Investment Banking Job Description

What is investment banking and how to break into IB

A career in investment banking can be both extremely rewarding and challenging. This job is defined by long hours and can be very difficult work, but typically provides very high pay. It is an excellent choice for those who thrive on the challenge of creating and executing financial transactions that result in the successful flow of capital.

Preparing Pitch decks - Investment Banking Job

It involves advising companies in managing large financial transactions such as mergers and acquisitions, initial public offerings (IPO), leveraged finance, and restructurings

Investment bankers must have a great amount of knowledge surrounding financial markets to organize and assist in these complex transactions. In addition, candidates for junior roles must show a great deal of dedication and work ethic to succeed in this industry. It is one of the industries where excellent quantitative skills and the ability to model complex transactions are a must-have.

While the allure of high salaries draws many candidates into this industry, there is an exceptional amount of work. Most junior positions are required to work around the clock and usually forfeit weekends. Work may involve financial modeling, industry research, analyzing financial statements, and creating pitch books and projects.

To land a role in investment banking, a candidate needs to put in a considerable amount of work. Usually, this involves getting a bachelor's degree in economics or some related field and some degree of professional experience. 

Candidates must have strong knowledge of finance and accounting and good quantitative and interpersonal skills. They often need to build a large professional network to help break into the industry and get a leg up in the hiring process. One major benefit of a career in investment banking is that the corporate ladder is very well defined. In most cases, one can reasonably expect to be promoted to VP in 7 years. 

While investment banking isn't for everyone, it certainly has appeal and many advantages and disadvantages and is worth considering.

If you are interested in a role in IB, please look at our free IB interview guide, one of the most comprehensive free guides out there.

What is Investment Banking?

Investment banking is the act of raising capital or advising on large financial transactions to companies, organizations, and governments. It requires an extensive understanding of financial markets, strong analytical skills, and a commitment to hard work. Check out the video below on investment banking from our M&A Modeling Course!

Many investment banks assist with mergers and acquisitions both on the sell-side and buy-side. For example, they may help find a buyer or seller for a company depending on which side of the transaction the investment bank is on. They also help companies value the acquired company, negotiate a price, and find the best deal for their client.  Check out the video below about M&A models from our M&A Modeling Course!

They also assist companies to list on a stock exchange through an initial public offering (IPO) by helping them determine what price they should offer in exchange for their equity and how many to issue. In some cases, an investment bank may take on the risk for another company by buying all their shares and acting as an intermediary between them and the market, and selling these shares at a markup.

They are also often hired to help a company's restructuring process. For example, a company burdened with excessive debt might want to rearrange its operations and sources of funds to become profitable in the future. These banks tend to have specialized departments best suited to advise such clients.

Leveraged finance (raising large amounts of below investment grade debt) is another common role these banks play. Often investment banks will help fund a private equity firm's leveraged buyout operations or help finance other companies' mergers and acquisitions. 

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Investment banking is a booming industry and among the most competitive jobs to land in finance. Landing a role requires a great amount of knowledge, lots of networking, hard work, and dedication.

Investment Banking Offices

How to Become an Investment Banker?

Breaking into investment banking is no easy task. Jobs here are highly sought after and extremely competitive. To stand out to employers takes a lot of work and dedication. Candidates looking to find a job in this industry should have a strong command of accounting and finance and know how to do financial modeling. In many cases, a candidate must put in effort outside of formal education and apply to many jobs before landing one.

An investment banker needs to have a wide range of knowledge to succeed in this career field. They should have a thorough understanding of major financial markets and trends while being educated in general business topics such as marketing, operations, and management. A good understanding of economics is also necessary for this position because the job involves analyzing market data and forecasting trends.

An investment banker should have a strong sense of ethics because the work often requires working with high-profile businesses or individuals under federal investigation or involved in legal disputes.

How to become IB analyst?

