How to Become an Investment Banker: Is the Money Worth It?
When I was first going for my MBA, I knew I wanted to have a career in investment banking. My undergraduate education focused on investments, so I thought it was the logical career choice.
But after researching how to become an investment banker and talking with others who were doing the job, I decided it just wasn't for me. But that's not to say it isn't a phenomenal, rewarding career for many people.
So, you want know how to become an investment banker but have no idea how to break into the business? Don't worry, you're not alone.
Renewed interest in investment banking in recent years has made it a lucrative career for both men and women.
Glassdoor reports the national investment banker salary to be close to $100,000 a year.
If that wasn’t enough to pique your interest in a career in investment banking, nothing will.
It's a demanding career that leads to burnout in many people who can't handle the pressure. If you're up for the challenge, read on.
Before we get started on the ins and outs of how to become an investment banker, we need to first understand the industry better. Here are some of the questions you probably have:
- What is investment banking?
- What makes it a challenging and worthwhile career?
- What do investment bankers do?
- Are there formal educational requirements that need fulfilled before entering the field?
- Do some financial institutions offer on the job training?
- What is a competitive investment banking salary?
- What are the best companies to work for?
- How do you ace an interview and land your dream job?
- Should you supplement formal training with extra materials like courses and books on investing?
All are great questions that need answers. Let’s start with the most obvious...
What is investment banking and what do investment bankers do?
For starters, having a good understanding of the financial industry helps. This way you can prepare for job demands, education requirements, and company training.
An investment banker's role
Investment bankers work with clients by helping them invest their money the smart way. It doesn’t matter if it’s an individual, company, or government. Everyone wants their money to grow.
An investment banker will buy and sell securities on behalf of their clients, as well as broker deals like mergers and acquisitions.
But before doing so, they need to have a good understanding of their client's finances. They also need to be aware of the risks and rewards involved with investing other people’s money.
That leads to the next question - why investment banking? What makes it a good profession to get into?
Like any other career field, there are pros and cons to consider. Investment banking analysts get handed a lot of responsibility right from the start.
If you’re the type of person who likes being busy and solving problems, then you’re in the right industry.
It's a fast-paced environment, but comes with a competitive salary. Most investment banks will give you on the job training, too.
Also, if you like being well connected, this might be for you.
Through fellow employees, as well as your clients, you'll make tons of connections. This is important in the financial field - trust me.
On the downside, you’ve chosen a career that demands a lot from you in the way of time and energy. Don’t expect to work normal hours.
It might also be difficult to have a life outside of work, including relationships.
You’ll meet some strong personalities while working, too. Expect a high level of competition from your superiors and peers as an investment banker.
There's also low tolerance for errors. So if you’re the type of person that double checks everything, you may want to triple check it for accuracy in the future.
Your clients rely on your ability to make intelligent financial decisions on their behalf. This means ethics and transparency are key. You'll need to uphold the highest standards while working at a bank and handling other people’s finances.
When I was studying for the CFA Charter this was the first topic they drilled into our heads. In fact they made us study an entire book on ethics.
For a little more information on what an investment banker does, watch this video:
The top investment banks to work for
Now that you know more about what an investment banker does, it's important to know which companies are the best in the industry. These companies have built rock solid reputations throughout the years.
Their standards for employees are high, but don’t let that phase you. You should shoot for the stars when it comes to employers.
How else do you know what they expect from their employees? If you need more experience, spend a few years at another bank perfecting your skills before applying for a position at one of these top firms.
According to Forbes, the top boutique investment banks to work for include:
The admission rate is about 4%, which makes getting into Harvard look like child’s play. Still, it’s worth it to try to score an interview with one of these firms.
Each offers competitive salaries and benefits packages. For instance, J.P. Morgan looks for superior problem solving, organization, and communications skills.
You need a willingness to learn quickly and execute on your training accurately. It’s also important to be knowledgeable about global markets.
To illustrate just how competitive the world of investment banking is, take a look at a job board. Usually you'll find few investment banking jobs.
From my experience many of the ones posted are not worth pursuing. If you want to land a good investment banking job, start networking.
To learn more about the requirements for working at each of these investment banks, look at the 'careers' section of their websites. You’ll find out what it takes to break into the business and work for the ‘cream of the crop’.
Meanwhile, it doesn’t hurt to brush up on the requirements for all investment banking jobs.
Breaking into the investment banking industry
Getting into the investment banking industry isn't easy. You have to know people, be patient, have the skills and education, and be ready to sacrifice a lot.
