UA to NYC

Cover Page
About This Site
IBer Profile
Living It
Process Overview
Preparation
List of Firms
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Contact Process
Travel
While in NYC
Interview Process
Next Interviews
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Wrapping It Up
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Appendix



Investment Banker Profile

If you are like me then you probably have heard of investment bankers by the time you are a junior or senior at the University of Alabama. However, do you really know what they do, how they live, and what they get paid?

WHAT IT IS REALLY LIKE?

Money isnít everything but it certainly helps in most situations. It is hard to convey what it is like to work at an investment bank but these books do a really good job of it.

Monkey Business by John Rolfe and Peter Troob does a good job of capturing the day-to-day routine and events of investment banking mixed with surreal moments. Every IBer ends up with some memories that most of your friends donít believe but Rolfe and Troob actually write about it.

The Business of Investment Banking by K. Thomas Liaw will provide you with a solid understanding of the investment banking world, the players, and the terms. While it won't really help you figure out how to price or structure a deal (you'll learn soon enough), it will help you get a really good idea of how the industry works.

Liar's Poker by Michael Lewis is now an old classic. Even though Monkey Business is a more accurate description of investment banking now, I highly recommend Liarís Poker to really understand the culture of trading and investment banking.

COMPENSATION

I've provided the following updated summary of base salaries found across Wall Street for those investment banking analysts starting in the summer of 2000.  Note these figures exclude bonuses which can sometimes be more than 50% on top of your first year's base salary.  If you are wondering where I got these figures, salaries are constantly being compared across firms by analysts and I happened to catch a few e-mails with the following numbers.

First-year Analysts $55,000
Second-year Analysts $65,000
Third-year Analysts $75,000


FMA EXCERPT (NOT MY WORK)

The Princeton Review Guide to Your Career: Investment Banker

Originally found in The Princeton Review Guide to Your Career, 1997: Princeton Review Publishing, New York, New York

* Paying Your Dues
* Something to Fall Back On
* Past and Future
* What to Expect From Your Life

A Day in the Life (Career Profile)

Investment bankers advise their clients on high level issues of financial organization. They manage the issuance of bonds, recommend and execute strategies for taking over and merging with other companies, and handle selling a company's stock to the public. The work thus involves lots of financial analysis, and a strong background in finance and economics is a necessity. Personal and strategic skills are vital to investment bankers as well, for they serve as strategists for their clients, helping them develop their financial plans as well as implement them. At the profession's highest level, investment bankers serve as crucial figures in the shaping of the American and world economies, managing mergers of multibillion-dollar corporations and handling the privatization of government assets around the world. All this is time consuming, and investment bankers work long hours. Work weeks of seventy hours or more are common, and all night sessions before deals close are the rule rather than the exception. Still, the work is extremely interesting, and those who stay in the profession report high levels of job satisfaction. Investment bankers spend large amounts of time traveling, to pitch ideas to prospective and current clients or to examine the facilities of companies being purchased by their clients. In the office, they spend their time developing strategies to pitch to clients, preparing financial analyses and documents, or working with the sales forces of their banks in selling the bonds and stocks which are created by the investment banking department's activities.

Paying Your Dues (Major Employers)

In general, an M.B.A., requiring two years of post-college study, is required to rise in the field, though entry level jobs in analyst programs are available to college graduates who want experience in the profession. Analysts perform much of the grunt computer crunching required in preparing financial proposals, though they often travel to sit in on meetings with clients and sessions in which senior bankers pitch ideas to prospective customers. After two years, analysts usually move on, either to business school or to another profession, though a few are offered jobs as associates, the position which investment bankers offer to M.B.A. holders. In many banks, this is as far as one can rise without an M.B.A., though there are exceptions, and a few prominent bankers never went to business school.

