Investment Banker Lifestyle
You must have probably heard a lot about investment banking and would have a fair idea of what an investment banker does and wish to be one. But how well do you understand the investment banker lifestyle? Wouldn’t it be great to have a clear picture of your life as an investment banker so you are well prepared to take that as your career? That is where this article would guide you. So, become awesome in investment banking with this investment banking training.
An investment banker’s life is considered to have long working hours, working on weekends, a lot of hard work, and little sleep. So let us have a closer look at it.
This write-up on investment banker life will help you know the following: –
Table of contents
- Investment Banker Lifestyle
- Why become an Investment Banker?
- Investment Banker Lifestyle
- Myths and Facts of investment banking
- The Downsides of an Investment Banker’s Life
- When To Quit Investment Banking?
- An investment banker’s life has long working hours, working on weekends, hard work, and little sleep.
- Psychological attraction, earning enough money, lifestyle, status symbol, passion for finance, higher expectations, career foundation capabilities, and intelligence are the reasons for becoming an investment banker.
- The downsides of an investment banker’s life are lengthy working hours, unpredictable work nature, stress, no error tolerance, work pressure, and conducting unimportant tasks.
- Life as an investment banker is hectic, but investment banking is the perfect choice for those who want to live through dedication, competition, risks, and performance.
Why become an Investment Banker?
I would not be wrong to say that today’s candidates are mesmerized by an investment banker’s image. The image I am referring to is where we see even young investment bankers dropping out of expensive cars wearing shiny suits. Seldom do people realize that such investment bankers put in a lot of hard work, working under stressful situations and round the clock for months.
Earn a lot of money
There is no doubt about this particular reason being the biggest motivating factor for people to get into investment bankingInvestment BankingTo get into investment banking, know where to begin with, understand how investment banks recruit, master investment and technical banking skills, and work on your soft skills along with the required degree and knowledge.. But, first, check out the Investment Banking Associate SalaryInvestment Banking Associate SalaryAn Investment Banking Associate is hired by an investment bank. An Associate can be a promoted Analyst after three or four years, or he can be hired directly from a reputable business school. A average annual compensation for an Investment Banking Associate is from $75,000 to $250,000..
The salaries and bonuses one could earn are extremely luring, getting you in his career and motivating you to stay in. The fat paycheck and the rewards, which could go up to three to five times the salary, make up for all the hard work you put in.
A few career options give opportunities to earn money, as investment banking does. If we have to compare it with entrepreneurship, it could be similar. But again, the risks involved are greater than working as an investment banker. Hence, investment banking can be a safe bet for compensation. Especially considering the amount of bonus an investment banker gets for the slogging is quite worth it.
Often, it is the lifestyle this job affords that some get attracted towards. With high salaries, you could very well have enough money to visit luxury hotels in exotic islands and gobble on some fine food and wine. But, on the other hand, several people enjoy living a rich person’s routine life, such as attending art exhibitions, hanging out, and spending time with the fat cats.
Being an investment banker, you are attached with a tag of being a financial wizard and a symbol of financial success. This tag brings in a lot of prestige and gathers attention when anything in finance is discussed. Therefore, your opinion on investments, loans, and mortgages will become important to all your near and dear ones.
Passion for Finance
Some people are motivated to get into finance from a young age. That is because they have a sharp sense of finance, have an analytical mind from the start, and are the ones that can digest information quickly. Such people usually get into investment banking as soon as they complete their financial degrees in the university.
I refer to the background and surroundings, which urge people to get into investment banking. For example, most of their family members and friends belong to hedge funds investment banking and are motivated to follow suit.
Career Foundation Skills
Getting into investment banking gives you loads of opportunities to hone your PowerPoint presentation, communication, and Excel skills. Other skills would teach you how to work and survive in this challenging industry. Also, you get to add quite a few impressive points to the resume. Many people become investment bankers to get the most out of this profession, learn as much as possible and leave before it’s too late. An exit from investment banking may open new doors for you in finance careers such as private equity, venture capital, and 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..
Another attraction for people to get into investment banking is working with intelligent minds who have sharp brains and are driven to prove their financial abilities.
Learning is intense, and you get to work with some of the brightest and most demanding people on Wall Street. You would be exposed to top business leaders and know how they think, create strategies and the thought processes behind their decisions.
