Investment Banker- Job, Salary And Career Prospects Of An IB
Investment Banker- Job, Salary And Career Prospects Of An IB

Investment Banker: Job, Salary And Career Prospects Of An IB

 

The essence of an investment banker in the operation of an investment bank cannot be overemphasized. Investment banks are banking and financial organizations that offer financial, advisory, assets management and investment services to its clients. In addition to this, investment banks carry out research in market systems and other financial products like commodities, equities, currencies and much more with the intent of providing clients with credible monetary services. Investment banks have been in the global scene for centuries with the sole aim of meeting challenges of innovations and latest developments confronting the financial markets.

Who is an Investment banker?

An investment banker can be described as a person saddled with the responsibility of raising capital for entities such as corporations, individual investors, as well as, the government.

An investment banker may or may not be affiliated with an investment bank, but he or she will lend a helping hand in terms of handling large and complicated transactions such as a merger, structuring an acquisition, sale for groups of clients or individual clients. Other core responsibilities of an investment banker include raising money through the issuance of securities and creating the needed documentation for the approval of SEC (Securities and Exchange Commission) in order for a company to raise capital from members of the public.

In addition, an investment banker can save the money and time of a client by identifying the inherent risks that would have been associated with a particular project if executed. Businesses, whether big or small seek the services investment bankers with a view to planning their financial prospect in a given financial year.

How to become an investment banker?

When the need arises for corporations or big firms to raise money in order to finance their project, they consult an investment banker. Becoming an Investment banker involves a lot of financial training in order to be successful. To this end, you must understand the legal requirements of the financial market, as well as, how the financial market operates.

You can become an investment banker regardless of your background. However, you must be well-grounded in mathematics. A potential investment banker may possess a degree in accounting, finance or mathematics. Holders of computer science and physics degrees are also eligible to become investment bankers, provided they are well-grounded in mathematics.

Investment bankers are trained by their employers. Newly employed investment bankers are trained in analyst roles and other finance-related courses before deploying them to start their careers. These training may run into several weeks or months as the employer may deem fit. In addition, the potential investment banker will be introduced to accounting risks, financial statement analysis, market trends, as well as, financial management.

Financial bankers will also have the opportunity to learn the following skills;

  • Negotiation
  • Presentation skills
  • Communication

Thereafter, the employer will deploy him/her to his/her assign role. Sometimes, a re-training program will be organized to further sharpen the skills of an investment banker.

One good for those aspiring to become an investment banker is to pass through an internship program. The internship program will expose the potential investment banker to a lot of financial management skills. Investment banks once or twice in a year take graduates or undergraduate interns with a view to providing them with mentorship and training. Interns are more often than not assigned similar tasks that associates and analysts perform. Such tasks include but not limited to data gathering, interaction with clients, as well as, working with financial models.

The entry-level requirements for the position of an investment banker are basically a bachelor’s degree, but most investment bankers immediately pursue a Master of Business Administration degree after been employed. Several higher institutions in India offer financial mathematics programs, and obtaining a higher degree in this program will surely give you an edge over your counterparts.

Are there any certification or licensure requirements?

Immediately an investment banker is hired, they must register with the Financial Industry Regulatory as representative of their banks. In order for an investment banker to qualify for registration, it is required that they must pass the certain examination, although depending on the task assign to them by their employers.

Voluntary certification such as Chartered Financial Analyst is also a good certificate for investment bankers to obtain. However, to obtain this certificate, the investment banker must have at least four years working experience in addition to a graduate degree. The Chartered Financial Analyst program takes a minimum of 2 years or a maximum of 4 years to complete.

How long does it take to become an investment banker?

You can become an investment banker immediately after your bachelor’s degree; however, advancing to the level of an associate banker will take an average of two to four years, in addition to your graduate degree.