Most importantly, a candidate needs to be dedicated and hard-working while having a lot of interest in finance. They also need to know if it is a career they want. Not only does landing a position require an incredible amount of dedication and hard work beforehand, but if finance is a means to an end, this job may not be the right fit. 

It requires a lot of hard work that can be fast-paced and stressful and requires time. Much of the work may be somewhat tedious to start, as it will require a lot of focus on details and will be a lot of work with numbers. If a candidate is not willing to work hard or is not interested in finance, not only will it be exponentially more difficult to land a position, but it will also be relentlessly challenging once in the position. It could be miserable if a candidate is not interested in the work.

Investment Banking Skills and Qualifications

A candidate should pursue a bachelor's degree in finance, economics, or a related field. Extracurricular activities are also highly recommended; participating in a school's investment club or other programs is a great way to gain experience and stand out. In addition, it is a good idea to learn as much as possible about finance through reading and other avenues both inside and outside of a school curriculum. 

In addition to education, professional experience is looked for by many employers. Therefore, a candidate should pursue internships throughout college to gain experience and knowledge and improve their resume. Many investment banks take on several interns in their junior year and invite a select few of them back for a full-time position after graduation.

While landing the job usually doesn't require it, a Master's in Business Administration (MBA) may help a candidate climb the corporate ladder. Sometimes employers will help finance it because it can improve a candidate's productivity and quality of work. It also can help land a job. An MBA is an accreditation that shows employers that candidates have the skills they are looking for and can certainly improve their job prospects.

Graduation

An investment banker must be detail-oriented and have strong analytical skills. This job requires many skills related to research, financial modeling, and creating pitch books that should be meticulously created to not have any flaws and include all relevant information. It is helpful to have strong math and analytical skills to excel in this position. 

They must also have the ability to motivate clients. The work is focused on client service, which requires persuasive communication skills. An investment banker must also think quickly on their feet, which requires excellent verbal and writing skills. 

While interpersonal skills are helpful in any job, this remains especially important in investment banking. As mentioned above, breaking into this industry is not a walk in the park. It can be tremendously helpful to be personable enough to make friends with people in this industry who can give you references and help you get a shot at an interview. 

Many companies include a section in their application to note people you know at the company, and some have separate applications for those who secure a reference. Being personable is exceptionally important in an interview, as being unlikeable can kill job opportunities immediately no matter what a candidate's resume looks like. 

The better a candidate is at making friends with colleagues and those in senior positions, the better they will do and the faster they will move up the corporate ladder. As one gains experience and takes on more responsibility, the more client-facing the role becomes. Interpersonal skills will be extremely important when meeting clients and can be a lifesaver if a candidate makes a client upset.

Networking

How to Secure an Investment Banking Interview

How to secure the interview? This question does not have a single answer, but there are several things that candidates should do to improve their chances of getting an opportunity to interview.

If a full-time career is still a long way out, that is good as it pays to get started early. While a candidate may not land an interview as a freshman, it can help gain experience to bolster their resume, which can help get an interview in the future. As an aspiring undergraduate, try to get relevant experience. It may not be directly related to investment banking, but almost any financial experience is useful, especially before someone gets started. However, as a junior, it may be time to start looking for actual investment banking internships, as this can often lead to a full-time job at the same firm after graduation.

Also, make a Linkedin account. The first thing to do is network with as many people as possible. This includes anyone a candidate's family might know, a neighbor, a neighbor's dog, or anyone who could help refer a candidate or give them an opportunity at an investment bank. 

College and High School alum are extraordinarily useful and may agree to conduct an introductory interview - answering questions about a candidate's ambitions. However, it may not always pay to outright ask connections for references or interviews, especially if having only recently or briefly met them. 

However, suppose an alum or connection likes someone. In that case, they may give them a reference or may be able to secure a formal interview, or may be able to provide other valuable connections.

