Successful bankers demonstrate financial acumen with a human touch.
The “rags to riches” story of standout investment banker Chris Gardner depicted in The Pursuit of Happyness does not represent a conventional road to the top. However, the experiences shared by Gardner and hundreds of other investment bankers prove that a combination of hard work, financial acumen, and strategic networking can produce an exciting and worthwhile career outcome.
In this blog post, we take a closer look at the investment banking profession, including the key responsibilities and attributes of successful investment bankers. We also provide guidance for would-be investment bankers looking to enter or advance within this exciting vocation.
What is an investment banker?
Investment bankers are finance professionals who advise corporations, governments, and other business entities on important financial matters, leveraging their vast knowledge, experience, and analytical skills. Some investment bankers are directly employed by investment banks and act as intermediaries between investors and outside organizations, while others work within the dedicated investment banking divisions of large companies.
What do investment bankers do?
The investment banker job description includes a wide variety of tasks ranging from basic investment advice to the completion of complex financial transactions. Depending on their unique expertise and focus areas, the role of an investment banker might include:
● Raising capital: Investment bankers help organizations raise capital through bonds, initial public offerings (IPOs), or private equity investments.
● Administering securities: This includes the issuance and sale of the stocks, bonds, or options companies use to fund their organization.
● Asset management: This practice involves the management of investment portfolios over time to increase their value by monitoring and updating the holdings.
● M&A assistance: Both parties involved in mergers and acquisitions (M&A) benefit from the services of investment bankers as they negotiate terms, advise on valuation, and help to finalize the transaction.
● Advisory services: Investment bankers provide consulting services for their clients in a wide range of areas including capital restructuring, risk management, and strategic financial planning.
● Underwriting: During the underwriting process, an investment banker might be called upon to assess the financial risk associated with a loan or other form of debt financing. Investors improve their decision-making based on this essential vetting process and expertise.
Investment banker skills and qualities
Successful investment bankers share many innate skills and attributes that lend themselves well to this demanding profession. Critical thinking is one such attribute that can be more valuable than many investment banking courses, given the complex data analysis, risk assessments, and problem-solving skills required to meet client expectations. Additional skills and qualities that are ideal for investment banking include:
● Financial expertise – Investment bankers need to thoroughly understand financial markets, instruments, accounting, and investing principles.
● Communication and presentation skills – These soft skills must be cultivated to present complex financial information in a relatable manner and build lasting relationships with clients.
● Dedication and work ethic – Not every work week will require long hours in the office, but investment bankers must possess a strong work ethic and dedication to their craft to meet deadlines and achieve goals.
Attention to detail and accuracy in work output are additional attributes that allow investment bankers to juggle a high volume of complex tasks without errors or oversight, ensuring all financial reports, analyses, and transactions are executed flawlessly.
How to become an investment banker
Learning how to be a banker in today’s complex financial environment is not always straightforward. Like most demanding career choices, it all begins with education. A bachelor’s degree in finance, business, or economics is a minimum requirement. Prestigious universities can open doors by providing useful connections and networking opportunities, although acceptance rates are lower while the tuition is higher. A law degree, MBA for investment banking, or master’s degree in finance are common postsecondary educational choices for investment bankers in training.
There is no substitute for real-world experience before, during, and after the educational journey. Internships are a great opportunity to learn the ropes while still attending college. Many investment bankers initially enter the workforce as analysts or associates to gain experience and build their professional networks.
There are also many certifications and licenses that impact a banker’s credibility and market value. Certified financial analyst (CFA) and certified public accountant (CPA) certifications are widely recognized and respected. Many investment banks also require Series 7 (general securities representative) and Series 79 (investment banking representative) credentials from the Financial Industry Regulatory Authority.
Investment banker specializations
Like medicine, law, and many other professional fields, investment banking provides opportunities to specialize in specific sectors, transactions, or financial products. This allows the practitioners to focus their energies and deliver more targeted value to clients.
Product groups
An investment banker working in a product group specializes in a specific type of transaction such as mergers and acquisitions, equity capital markets, debt capital markets, restructuring, or leveraged finance. In this role, they complete similar transactions across various industries and sectors, becoming an expert in that particular type of transaction.
Industry groups
An investment banker working in an industry group specializes in a specific industry such as technology, healthcare, financial institutions, consumer goods, real estate, or oil and gas. These investment bankers specialize in their chosen industry and maintain close relationships with senior executives at businesses in that industry. If a business decides to execute a transaction, the industry investment banker may bring in a product banker for support with their expertise on that specific transaction.
How to advance your career as an investment banker
Landing an investment banking job is just the beginning. In this highly competitive field, continuous growth and development are prerequisites for advancement. For example, an MBA or doctorate from a top business school or a CFA certification might catch the eye of multinational investment banks looking for new talent. Additional activities and accomplishments that help investment bankers progress in their careers include:
● Building diverse experiences through a wide variety of investments, transactions, and clients.
● Growing their network of contacts and colleagues in the industry.
● Understanding and leveraging new technology like financial modeling software and big data analytics.
● Establishing a track record of successful deals.
With time and experience, investment bankers will also develop their leadership and communication skills, as they continue to mentor junior colleagues and collaborate with clients.
Ultimately, a successful career in investment banking requires a unique combination of education, experience, certifications, and ability. Through dedication and hard work, seasoned investment bankers are well-rewarded with a prestigious and rewarding career.