Skills required to become an investment banker

Becoming a professional investment banker that employers would like to hire requires certain skills that cannot be overlooked. You must demonstrate the following qualities;

  • Analytical and problem-solving skills: This skill is very important. You should emphasize this skill in your resume. The job responsibility of an investment banker deals with calculations and numbers. You must, as a matter of fact, be able to quickly analyze numbers and trends, calculate percentage and numbers, as well as, understand how your calculation impacts on the performance of your company. However, it doesn’t necessarily mean that you must be a professional mathematician. Basic calculations plus confidence is all you need to excel.
  • Attention to detail: You must be attentive to details. Critically looking into your work with a view to spotting formatting errors and inconsistencies is highly necessary as an investment banker.
  • Communication skill and team orientation: You must be able to present your ideas in clear terms devoid of ambiguity. Communication skill is very important. You should understand the difference between communicating with your superiors and juniors.
  • Time management and multitasking ability: You should know how to multitask. This is because investment bankers handle a lot of projects at once. In addition, you must possess time management skill. These are what will give you’re an edge over your counterparts.
  • Leadership skill: Leadership skill is essential to become a successful investment banker in view of the fact that employers doesn’t expect an enter-level investment banker to possess this skill, hence giving you leverage over other competitors.

WHAT DO INVESTMENT BANKERS DO?

Investment bankers are saddled with a lot of responsibility to either their employers or individual investors. Although the major task of an investment banker is to raise capital for their clients, but, they do more than just raising capital. Raising capital is done in 2 ways which are;

  • Selling equity
  • Issuing debt in the company.

Issuing debt can be described as the process of selling bonds to a client. When a client buys a bond, what this means is that the client is loaning capital or money for a specific number of years to the issuing company at a fixed interest rate. The issuing company would then pay the interest throughout the validity period of the bond. Now, when the validity period ends, the issuing company would then remit back to the investor the principal amount. An investment banker is required because sometimes it is pretty difficult to get a qualified investor with plenty of money to invest.

Furthermore, investment bankers play a critical role when a company wants to raise funds from members of the public by a way of initial public offering (IPO). The success or failure of a company to raise funds via IPO can make or mar the operations of the company. This is the major reason why big companies seek the services investment bankers to help them line-up credible investors, as well as, properly position their IPO to succeed.

Investment bankers lend helping hands to their clients in various ways such as serving as advisors with a view to finding credible opportunities for their clients and helping their clients to broker M&As.

Why are investment bankers earning so much?

The following are some of the reasons why investment bankers are highly paid;

  • Banking jobs are insecure: Banking jobs don’t have security, highest lifespan being 5 years for a managing director position, hence the reason why investment bankers are one of the most highly paid professionals.
  • Investment Bankers are the life of a system: Investment bankers are the cogs in a capitalist system. Anybody that has the capacity to control huge funds is more or else the controller of an economy. Investment banking role is a challenging position, hence the reason why remuneration reflects the same.
  • Investment bankers work more hours than another profession: Investment bankers put in more hours on the job than any other profession. The average working hour per week of an associate investment banker is about 70-80 hours.

Salaries of an investment banker

In no particular order, the table below shows the average salary of an investment banker in India with respect to the organization they are working.

S/N Company Name Amount per annum (INR)
1 Goldman Sachs 1,238,800
2 HSBC Holdings 1,355,000
3 Accenture 272,000 – 298,000
4 PWC 477,000 – 520,000
5 TCS 578,000 – 621,000
6 Deutsche Bank 225,000 – 247,000
7 Standard Chartered Bank 409,000 – 447,000

 

 

Investment banker long-term career prospects

Investment bankers launch into their career as an investment analyst and then gradually they advance to the level of an associate. Some start their investment banking career as an associate having worked in other industries for several years and also holds an MBA degree.

An associate can as well advance to become the bank’s vice president, supervising analyst and associate banker. The role of an associate comes with experience and interpersonal relationships with various clients.

Consequently, a bank’s vice president can advance to become a principal officer or a director focusing more on bridge building between the bank and her customers.

The highest position an investment banker can attain is the managing director. At this level, the job of the investment banker is to introduce new ideas that will birth new businesses for the bank.

As the investment banker climbs up the ladder, their remuneration increases to justify the new responsibilities.

Conclusion

An investment banker can save the money and time of a client by identifying the inherent risks that would have been associated with a particular project if executed. A potential investment banker may possess a degree in accounting, finance or mathematics. Holders of computer science and physics degrees may also eligible to become investment bankers, provided they are well-grounded in mathematics.

 

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