List of Top 4 Career in Investment Banking
Careers List in Investment Banking: Below mentioned are some of the Investment Banking Roles that a person can reach in his career.
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Source: Careers in Investment Banking (wallstreetmojo.com)
Overview of Investment Banking Career
Investment BankingInvestment BankingInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc.read more is a financial services company that engages in financial advisory and capital raising services to individuals, corporate, and government institutions to meet their financial needs. Unlike Commercial Banks, they do not accept deposits from the public; instead, they act as a mediator in providing underwriting and providing other financial advisory services.
- Investment banks can be further classified as below :
- Bulge Bracket: Bulge BracketBulge BracketTop 10 bulge bracket investment banks are - Blackstone, Goldman Sach & co, Morgan Stanley, J.P Morgan Chase & co, Bank of America Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, HSBC, UBS.read more refers to the large banks that serve large corporate and government. They also provide a bouquet of services that includes banking, market-making, underwriting, and other financial products.
- Mid-Market: Mid-Market refers to the banks which focus on mid-level companies.
- Boutique Banks: Boutique investment banks are small banks that specialize in one aspect of the IB Services. They generally work on smaller deals.
- They are further classified into buy-side and sell-side. Buy-SideBuy-SideThe term "buy-side" refers to entities that advise their clients like individual investors and institutional buyers on investments and securities purchases. Private equity firms, mutual fund companies, life insurance companies, unit trusts, hedge fund companies, and pension fund entities are examples of buy-side firms.read more refers to mutual fundsMutual FundsA mutual fund is an investment fund that investors professionally manage by pooling money from multiple investors to initiate investment in securities individually held to provide greater diversification, long term gains and lower level of risks.read more, pension funds, hedge fundsHedge FundsA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques.read more, and other large investment companies. Sell-side refers to the trading of securities for cash or underwriting of services.
- The primary purpose of an investment bank is to assist the company in its Initial Public OfferingInitial Public OfferingInitial Public Offering (IPO) is when the shares of the private companies are listed for the first time in the stock exchange for public trading and investment. This allows a private company to raise the capital for different purposes.read more, acting as a book-running lead manager to the issue and help the company to go public by listing its equity on the stock exchanges.
- However, there are other ancillary services like M&A, Sales and Trading, and Asset Management, which plays a crucial role in an investment bank.
To make a career in investment banking, one needs to spend 3-5 yrs in a boutique investment bank and then move to a bulge bracket one. It is one of the most favored roles in the finance industry since it requires a high level of expertise and knowledge to execute a transaction. Additionally, the Investment Banking career is one of the highest-paid jobs in the financial services industry in terms of bonuses and perks.
Let us discuss the Investment Banking Career Path in Detail –
Career #1 – Analyst
Who is an Analyst?
Investment Banking AnalystInvestment Banking AnalystInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.).read more prepares pitch book presentations on the companies for the senior team members required for the discussion. He is the one who has just completed his degree from college and is looking out for a Job in the IB Industry to make a career.
| Analyst – Job Description |
|---|
| Responsibilities | Responsible for updating the deal books on a periodic basis and perform industry analysis as well to complement the decision-making process. |
| Designation | Investment Banking Analyst |
| Actual Role | Is to work on large databases and presentations, prepare IM, due diligence report, etc. |
| Top Companies | Jp Morgan, Morgan Stanley, Goldman Sachs, Bank of America, and E&Y are one of the top 5 Investment Banks in the world. |
| Salary | The median annual salary for an analyst will be between $80,000 to $1,00,000. This is a very broad number and can vary from bank to bank. |
| Demand & Supply | Highly demanded profile since it requires extensive presentation skills to prepare different types of pitches to the clients with limited data available. |
| Education Requirement | CFA/CPA / MBA from Tier -1 Universities with at least 2-5 Yrs of Exp. |
| Recommended Courses | CPA/ MBA / CFP/ CFA |
| Positives | Be a part of the entire deal cycle and chances to earn huge bonuses at the end of the year. |
| Negatives | Long working hours on building presentations and storing client data. |
Career #2 – Associate
Who is the Associate?