Associated Careers (Who You'll Work With)

Most commonly, investment bankers who leave the profession go on to financial jobs in-house with a client of their former banking firm, as financial officers and analysts. It is also not uncommon for bankers to move on to management consulting, a field which demands many similar skills. Some bankers get law degrees and become specialists in financial and corporate law, while lawyers sometimes leave their firms to become investment bankers. Bankers who have become sufficiently established, with clients who trust them and reputations for expertise in their fields, can become entrepreneurs, leaving their firms to set up their own investment banks.

Past and Future (Major Associations)

Investment bankers have been around as long as stocks have been issued and bonds sold, but the current industry owes its form to the demand for expert counsel created by the increasing complexity of financial markets since the 1930's. Until relatively recently, investment banking was a fairly sedate field, but the 1980's saw a tremendous growth in the field, as the increasing availability of complex securities and high-yield ("junk") bonds made mergers and acquisitions a weapon in the arsenal of every major corporation and made investment bankers like Henry Kravis and Robert Rubin extremely visible figures. Though the stock markets have their ups and downs, companies always require expert advisors to help them sell stocks and bonds and to make strategic financial plans; investment bankers fill this need. Employment in the investment banking industry should remain strong over the foreseeable future.

Quality of Life - Two Years Out

During the first two years after finishing business school and taking a job at a bank, most investment bankers work as junior associates, supervising the financial analysis done by analysts and themselves closely supervised by more experienced bankers. At this level, associates are learning the business, acquiring the skills they will need when they are called on to develop financial plans rather than execute them. They spend long hours running computer analyses, preparing the financial reports which accompany stock issues, and putting together the documents used by senior bankers to pitch ideas.

Quality of Life - Five Years Out

At this level, investment bankers have significantly more responsibility and mobility. They have become senior associates or vice presidents, depending on the structure of the firm, and oversee the preparation of documents that leave the firm, and they begin to be involved in the more creative side of the business, working with senior bankers and clients to develop financial strategies. They have established specialties, whether regional or by the type of transaction, and have begun to develop the professional reputations and skills which will enable them to attract clients. Hours remain intense, and still involve all-night sessions and seventy-plus-hour weeks, but fifth-year bankers begin to have more control over their schedules. They have more control over their careers as well, as the options of going to work in-house for a client or moving to another bank with a specific need for their expertise become increasingly available.

Quality of Life - Ten Years Out

By this point, investment bankers are involved in strategic and financial planning, creating the plans executed by junior bankers and spending significant amounts of time developing plans with existing clients and attempting to attract new ones. Those who have not left to start their own firms or to work for clients usually now have ownership interests in their firms, and they begin to participate in firm policy and management. They are responsible, either alone or with other senior bankers, for overseeing a sector of the firm's investment banking business, and professional success is now largely dependent upon the banker's ability to develop a client base. Hours remain long, but there is significant control over when work must be done, and pay increases dramatically.

Career Profile

Number of people in the profession: 40,000
Percentage male: 90%
Percentage female: 10%
Average hours per week: 70
Average starting salary (analysts): $40,000
Average starting salary (associates): $100,000
Average salary after 5 years: $300,000
Average salary after 10 years: $1,000,000


Professionals Read

Money Management
Wall Street Journal
Financial Executive
Institutional Investor

Books, Films, and TV Shows Featuring the Profession

Wall Street
Sabrina
All That Glitters
Barbarians at the Gate
Liar's Poker

Major Employers

Morgan Stanley & Co.
PaineWebber
Merrill Lynch & Co.

You'll Associate With

Accountants
Financial Analysts
Researchers
Stockbrokers

Major Associations

My letter to the institute was returned unopened:
Institute of Financial Education
111 East Wacker Drive, Suite 900
Chicago, IL 60601-4389
Tel: 312-946-8800
Fax: 312-946-8802
Contact: Lynn Murray

This association administers the CFA program:
Association for Investment Management & Research
P.O. Box 3668
Charlottesville, VA 22903-0668
Tel: 804-977-6600
Fax: 804-980-9755
Contact: Information Central Dept.



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