Investment Banker Lifestyle
There is no “typical day” for an investment banker as your tasks will vary every day. You can be expected to prepare financial models (project how much the company will grow in the next 85 years), design pitch books (why you should sell your company to ABC Corp. at $20/share), work on the deal memorandum, and everything else that goes into a deal.
Have a look at the below infographics on investment banker lifestyle:
Myths and Facts of investment banking
Truth: Do not expect this to be true, especially at the analyst or associate level. The tasks would be the ones that come down from the senior managers and would be basic grunt work. Although, it does pay back when you handle a much more influential position in the company, higher up the ladder.
Analysts spend quite a lot of time controlling the life in investment banking regarding the long hours and random work assigned by the seniors. With this, they gain experience, and as time goes, they are assisted by various other interns and fresh recruits who share the work responsibility.
Truth: It is not as simple as it may seem. It would help if you spent some time figuring out who would be the best to assign a specific work. Also, you would be responsible for the work they perform and involve risk.
Truth: Strength of mind, character, and competition are vital elements of investment banking. And competition exists because there are losers and people in investment banking are committed to making you one. But, the political and competitive scenario is not everyone’s cup of tea, and you need to very well survive, pour in your sweat and tears if you want to earn that heavy salary.
Truth: The majority of the stuff you do in investment banking will be simple in terms of the mathematical skills you use. Being an analyst or even an associate, you spend most of your time on administrative work. Even if you fall into some technical group, you will spend time on qualitative tasks rather than number crunching.
Truth: This cannot be regarded as a complete myth as Investment banking has been male-dominated. The ratio is such that, on average, there are around 1 in 4 female investment bankers. Accepting that this is substantial enough, the gender discrepancy decreases day by day. It gives us enough positive signs that things will change for the better.
The Downsides of an Investment Banker’s Life
Long working hours
- If you want to work in regular office hours and have a social life, a career in investment banking is not for you. Want to know why?
- At bulge bracket banks, you would find the analysts working for more than 100 hours a week. The day might start at 10.00 a.m., or even earlier and end at 2.00 a.m., and weekends could not be an exception.
- When working on the big deals and during the beginning stages, it is not uncommon for the analysts to be up all night and get through the work.
- It could be comparatively better at the Associates level, where the average number of working hours could range from 80 hours – 90 hours per week, from 9.00 a.m. to 11.00 p.m. and working either of the days on weekends.
- When it goes higher up the chain at a Vice President level, the hours will improve. If they have to work on weekends or late nights, Vice President can do it from home.
- Managing Directors have a significantly better work schedule when they do not travel; they could report at 7.00 a.m. and leave by 6.00 p.m. However, Managing Directors have a lot of traveling, perhaps 3 out of every 5 days on average, where they need to do a lot of marketing and pitching.
- It is also possible that sometimes Analysts and Associates could go out for pitching and sometimes be spent in an office. However, this lifestyle and the working hours vary across bulge bracket banks and could be better.
- Many experienced in this industry would say that more than the number of working hours, it is because of the unpredictability of the working hours which makes it erratic. In addition, you do not have any control over your social life and will have to sacrifice a lot of your time.
Unpredictable nature of work
- The work is not constant and would vary, and would be expected to work on the pitch books, prepare financial model in excelPrepare Financial Model In ExcelFinancial models are used to represent the forecast of a company’s financials based on its historical performance and future expectations to use for financial analysis. The most common financial models include the Discounted Cash Flow model (DCF), Leveraged Buyout model (LBO), the Comparable Company Analysis model, and Mergers & Acquisition model., put across the deal memorandum, etc.
- In the morning, you would find for yourself a fresh stock of work required to be done on the marketing pitch book or live deal work.
- The higher-ups get to the office early and check on last night’s work that you left. But you would receive the comments and review on the job much later in the evening, which you would have to finalize before you leave for the day and your Vice President gets into the office in the morning.
- The work gets hectic only after lunch as you get the job list that needs to be done throughout the day. One would majorly spend time going through the pitch booksPitch BooksPitch Book is an information layout or presentation used by investment banks, business brokers, corporate firms, and others to provide potential investors with the firm's main attributes and valuation analysis, which helps them decide whether or not to invest in the client's business. A pitch book is also known as Confidential Information Memorandum, which is used by the firm's sales department to help them sell products and services to a client., creating deal models, working on numerous comparable transaction alternatives.
- The work majorly is done through spreadsheet software like Excel and presenting your models effectively in a PowerPoint presentation.
