Is Investment Banking a Good Career? Skills, Pros & Cons

There is no doubt in the fact that Investment bankers enjoy a luxurious lifestyle but there are many more reasons to choose this awesome field which we will be discussing ahead in this article.

Before moving ahead in the article you must know that everything comes with a price. Though Investment bankers get big cheques, in return, there is a hectic lifestyle one should adapt to. Working hours are often longer and there is big competition one has to face.

Having got a basic idea, let’s begin with the blog. We will be discussing the following topics:

• What is Investment Banking?
• Career Options in Investment Banking and Salary
• Investment Banker Skills
• Pros of being an Investment Banker
• Cons of being an Investment Banker
• Conclusion

Watch Intellipaat’s Youtube video on the Investment Banking Online Course:

What is Investment Banking?

We all are quite familiar with the term “Bank”. In layman’s terms, it is a place where you deposit money and withdraw when you need it without worrying about where your money went and what the bank will do with it.

Well, that too makes sense because what matters to us is the safety of our funds, and interest rates in case of fixed deposits. Let me give you a little explanation of how your bank makes a profit. 

The bank mainly makes a profit from the interest rate it charges while lending out various types of loans. For eg, you want a car loan for say amount ‘x’. Now what the bank will do is apply an interest rate on this amount, let’s assume it to be 7% of the total amount. Wherever you go back to the bank to pay the loan amount, you will have to pay 7 percent more.  Such a form of banking is known as Commercial banking.

On the other hand, Investment Banking involves transactions on a very large scale and it only deals with big organizations and very wealthy clients.  This type of banking is involved in situations when a company wants to release its IPO (Initial public offering), in case of complex financial transactions, and they also help in the merging of two firms, etc.

Investment Banks primarily focus on providing services to corporations for raising money. They are also responsible for planning and managing the financial aspects of big projects which can even involve governments.

Considering the fact that Investment banks only deal with big players, the amount of money they earn is whopping too! What if I tell you that even the Commercial banks are clients of these Investment banks?

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Career Options in Investment Banking and Salary

Now you have an idea about investment banks, let’s discuss job profiles from junior to senior level along with the fascinating salaries they enjoy.

• Analyst – An Investment Banking Analyst does research and examines financial data, as well as market trends. They develop and apply economic models to evaluate deals and estimate profitability. They are also in charge of mergers and acquisitions, IPOs, and private equity settlements.
• Associate – Associates perform similar tasks to analysts, but with higher responsibilities to ensure that everything works perfectly. Associates frequently obtain a Master of Business Administration (MBA). This positions them for promotion or a move into a more specialized area of finance.
• Vice President (VP) – Vice president position comes with more client-facing responsibilities. They are in charge of analysts and associates and are responsible for handling potential clients and closing deals.
• Managing Director (MD) – They are the head of the team, and their sole responsibility is to maximize profits. They spend their time each day acquiring clients, retaining them, and building new ones. The managing director assigns tasks to lower-level employees and ensures that everything is done flawlessly to satisfy the clients.

Below is the salary range one can expect along with a timeframe for the promotion.

You can even go through Investment Banking Salary in India blog to get deep insights about salaries in India.

Skill Required to become an Investment Banker

There are some skills and qualities one must possess before applying for an Investment banker job.