Having said that, there are a few things you can do to prepare yourself for what's to come. Here are a few starting points for breaking into the investment banking industry:
1. Get a degree in finance, economics, business or accounting
Few schools offer a degree in investment banking, if any. In fact I've never even heard of a true degree in investment banking.
You need to find a similar field that deals with investments. Think finance, economics, business or accounting. You’ll also want to know a thing or two about math and engineering.
If you’re currently a college student, focus on these types of courses and/or degrees. If you’re thinking about going back to school, talk to an advisor about your long-term career goals.
Here are some of the best schools for finance students, according to U.S. News:
- University of Pennsylvania
- New York University
- University of Michigan
- Massachusetts Institute of Technology
- University of California, Berkeley
- University of Texas at Austin
- University of Virginia
- Carnegie Mellon University
- The University of North Carolina at Chapel Hill
- Indiana University Bloomington
- Seattle University
- Boston College
2. Score an internship with one of the best investment banks
Nothing prepares you for the world of investment banking more than working side by side with successful investment bankers. Learn the ins and outs of the industry by someone who has lived, breathed, and worked as a banker for quite some time.
Grow from the experience and use it to land yourself a job with your dream bank. Focus on developing five of the most sought-after skills employers look for:
- Knowledge on entrepreneurship
- Knowledge on global matters
- Relationship skills
The last one is really important. Being an investment banker requires you to be a ‘people person’.
Thus, your communication skills need to be exceptional and you’ll need to know how to relate to the people you work with on a day-to-day basis. This builds trust in your abilities with your clients.
3. Network like crazy
It’s not just what you know, it’s who you know. The internet is a glorious place for making connections with people you wouldn’t ordinarily meet in your everyday life.
LinkedIn is the best place to start. Make sure to build your professional profile and connect people in the industry as often as you can.
You never know when a vacancy will come up. Wouldn’t you like to be the first person recommended for the position when it does?
Here are some tips from LinkedIn on building a killer profile:
The next section provides insight as to the type of questions you’ll be asked by different investment banks looking to fill vacancies within their companies.
Hiring personnel oftentimes ask the same core questions. They may have additional questions for you as a way to gauge your personality and the extent of your knowledge.
Preparing for interviews
Investment banks want to know you’re the right man or woman for the job. So, they’ll ask questions that give them a feel for who you are as a person and what unique skills and vision you have to bring to their companies.
Answer their questions as quickly and concisely as possible and be sure to elaborate with details when asked to do so. When interviewing for an investment banker position, you might get asked some of the following interview questions:
- Who are you and what qualifies you for a position within our company?
- Why do you want to be an investment banker?
- Why did you choose to apply at our bank?
- How do you value a company?
Other questions they may ask include detailing your greatest strengths, your weaknesses, where you see yourself in five or ten years, your proudest accomplishments, and your greatest influences.
You may be asked what other firms you’re interviewing with and your most challenging professional experience. If you haven’t worked in banking before the interview, use examples that pertain to problem solving and team building when answering.
You may have a pressing urge to ask "how much do investment bankers make?" Don't.
It's tacky and unprofessional to bring up money in an interview.
Know that the salary is competitive and you can always discuss specifics with the recruiter if they make an offer.
It is important to have an idea of what a company offers, though, so you can do some negotiating. You'll also want to know how a bank stacks up against the industry average.
Usually on your initial recruiting phone call they'll ask what your expected salary range is. Be realistic and give a range.
I usually suggest a $10,000 range. For example, say you're looking for $75,000-85,000 (this depends on your experience and location, though).
Dressing for success
Some other things to keep in mind is how to dress as an interviewee. It’s important to be professional in every way.
Men should wear a black, gray or navy blue suit with a crisp white dress shirt. They should also wear a tie and belt.
Some companies go as far to say that you should also wear dress socks because they hate seeing men go without socks or wear tube socks to an interview. Seriously, guys, stop this no-socks with dress pants thing.
Women should wear a nice pant suit with slacks or a skirt. They should be careful not to wear too much perfume because some people are highly allergic to fragrances.
I'd actually suggest not wearing any perfume at all. Super high heels are also not recommended.
You want to feel comfortable walking into an interview, not draw attention to yourself because your shoes are clacking loudly across the floor.
Hair should be neat and trimmed. Your hair color should be conservative as well.