- As a result of the above two downsides, we discussed STRESS. Also, investment bankers deal with huge amounts of money, and there are a lot of expectations from them to convert deals into profit.
- These conditions lead to pressure to perform, and many a time, it is observed bankers get wound up with insomnia, eating disorders, alcoholism, and other health issues.
- There is always an urgency to the task assigned to you. It is not a day or two limited top priorities but more of a day-by-day exigency.
- You could also receive phone calls in the middle of a good night’s sleep if you handle certain foreign accounts.
No leniency for errors
As an investment banking analystAs An Investment 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.)., you would be expected to learn your job quickly and perform to a very high standard. You would have to ensure the responsibilities are completed on time, paying close attention to detail as there would be no room for mistakes.
As we already saw, you would be working with many strong and bright-minded personalities as investment bankers. But with this upside comes a lot of pressure to perform as you would be compared to your colleagues and will have to outperform them if you need to go up the ladder. In addition, you will find that you could make very few friends as this industry itself is deeply competitive, and people are hungry for profits and higher bonuses for themselves.
Performing not so important tasks
Although analysts can indeed be given a lot of responsibilities early on in their careers, they will often be expected to work on tasks that are not desirable, such as copy-pasting, photocopying, book meeting rooms, etc.
When To Quit Investment Banking?
You may be wondering why we are discussing this topic here in investment banker life. But believe me, once you are into investment banking, this question will pose in front of you some or the other day and for some every day.
Investment bankers do consider leaving their jobs for various reasons, which you could have already learned from the above discussions in the article. Although there is nothing wrong with quitting, what matters is finishing graciously at the right time for the right reason.
So, when should you quit investment banking? It would be very wrong to decide the correct time to call it a quit. It is an individualistic decision that should be taken after considering a few important points.
Quit because you are having a bad day at work?
No, never quit because of this reason. You will have plenty of those in investment banking. It is very normal to have a bad day when your decisions fail, or you somehow do not deliver up to the expectations. It is better to learn from such situations, give it some time and see if there is an improvement. Suppose it does not then go for it!
Do you see yourself as an investment banker for the rest of your life?
Let us consider a situation where you have spent approximately two years in this profession. Observing the Managing Directors at your firm (who make millions, delegate the work and leave the office at 6 p.m.) and think that you want to be that person, then this is one indication that perhaps you would like to continue as a banker.
Have you spent enough time to exit investment banking?
It would be best if you made yourself marketable enough before you decide to quit investment banking. Hence, it is always recommended that you finish at least two years before leaving. It is better to gain anywhere between 2- and 5-years’ experience as anything less than 2 would be tagged ‘lack of experience’ and more than 5 as ‘too experienced.’
Does quitting mean you are failing?
You might feel like a banker that you urge to quit because you cannot handle the job well. And you continue working hard day in day out but are never satisfied. Do not think that you have failed when you decide to quit. You have learned a great deal in the times you have survived, and it is more like working out what you want to do with your life rather than continuing something you do not believe in.
Money is no longer a motivation
We know that you would be paid well as an investment banker. But there could be a point where you realize that money no longer motivates you to stay as an investment banker, especially if you are not enjoying your work. So you could consider quitting if you think you can earn something less but take up a job that is not as demanding as investment banking.
It is always better to think about what is important to you and what you wish to do ahead that will decide to move on with something else but investment banking. Ensure you have planned what next? Once you have decided to call it quits.
We can say that investment banking is an industry that can provide loads of opportunities to learn, but you will have to find ways to survive with all that we have discussed. You would surely earn enough, but it is hard to discover time to spend it. Life as an investment banker will be hectic, but investment banking is the right choice for those who wish to live through dedication, competition, risks, and perform well.
Hope this article provided you with the necessary insights into an investment banker’s life.
Frequently Asked Questions (FAQs)
Investment bankers are those investment professionals who blend financial services industry ability, analytical skills, and compelling influential communication capabilities backing institutional clients in processes such as raising capital and mergers and acquisitions.
Every investment banker desires to become a Managing Director because they may earn up to $10 million yearly. In addition, the base salary is around $300k – $ 1 million. Moreover, the bonuses are annually high at $200k-$10 million.
The investment bankers may work for an investment bank or the organization’s investment banking division. They are crucial players in economic growth in a business, organization, or corporate entity.
Investment banking as a career is frequently desired since a booming investment banker may enjoy a high salary, ample networking opportunities, and the capability to play a highly apparent aspect in a firm’s success stories.