• Communication skills:  Investment Banking jobs involve lots of interaction with clients and they also have to supervise and look after the people who work under them. They conduct lots of meetings and are responsible for giving presentations in front of customers. Therefore, having good communication ability is a vital skill Investment Bankers must have.
• Decision-making skills: Investment Bankers are responsible for reviewing potential corporations’ investment processes as well as managing the firm’s financial losses and gains. As a result, it is critical to have accurate decision-making abilities and the ability to make sound judgments.
• Numerically Strong: Investment Bankers work with big numbers and a tiny mistake can cause big damage. They have to calculate the net worth of businesses along with the financial reports of rich individuals and firms. Hence, having excellent numerical skills is a must.
• Leadership: There is a huge number of salespeople who are to be directed by Investment Bankers, these people are really smart and can be aggressive too. Also, an Investment Banker has to look after lots of work reports and make decisions accordingly.  Exhibiting leadership skills makes their decision-making more effective and it results in good relationships among the professionals they supervise.
• Patience: There is always a big risk involved in this job, and a single wrong decision taken in a hurry, or say maybe due to some other circumstances can heavily impact the reputation of the client. Hence, Investment Bankers are expected to always think patiently and take many things into consideration before passing a decision.
• Attention to detail: Accounting, money losses, information, and data analysis for consumers, and the investing department are all part of investment banking. Investment bankers must deal with a large amount of numerical data. They must be precise in their calculations because a single error can result in a major hazard.
• Critical thinking: Management of the investment department demands sophisticated critical thinking abilities, which include applying logic and reasoning to assess the strengths and weaknesses of various solutions, conclusions, or approaches to solving problems.

Willing to become an Investment Banker? Check our blog on Investment Banking Career Path Now!

Pros of being an Investment Banker

The experience you gain in this career is immense, you work with the best financial experts from around the world. You get to deal with crazy rich individuals and work with the government of a country, which is a totally different experience than one can dream about.

As an Investment Banker,  you will be working really long hours and the Investment Banking skills you gain doing work is invaluable.  Below mentioned are a few amazing advantages this job offers you.

High earning potential

• Analysts make around $66K per year, straight out of university along with big bonuses.
•  A successful Investment Banker can expect both a high base salary along with significant commissions.
• For someone looking for a career with immense earning potential should definitely choose this field.

Powerful networking

• Investment Bankers always stay in close contact with senior officials, providing them with the opportunities of building good personal and professional relations with them.
• Good networking can benefit your career while seeking promotions and while looking for new opportunities. 

Go through the Types of Investment Banking blog to know which type will suit you better.

Continuous Development

• The investment banking field is always evolving with the changing market because an Investment Banker’s work involves analyzing markets and new trends.
• The skills you already possess are always important and learning new skills also becomes an important part of this job.

Amazing perks

An Investment Banker enjoys the following perks in his career:

• Traveling the world and staying in the best hotels
• Flying in Business class
• Subsidized access to the best gyms
• Extra pay per hour beyond your working hours
• Good pension
• Best medical insurance

Check out the difference between Management Consulting VS Investment Banking to choose the right career path for you!

Cons of being an Investment Banker

Just like any other career, Investment banking has its drawbacks.

Here are some of the major cons one can expect in the field.

Long Working hours

• There is no 40-hour workweek for an IB, right from the Analyst level they typically work 80-90 hours per week. Some Days even work till 2 am.
• Working on weekends and sometimes more than 15+ hours a day can turn out to be a very big challenge for some, but that’s what this career is about. More working hours translates to more numbers on salary slips.

Increased availability

• No matter if it is early morning, midnight, weekend, or your holiday, you are always expected to answer calls and emails.
• As an IB you have to be always available for the clients to provide them with great service.

High competition

• Investment Banking is a very highly competitive job because of the amount of financial stability it offers.
• It can become stressful working in a highly competitive environment because no one wants to see someone else performing better than them.
• Therefore, it becomes quite important to adapt and be a person who can work in a highly competitive and pressured environment.

Repetitive work

• A lot of the work an Investment Banker does might be rather repetitive. Researching a firm and generating reports about them, for example, may provide different outcomes for each organization.
• However, the actions taken by the Investment Banker to do this are likely to be identical from one company to the next.

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Conclusion

Deciding whether a career is good or not depends on various factors, in this blog we tried discussing Investment Banking. A career as an Investment Banker can be both exciting and challenging as well. If money is the only thing you look for in a job, this can be a good choice for you. Considering the long working hours and highly competitive environment, Investment Banking might turn out to be a stressful field.