and SABMiller – (Almost… Potentially… Still in the works…) merged? The investment banks working on the $108 billion merger racked in about $95M-120M in commissions fees. And when this deal went live, the names of the investment banks involved were splashed across every major news outlet. Why? Because it was investment bankers who helped AB InBev decide whether or not to purchase SABMiller and for how much. When you’re getting paid a hundred million bucks for your advice, you know this is serious business.
What would I do as an analyst?
Analysts are expected to be sponges, soaking up every detail so that eventually, they too can be in a position to give clients financial advice. On the day-to-day, you would either be doing research, updating different databases, creating financial models and most notably, creating and editing a LOT of presentation books. If you consider yourself a whiz in Microsoft PowerPoint and/or Excel now, in the words of Randy Bachman, “you ain’t seen nothing yet.”
What skills do I need?
The five most popular majors to enter the field with are Economics, Business Management, Finance, Accounting, and Mathematics, but it’s not unusual to see students enter the field from seemingly unrelated fields like Computer Science and Communications or Marketing. This is because Investment Bankers work in very dynamic environments. They need to be able to draw on a very wide knowledge base in order to advise companies how to adapt to an ever-changing industry. For this, they need to have razor-sharp problem-solving skills, innovative thinking, and an all-seeing vision that will allow them to advise companies on how to strategize their long-term growth.
Where do I go from there?
Adding investment banking to your resume will open lots of doors. Most analysts leave after two years and go work for their client, head straight to business school, or work for another prestigious financial institution. Top choices include private equity shops, hedge funds, and venture capital firms. For those aspiring to take the latter route, 2-3 years of experience at an investment bank is sort of a pre-req for landing those top finance jobs. Even still, some analysts go on to become associates, gaining more client exposure and utilizing the skills they have already acquired.
Why all the hype then?
Investment banks are notable for their selectivity and high salaries. It doesn’t come as a surprise that investment banks recruit from the top schools in the nation and have acceptance rates lower than Harvard’s. With starting base salaries around $85K and bonuses between $55K-$75K, these spots are highly coveted. If you stay in the industry, you could easily be a millionaire by your 30th birthday.
Alright, I’m interested. What’s the best way to enter the field?
Landing an internship in investment banking, either as a freshman, sophomore, or junior (yes, you heard me right- most big banks offer internships starting in your freshman year) is the golden ticket to securing a full-time analyst position. In 2015, Morgan Stanley filled positions in its sales and trading department exclusively with its interns. Investment banking is really no different.
We’re not going to lie to you, connections are important in any industry, but especially important with Investment Banking. However, if you don’t have any connections, don’t throw in the towel just yet. Investment banking networking events at your university are a great way to meet people and gain a foothold over your peers. Even if your resume speaks for itself, you need something else to help you stand out of the crowd, and that something is usually a reference from someone you networked with. Networking may help get you the interview, but it won’t land you the job. Unlike your college exams, you can’t pull an all-nighter and nail these interviews. So if you don’t already have a subscription to the WSJ, Financial Times, Economist, etc., you should get one ASAP. While the freshman and sophomores might not be expected to know the ins and outs of the interest rate hike dilemma, juniors and seniors certainly are.
The bottom line
This is a great career for those who thrive in ever-changing environments. The investment banking world is fast-paced and dynamic, ensuring you’re always fully engaged with your work. You’re not only given the opportunity to surround yourself with some of the most intelligent and influential figures in the corporate world, but you’re also given the opportunity to actually shape and change the industries you work in.
Feeling overwhelmed? Don’t worry. That’s where we come in. iXperience’s Finance course will teach you the tools of the trade and help you land an internship in investment banking. Aside from the coursework, we encourage our students to network with iX alumni in investment banking to get the inside scope! Good luck and happy hunting.