Network

It is important to have good questions prepared. It is essential to have questions prepared when meeting potential connections as otherwise, it gives a bad impression. Usually, a candidate will receive much better information if they can produce questions their connection can answer. Sample questions include:

  • How did you start your career?
  • What is the best piece of advice you've gotten?
  • What do you think is the most valuable trait a person can have?
  • What responsibility takes up most of your time?
  • What is the most difficult part of your job?

More specific questions may also be useful. For example, asking about a connection's particular firm or position can demonstrate greater research and generate better information.

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Applying to many different firms, just like throwing darts at the board, although crude, can be effective. This is true for everyone, but especially for those that don't have an exceptionally strong resume or many connections. The more applications a candidate fills out, the more likely they are to land one or multiple interviews, and assuming that a candidate may not nail the first interview they're given, it can pay to get a shot at many. 

Interviewing at many places can help practice and get a candidate more comfortable doing them. Interviewers may even advise about what a candidate did wrong and what they can do for their next job application, and if they don't, it may be useful to ask after receiving a rejection.

How to Prepare for an IB Interview

Once a candidate has landed the interview, it is time for them to prepare. It can be very stressful looking an interview in the face, especially if this is the first time interviewing for a position within finance. It is easy to question whether one is prepared enough or qualified for the job. Below are details on what to prepare for and what material to know when it comes time to interview.

A candidate needs to research the firm that is interviewing them, ideally the person interviewing them if they know who it is. Firms are looking for candidates who want to be there, and if a candidate knows details about the firm, it gives a good impression that they truly are interested in that firm in particular. In addition, this can demonstrate that the candidate does their research before diving into something, which is another valuable trait.

Preparing for IB interview

Technical skills are the hardest part to prepare for. There are no shortcuts, and one must put in time and effort to prepare for them. A candidate should have a strong understanding of accounting fundamentals and valuation ratios. These are the basics required to succeed in more difficult applications. A candidate should also make sure they are well versed in three statement models, discounted cash flow models, understand the process of mergers and acquisitions, and the modeling involved. 

They should also have a solid understanding of different valuation methods and how to model them. Unfortunately, there aren't many tips and tricks to get past this section besides putting the time in and learning the content. It can be difficult and time-consuming, but the best way to do it is to start early and learn as much as possible every day until they feel comfortable. 

A great way to get good at something is to do it, so make sure to create different models and think of ways to improve them.

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It is good to prepare some questions about the firm ahead of time. In many cases, the candidate will be given time to ask any questions at the end of the interview. These questions should be specific and thought-provoking questions that aren't readily available online.

The IB Interview

The interview process is different at any firm, and the firm at which a candidate applies affects the difficulty of the interview. A common interview process is a first-round interview over the phone, a one-on-one interview, and then a process called "super day," in which a candidate goes through several rounds of group interviews.

Some employers will start with behavioral interviewing and "fit" questions. This means asking more about a candidate's personality and interests, their background and resume, and why they want to pursue investment banking and, in particular, that firm. Other employers will begin to test technical skills early on. While not all will test very difficult technical skills, to begin with, some certainly will. Of course, every interview experience will depend on the firm, so it is prudent to be prepared for anything.

Please have a look at our free 101 Investment Banking Interview Questions and Answers guide, which is designed to help jumpstart your interview prep.

Interviewing at IB

Some important things to keep in mind for an interview:

  • Stay calm. As nervous as one can be during an interview, it is important not to seem like it, which may not be easy.
  • (If in person) Have a firm handshake.
  • Dress nicely. A candidate should be dressed in a suit and tie for an interview for investment banking. This industry is enormously prestigious, and jobs aren't usually given to those wearing t-shirts.
  • Make good eye contact. This is a tip for any conversation, but its importance is undoubtedly more significant for interviews.
  • Try to speak confidently, articulately, and audibly. To speak confidently, one should stay relaxed, not go back on what they say, and try not to include too many "ums." To be articulate, make sure your answers are concise and thorough, but remain brief and do not ramble. Finally, speaking audibly means enunciating oneself and not mumbling. 
  • Smile and stay positive. Nobody wants to hire a cynic who doesn't smile. So bring some positivity and a smile and try to get along with the interviewer and anyone else that one might meet.
  • After the interview, make sure to follow up and thank the interviewer for their time.

