How To Start A Career In Banking – Want to learn more about a career in investment banking with a simple, visual and plain English explanation? If you’re researching investment banking as a career option, you won’t find a more detailed overview. After reading this article you will know:
For more information on career paths, hiring cycles, roles and responsibilities, and typical investment banking salaries, see the rest of this article.
How To Start A Career In Banking
For many people, the world of investment banking (or “IB”) is incredibly opaque. As a result, figuring out how to pursue a career in investment banking can be very difficult.
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This detailed article provides a simple, illustrated and plain English overview of investment banking careers, roles and responsibilities, and typical investment banking salaries.
But they perform a special function (as shown above). Additionally, careers in the capital markets are a bit different.
This article focuses on the career path of an “Investment Banking Fund”. You can think of an investment banking department as similar to real estate agents.
Banks pay a commission based on the sale value of the business or a percentage of the money collected.
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However, it is worth noting that within each investment bank, the above services are divided into industry coverage (focusing on a single industry) and product groups (specific services such as M&A).
Also, the world of finance often divides investment banks into Bulge Bracket vs. Elite Boutique vs. Mid-Market Bank.
Currently, one of the most common questions is, “What is a ‘typical’ career path in investment banking?”
Although there is no typical path, there are two main entry points into investment banking: pre-MBA and post-MBA.
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As we’ll discuss in a moment, the pay is very high (ie six figures or more after graduation) compared to other jobs.
Working at IB also opens up hard-to-find (and even better-paying) job opportunities early in your career.
Whether before or after an MBA, incoming investment bankers tend to excel with high GPAs, high test scores, and repeated success (in and out of school).
While it is possible to get a full-time job at an investment bank without a summer internship at that bank, the number of jobs available is much lower.
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Although it sounds a little crazy, junior summer internships are recruited 12-18 months before the internship begins.
As a result, aspiring analysts must begin job training during their sophomore (and sometimes freshman) year of college.
However, in recent years, banks have realized that they are missing a large pool of highly talented students and are much more open to “non-target” students.
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So the good news is that you can get in if you don’t attend your target school, but it takes a little more work, mostly in the form of casting a wide net.
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Although people enter IB through all three routes described above, MBA graduates make up the lion’s share of post-MBA investment bankers.
Like pre-MBA recruiting, post-MBA recruiting is extremely competitive. But admission at MBA level is a little easier.
Investment banks come to recruit on the campuses of the best MBA programs. This usually happens 3-5 months before the start of the summer internship (between the first and second year).
Whether pre-MBA or post-MBA, targeted or non-targeted, there are some general things you need to do to get into investment banking:
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We’ve listed how people typically get into IB. Now let’s take a closer look at the roles played in the investment banking hierarchy.
Quick Note: The compensation levels listed here are for top tier banks. Compensation is generally lower for smaller and/or regional banks.
When a full-time analyst starts work, he or she is usually immediately “filled” with one (or more) tasks.
Although senior and mid-level investment bankers emphasize this in broad terms, analysts (supervised by peers) are “in the weeds” and are typically tasked with:
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When your client is a CEO of a large company who is often making the biggest decision of his career regarding a merger or capital raise, time is of the essence.
If you ask yourself, “Why do I want this kind of job?”… that’s the right question.
While all three factors above are important, as most analysts only stay for two years, the biggest driver for many analysts is the career opportunity after investment banking (or “Exit Opps”).
As mentioned earlier, most associates come from top MBA programs, are hired on the side, or are promoted directly from analyst positions.
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While the analyst prepares the raw material, the associate is responsible for the quality and accuracy of the work.
While some partners find roles in hedge funds and private equity, it is far more common for associates to move into corporate development or corporate finance roles.
Typically, VPs lead (or “quarter”) the execution of each deal. Thus, VPs act as a “buffer” between senior bankers and junior bankers.
They support the needs of senior bankers while ensuring team cohesion and performance with junior bankers.
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The role of a vice president is much more customer-oriented than that of a colleague. VPs are often invited to client presentations.
When a customer is engaged, VPs often lead the charge and work with the customer to make sure they are satisfied.
After three to four years, the vice president is promoted to senior vice president (or “SVP”).
As professionals, they were rewarded for their work. But at this stage they need to prove that they can bring in new business.
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Most SVPs play a hybrid role. For example, SVPs support contract execution for MDs and also work to generate new business (often in underserved subsectors).
If you’ve made it all the way to the end of this article, you’re probably asking yourself, “What do I need to be successful in this career field?
There is no single formula for success. But there are common threads among the most successful candidates for IB jobs.
If you’re still reading, then investment banking may be the career for you.
Investment Banking Career Path
IB is a demanding career path. However, the rewards can be significant if you are willing to face the challenges.
Ultimately, the main question should be whether investment banking is a good career path for you.
A career in investment banking is a challenging (but rewarding) career field that requires a variety of skills at all levels.
If you enjoyed this article, be sure to watch our full animated explainer video on investment banking careers.
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Mike Kimpel is the founder and CEO of Finance|able, a next-generation financial education platform. Mike’s career spanned investment banking, private equity, hedge funds and mutual funds.
He is an adjunct professor at Columbia Business School’s Value Investing Program and directs the finance track at Access Distributed, a nonprofit that creates access to the best careers in finance for underrepresented college students.
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Investment banking is a challenging career, but it offers the opportunity to open the door to a wide range of attractive career opportunities (post-banking) while making six figures or more right out of school.
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Investment bankers at top banks typically make over $100,000 a year (in some cases up to $200,000) straight out of college. MBA graduates typically earn over $250,000 annually upon graduation. Top-level bankers (ie, managing directors) can earn more than $1 million a year, while superstar bankers can earn $10 million or more.
If you’re an undergraduate (aka “target”) or a top-tier MBA program, investment banks will come to your campus to recruit.
If you don’t go to a “target” school, you can still break in perfectly, but you have to work more on your feet. This means lots of networking with alumni from your school or connections in the investment banking world.
Analysts are entry level in investment banking. The next level is associate, which most people join from an MBA program. In addition, investment bankers are promoted to vice president (or director), senior vice president (or managing director), and finally to managing director.
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Investment banking can be an incredibly rewarding career opportunity to boost your early career advancement. But it’s hard work, 80-100+ work weeks in the early years and the requirement to be available 24/7 to your clients once you hit the top.
While it’s certainly easier to get into investment banking with a degree in finance or accounting, the job doesn’t require math beyond basic algebra.
As a result, investment bank analyst departments span a wide variety of specialties from the humanities to engineering.
If you attend a major (aka “target”) school or MBA program, investment banks will hire you on campus.
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Unless you’re going to a “target” school, you should have a wide network of alumni from your school or any available contacts who work in the field.
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