Men should shave their face or at least keep their mustache, beard or goatee groomed nicely. There are [easyazon_link identifier=”B00TT6OV38″ locale=”US” tag=”monemoza0c-20″]beard combs[/easyazon_link] and [easyazon_link identifier=”B00IB6IAOS” locale=”US” tag=”monemoza0c-20″]beard oils[/easyazon_link] on the market for this exact reason.
You never get a second chance to make a great first impression so it’s well worth the expense to buy one and have it on hand for interviews.
Get ready to study
Once you get an investment banker job, you'll need to take a couple of rigorous exams to become certified. The top investment banks want their people to excel.
The series 79 is for investment bankers wanting to do company buyouts and refinancing. The series 7 exam is for stockbrokers.
Prepare as necessary because they're long tests. The series 79 takes about 5 hours, while the series 7 totals at 6 hours (two, 3-hour parts).
Your employer will let you know when you need to pass the exams, and they'll sponsor you - meaning they'll pay for the tests.
The series 79 exam is a ‘lite’ version of the series 7 but still quite difficult. Don't underestimate the amount of time it takes to prepare for this extensive exam.
It's 175 multiple choice questions, and each has 4 potential answers. There are also 10 extra questions to answer that don’t count toward or against your score.
With only 5 hours to complete the exam, it equates to 1 minute and 37 seconds for each question. Once you’re done taking the exam on a computer, you'll get notified to whether you passed or failed. You can then go over each section to see which questions you missed.
The series 7 takes a similar approach, only its 260 questions over two, 3 hour sessions (125 questions for each session, plus 10 'guinea pig' questions that don't count).
Talk about a mind-fuck.
Other exams you may have to take include the Uniform Security Agents State Law Examination (series 63), as well as the Uniform Investment Advisor Law Examination (series 65).
Get this course to prepare now
As you can see, the role of an investment banker is an important one. It requires a lot of training but provides those interested a lucrative and profitable career.
If you’re interested in making it your profession, learn what you need to know from Corporate Bridge’s Investment Banking Training Bundle.
With over 99 courses and 500 hours of video training, it’s among one of the best investments you make when breaking into the field as an investment banker. WallStreetMojo provides more in-depth details on the course, but the bundle is cheaper through Stack Social.
You'll enjoy in-depth instruction from one source with the bundle. You also get lifetime access to all the content, making it something you can refer to for years and years.
A certificate of completion is granted once all coursework is completed. This is a great way to supplement the college education you received because the training materials are specific to the investment banking industry you’ve chosen to go into.
Business Insider even said the following about the course:
“All in all, Corporate Bridge's training bundle is an excellent overview for anyone considering this career track.”
Books you should read
[easyazon_image align=”none” height=”500″ identifier=”1479178012″ locale=”US” src=”http://www.moneymozart.com/wp-content/uploads/2016/02/51UGAjIc2BbL.jpg” tag=”monemoza0c-20″ width=”386″]
You may also want to look into buying the following titles as they are great to refer to even after you’ve landed your first job at a bank.
Some of the most useful books you’ll find include [easyazon_link identifier=”1118615778″ locale=”US” tag=”monemoza0c-20″]Investment Banking For Dummies[/easyazon_link] by Matthew Krantz and Robert Johnson, [easyazon_link identifier=”1479178012″ locale=”US” tag=”monemoza0c-20″]The Best Book on Investment Banking Careers[/easyazon_link] by Donna Khalife, and the [easyazon_link identifier=”1118456114″ locale=”US” tag=”monemoza0c-20″]Investment Banking Workbook[/easyazon_link] by Joshua Rosenbaum and Joshua Pearl.
Having books like this on hand to use to supplement formal training is always ideal. It keeps you learning and growing as a business professional.
Now that you’ve researched how to become an investment banker, investment banking salary estimates, and top investment banks, it’s time to get busy.
If you haven’t received a formal education, there’s no better time than now to go back to school. If an investment banking analyst position opens, you’re going to want to be ready for it.
That’s why it’s important to gather all the information you can on the subject and get busy learning everything you need to know. Your enthusiasm will shine through to the best investment banks where you’ll excel quickly in the different investment banking jobs available within those companies.
You may just wind up in the top 4% of new hires working for top boutique investment banks, Goldman Sachs, J.P. Morgan or Morgan Stanley.
Have you ever considered a career in investment banking? Please share your thoughts below!
Disclosure: This post contains affiliate links. If you click on the links and buy one of the products, I'll get a commission. If you've found this article beneficial and you do decide to go for any of these products, please consider using my links 🙂