Intellectual

Roles of the Investment Banker

The responsibilities of a job in investment banking may vary depending on your position. One benefit of this industry is that the corporate ladder is very well defined. 

IB jobs may be divided by industry or by division. In many cases, investment banking firms work in a specific division such as mergers and acquisitions, IPOs, levfin, or restructuring. Otherwise, they may work in specific industries such as energy, mining, healthcare, or other industries. These roles are different and very specialized, with each requiring a unique skill set.

Job progression in IB generally looks like this:

AnalystAssociateVice President (VP)Senior Vice President (SVP)Managing Director (MD)

To know more about how the compensation structure at an IB looks like, please refer to our free Investment Banker Salary article.

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We briefly look at the work involved in each role below.

IB Analyst

The analyst is the junior-most position typically offered to graduates out of college. A new analyst can expect to stay in the same role for 2 to 3 years before either lateraling into another area of finance or being promoted to associate. They are largely responsible for much of the grunt work and usually work long hours - up to 85 to 100 hours per week and often work on weekends. Responsibilities for this position include:

  • Analyzing various companies' financial statements
  • Performing industry research and analysis 
  • Creating pitch books and presentations
  • Making sure that deals are compliant with regulations
  • Building complex financial models 
  • Calculating valuations of various companies. 

This position usually involves assisting seniors in the transaction process by helping things go smoothly and involves a lot of research and analysis. 

While the hours are long and work can be grueling, analysts tend to be compensated well. Generally, analysts make anywhere from $75k - $150k, with their pay increasing over the years. 

Check out the video below from our M&A Modeling Course to learn more about pitch books.

Investment Banking Associates

Associates are a step above analysts. People can often get hired as associates from other industries within finance or as business school graduates. They typically work slightly less if not the same hours but are compensated more handsomely for their work.

They also share much of the same work as analysts, taking part in financial modeling, industry research, and building valuations. What separates associates and analysts is that the former tend to check and confirm what analysts are doing more than doing it themselves. They also typically play a larger role in team projects and take on a more managerial role.

This role is a good segue towards landing a VP role, much more managerial. Associates usually remain in this position for about 3-4 years before promoting VPs. They are usually paid about $150 to $300k per year.

Stressed out

IB Vice president

VPs, also known as Directors, share much less work with associates and analysts. This role is all about managing the associates, analysts, and clients and may include checking a bit of their work, but not nearly as much as associates.

Rarely do VPs do any of the modeling and research themselves; rather, they rely on analysts and associates to do the grunt work. This role typically involves:

  • Meeting clients, 
  • Giving presentations, 
  • Helping create budgets, 
  • Helping manage the associates and analysts to meet client demands. 

At this point in the corporate ladder, hours become reasonable with 55-70 hours per week, although it is still substantial. Salaries are also high, with VPs typically getting paid $300k to near the mid-six figures. At this point, a large chunk of pay will be in the form of a bonus, and promotion tends to not be very certain and depends heavily on performance and the firm.

Investment Banking Senior VP

Senior VPs help manage the business and other VPs. For example, they may oversee a company's operations, create budgets, help source deals, create business strategies, create hiring plans, meet with other SVPs, set goals, manage VPs, and ensure departments perform well. SVPs typically work slightly less than VPs and may be paid in the mid-six figures, with most of that in the form of a bonus. 

Investment Banking Managing Director (MD)

MDs are at the top of the food chain, just below the group head role or a C-level officer. The earliest a person could become an MD is by their mid-thirties. Usually, this role requires sourcing deals, finding new clients, meeting with clients, pitching to clients, and maintaining relationships. 

