How to Become an Investment Banker
It takes money to make money. This adage holds true for private sector companies. They require capital to expand, invest in new equipment, enhance their workforces, or to simply maintain their day-to-day operations. Acquiring capital often entails bringing in investors or engaging in merger and acquisition activity. For these complicated financial undertakings, the insight of an investment banker can be crucial. Investment bankers are financial professionals who help institutional clients connect with investors and other sources of funding. For those who are interested in investing principles or in helping organizations to thrive and grow, this can be a rewarding line of work. An advanced business education, such as a Master of Business Administration (MBA), is often an essential step for those who want to become an investment banker.
What Do Investment Bankers Do?
Investment bankers draw from their experience in the financial services sector, their analytical skills, their knowledge of investment principles, and their communication abilities to help their clients gain the funding needed for expansion, improvement, or regular operation. This may be done by connecting with investors, leading the company through a merger or an acquisition, or even coordinating an initial public offering (IPO). By setting up and overseeing these funding opportunities, investment bankers play a critical role in the growth and development of the organization they work for.
Investment Banker Job Description
The exact nature of what an investment banker does day to day may vary based on their specific role and the types of organizations they work with. Some common responsibilities associated with investment banking include the following:
- Raising capital via “book building,” investment meetings, prospectus drafting, and the selling or issuing of securities
- Coordinating and overseeing a company’s IPO
- Meeting with individual investors to secure the private placement of capital
- Providing leadership through mergers and acquisitions
- Leading the organization through a corporate restructuring
- Advising other leaders and executives on debts, equity, and other issues related to raising capital
In addition, investment bankers may provide advisory services related to hedge funds, mutual funds, and pension funds.
Steps to Become an Investment Banker
Individuals who wish to become investment bankers need to complete several key steps, including obtaining formal education, hands-on experience, and professional certification.
Earn an Undergraduate Degree
Success in investment banking requires foundational knowledge of finance and economic principles as well as some business basics. The best way to obtain this knowledge is by earning a bachelor’s degree in finance or a related field, such as business or economics. Virtually all investment banking positions will require an undergraduate degree.
Gain Work Experience
Hands-on experience is also important for cultivating investment banking skills, including soft skills like persuasion, collaboration, analytical thinking, and problem-solving. Internships can be great starting points, as can entry-level investment banking jobs like analyst and junior banking associate. These roles are the first steps on the career ladder, with higher rungs including senior banker and senior vice president positions.
Obtain an Advanced Degree
For senior roles, including those with more competitive salary ranges and expanded fields of responsibility, an advanced degree is often essential. An MBA can be especially helpful for honing a more sophisticated set of investment banking skills and a more comprehensive understanding of how businesses function.
Get Certified
The investment banking profession boasts multiple opportunities for certification. Though not always required, certification can often lead to more competitive salary ranges and higher-level roles. Two of the main investment banking credentials include Chartered Financial Analyst (CFA) and Chartered Investment Banking Professional (CIBP). The CFA credential, administered by the CFA Institute, requires a high level of training and testing, and denotes a considerable pedigree in finance and investment. The CIBP credential is an alternate option that covers similar subject matter and is accredited by the Investment Banking Council of America (IBCA).
Investment Banker Salary and Career Outlook
Because they play such an important role in business development, investment bankers are typically well compensated. According to Payscale, the median annual investment banker salary was approximately $119,000 in March 2023. Numerous factors can affect salary, including years of experience, level of education and certification, and geographic location. The continued growth and globalization of the U.S. economy are expected to drive demand for investment bankers over the next decade. According to the U.S. Bureau of Labor Statistics (BLS), employment of securities, commodities, and financial services sales agents — which includes investment bankers — will grow by 10% between 2021 and 2031, double the average for all professions.
Invest in Your Future
Investment bankers are integral to helping businesses grow and succeed. An advanced business education is often a crucial step on the path to becoming an investment banker. Consider Washington State University’s Online MBA and its concentration in finance, in which students will gain familiarity with investment banking principles that can contribute to their long-term professional success.
Learn more about the program and discover how WSU can help you realize your professional goals.
Recommended Readings
Financial Analyst vs. Financial Advisor: Choosing a Career
Online MBA vs. In-Person: Which Is Right for You?
What Is Operations Management and Why Is It Important?
Sources:
CFA Institute, What Is an Investment Banker?
Investment Banking Council of America, CIBP Candidacy
Investopedia, “A Day in the Life of an Investment Banker”
Investopedia, “How Do Investment Banks Help the Economy?”
Investopedia, “How to Become an Investment Banker”
Investopedia, “What Do Investment Bankers Really Do?”
Payscale, Average Investment Banker Salary
U.S. Bureau of Labor Statistics, Securities, Commodities, and Financial Services Sales Agents