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.
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.
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.
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.
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
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
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
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
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
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
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.