An MD's success is measured by their ability to generate deal flow. MDs who do not bring in many deals tend to be quickly let go. On the other hand, top-performing ones bag huge bonuses, sometimes in the several million. 

They usually work similar hours to Senior VPs and are paid a substantial salary. MDs make mid to high six figures in salaries and can make even more in bonuses that sometimes amount to more than $1 million annually.

Payday

Investment Banking: Things to Consider

There are both benefits and drawbacks to a role in investment banking, as with everything. We believe that all potential candidates should carefully assess these before pursuing a career in this industry. Investment banking has an allure for a certain crowd. It is a prestigious job with the potential to earn large amounts of money, but the reality is that the prestige and money are earned, and they don't come easy. 

You must be willing to work long hours as investment banking is a fast-paced business and you'll spend a lot of time at the office. Be prepared to work an average of 85-100 hours per week and more if working on a live deal.

You need excellent math skills and knowledge of finance and economics. IB is very competitive and a very difficult job. To succeed in this field, a candidate should be extremely passionate about these subjects and also be well equipped to handle the massive amounts of stress that come with it.

Reading reports

A Day in the Life of an Investment Banking Analyst

In investment banking, an analyst, on most days, will spend their time on a single task while on other days will have a range of responsibilities. Some days are busier than others. Below is a day in the life of an analyst that aims to show how time is likely to be allocated in this position.

8:00 AM - It is time to wake up and check the phone. Analysts are never truly off the clock, and they are expected to be reachable at all times.

As such, it is smart to check emails just after waking up to get back to people as soon as possible. While they're up, it's best to grab a coffee. Usually, they need it.

9:00 AM - Get into the office. Again, check voicemails to see if anyone has given any assignments. Check emails and take a quick look at the news.

9:30 AM - At this time, usually, financial models that analysts have been working on are revised and need to be edited. So if there isn't an old model, there is probably a new one to be made. This typically takes a long time and requires fixing several inputs or doing extra sensitivity analysis to see various scenarios that a VP would like to see. 

12:00 PM - Usually, a lunch break lasts 30 - 45 minutes. Many analysts will run over to Chipotle or other restaurants for a quick meal and head back to the office to settle back into the work.

Day in the life of an investment banking job

12:45 PM - An associate has left a voicemail and needs a public information book to be created. These include information about companies such as recent earnings, news articles, and other research. Typically this is in preparation for a deal or made to include in a pitchbook.

4:00 PM - Work on the pitchbook for a deal. Many projects and models are revised and edited many times over. Analysts typically spend a lot of time reviewing and tweaking their work, focusing on small details and attempting to make it exactly as their superior would like it.

6:00 PM - The VP calls everyone into a meeting to discuss the deal currently being worked on. There may be new information to be discussed, the client may have made certain requests that need to be met, or it could just be an update on the project's progress.

7:00 PM - Finally, time for dinner. In many cases, analysts must wait until a certain time of the day before the firm reimburses meals. In addition, companies can take a long time to process refunds, so analysts will float the bill until they are reimbursed.

8:00 PM - An associate asks to research a company. This might cover anything; for example, an associate may ask an analyst to research the professional history of a CEO to assess management competence to get a better idea of how a company is likely to grow. Do the research, create a small report, and print it out for the associate.

9:00 PM - Both the financial model and pitch book have been reviewed and require an additional multitude of edits. Start with the model and get to the pitch book later.

11:00 PM - The revisions on the model have been corrected. Email the associate and expect to make more corrections the next day. At this point, start working on the pitch book corrections.

1:00 AM - The pitch book has been corrected and emailed to the associate. Then, call a car and head home, just in time to catch a bit of sleep and repeat the cycle the next day.

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Additional Resources

WSO is a leading provider of financial modeling courses for finance professionals. To help you advance your career, check out the additional resources below:

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.