Investment Banking Associate oversees the work done by the junior analyst and guiding him properly in the deal process. He leads the execution of the deal and is the single point of contact between the client and the investor.
| Associate – Job Description |
|---|
| Responsibilities | Responsible for checking the work done by the analyst and mentoring him with the required knowledge and expertise required for the job. |
| Designation | Investment Banking Associate |
| Actual Role | Support the vice president in the entire deal cycle and play an important role in the execution as well as he is supposed to handle a team of analyst under him. |
| Top Companies | Jp Morgan, Morgan Stanley, Goldman Sachs, Bank of America and E&Y are one of the top 5 Investment Banks in the world. |
| Salary | The median annual salary for an investment banking associate can be anywhere between $2,00,000 to $3,50,000 since it is a professional role. This is a vast number and can vary from bank to bank. |
| Demand & Supply | Highly knowledgeable and skilled role since it requires practical experience to execute a transaction in the firm effectively. |
| Education Requirement | CFA/CPA / MBA from Tier -1 Universities with at least 7-10 yrs of exp. |
| Recommended Courses | CFA/CPA/ MBA |
| Positives | Lead a team of analysts and report to the vice president. |
| Negatives | Long working hours and is responsible for all the work done by the junior analyst. |
Career #3 – Vice President
Who is Vice President?
The Vice President leads the investment banking divisionInvestment Banking DivisionInvestment Banking Division is a segment of the investment bank offering advisory & corporate finance services. It executes mergers & acquisitions, deals with capital raising, & handles several kinds of advisory mandates. read more in the company with a team of analysts and associates and reports to the managing director about the profit & loss account. He is the person responsible for sourcing dealsSourcing DealsDeal Origination is a strategy used by firms to find investment prospects, either by gaining industry knowledge or by forming a deal for themselves using their connections with the involved parties.read more from the market both in the equity and debt space and generates a good amount of revenue for the company on a periodic basis.
| Vice President – Job Description |
|---|
| Responsibilities | Responsible for business development and execution of deals. |
| Designation | Vice President – Investment Banking |
| Actual Role | To build relationships with corporates and ensure that the company gets good business from them regularly. |
| Top Companies | Jp Morgan, Morgan Stanley, Goldman Sachs, Bank of America and E&Y are one of the top 5 Investment Banks in the world. |
| Salary | The median annual salary for a general manager can be anywhere between $ 3,00,000 – $5,00,000. This is a very broad number and can vary from bank to bank. |
| Demand & Supply | Highly Demanded Profile in IB because the IB Division P&L is dependent upon the VP who is supposed to bring business to the company. |
| Education Requirement | CFA/CPA/MBA/Valuation Expert with 10-15 yrs of exp. |
| Recommended Courses | CFA/CPA/MBA |
| Positives | Leads the department and allocates work to the team members. |
| Negatives | The salary component is less fixed and more variable or performance pay. |
Career #4 – Managing Director
Who is the Managing Director?
The managing Director spearheads the investment banking business of the company and reports to the board of directors about the financial liquidity and whether it is a concern in operation.
| Managing Director – Job Description |
|---|
| Responsibilities | Responsible for generating IB deals from the market both in the equity and debt space. |
| Designation | MD |
| Actual Role | Business development as ll the team members depend upon the MD. |
| Top Companies | Jp Morgan, Morgan Stanley, Goldman Sachs, Bank of America and E&Y are one of the top 5 Investment Banks in the world. |
| Salary | The median annual salary for the same can be anywhere between $ 5,00,000 to $ 10,00,000. However, they are more in favor of the commissions out of the deals that get executed. |
| Demand & Supply | It is a specialized professional role whose highest degree of networking skills and contacts to get the work done. |
| Education Requirement | CCFP/CPA / MBA from Tier -1 Universities with at least 15-20 yrs of exp. |
| Recommended Courses | CPA/MBA/CFA |
| Positives | Spearhead the most highly paid department of any organization. Opportunity to visit large corporate and develop a relationship that may have synergies in the long term. |
| Negatives | Risk of losing the job if the MD is not able to bring business to the company. |
Conclusion
Investment Banking is one of the most favored roles in the industry since it comes with very high compensation and knowledge. With the kind of technological advancement in the world, the IB industry is going to get doubled from where it is now. Going forward, there will be a lot of scope in the IB profile since not may candidates with that caliber are available in the market to perform this role since it requires senior-level expertise. The entry in the Investment banking industry is a bit difficult at the early stages of the career but gradually becomes easy ahead.
Recommended Articles
This has been a guide to careers in investment banking. Here we provide the list of top 4 careers in investment banking, which include Analyst, Associate, Vice President, and Managing Director. You may also have a look at these finance articles below –
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