Pros and Cons of Becoming an Investment Banker
Investment bankers arrange and establish connections between businesses and investors through a process called underwriting. Learn more pros and cons of a career in investment banking by reading onward.
|PROS of Becoming an Investment Banker|
|High paying salary (about $103,000 mean annual wage)*|
|Travel opportunities overseas*|
|Job training is sometimes provided*|
|Career advancement opportunities are available*|
|CONS of Becoming an Investment Banker|
|Job competition can be intense*|
|Work is seen as stressful due to long hours and a demand to get results*|
|A license is necessary to be an investment banker*|
|If you're not promoted from an entry-level position in two or three years, you're likely to be terminated from that position*|
Source: *U.S. Bureau of Labor Statistics.
Essential Career Information
Underwriting is the main job duty of an investment banker. It refers to the process of connecting a business looking to expand with an investor interested in providing funds. The initial public offering, in which a company becomes available to the public and issues stock out for the first time, is also often handled by an investment banker. If a company buys another or if two companies combine together, the process is generally handled by an investment banker. The investment banker gives advice throughout the transaction to make sure the acquisition or merger occurs easily.
Investment bankers are included in the securities, commodities and financial services sales agents category by the U.S. Bureau of Labor Statistics (BLS). For this occupational group in May 2014, the BLS reported an hourly average wage of $49 or so. This resulted in a yearly average salary of about $103,000. Massachusetts, the District of Columbia, New York, Connecticut and Kansas were considered to be the states that offered the highest average incomes for securities, commodities and financial services sales agents.
Commodities, securities and financial services sales agents were projected to see an employment growth of 11% from 2012 to 2022. The BLS notes that this is about fast as average in comparison to other vocations. As the economy grows and improves, the services an investment banker provides are expected to increase in demand. As the United States is a financial center at the international level, the economic growth of other countries is thought to contribute to the growth of investment banker employment in the U.S.
Education, Training and Licensing
Most investment bankers have at least a bachelor's degree, according to the BLS. Many go on to earn a Master of Business Administration as well. While in school, you'll want to take courses in economics, finance, business and accounting along while also looking for internship opportunities, as an internship can sometimes help you obtain full-time employment after graduation.
Upon hiring an investment banker, many firms take the time to train them on the job. This can be an intensive process, as a new investment banker has to become familiar with the clients the employer has and what services are offered. The Financial Industry Regulatory Authority (FINRA) requires all investment bankers to be registered to act as a firm's representative. To acquire this license, you're going to have to pass several examinations. Continuing education is generally needed to maintain your license.
What Do Employers Want in Investment Bankers?
Initiative is an important trait most employers want to see in investment bankers. Ideally, employers are looking for investment bankers with the drive to seek out clients and generate business for the bank. Communication and customer service skills are crucial as well, since employers want investment bankers that can keep existing clients happy. Several job postings for investment bankers from November 2012 were examined and are summarized below.
- In California, an investment bank has an opening for an investment banking associate with a bachelor's degree and computer proficiency. The position calls for applicants willing to spend some nights, weekends and long hours at work.
- A New York bank requires a municipal investment banker with an existing portfolio and a good employment record.
- An investment banking analyst job in North Carolina prefers someone who can take accountability and has a sense of urgency.
- A firm in Ohio wants an investment banker with at least five years of experience in commercial real estate banking or the housing sector.
How to Stand Out as an Investment Banker
Certification is one way that you can stand out as an investment banker. The Charted Financial Analyst (CFA) Institute offers a certification for charted financial analysts. Investment bankers along with financial services sales agents and brokers often choose to earn this certification as a way to distinguish themselves from their peers. To earn this certification, you're going to have to acquire a bachelor's degree and four years of work experience in an appropriate field. From there, three examinations have to be passed. These examinations cover topics ranging from accounting to corporate finance. As you are earning your work experience, you can choose to take these examinations.
Alternative Vocational Paths
As a financial analyst, you help individuals or businesses with investment decisions related to bonds and stocks. You typically work on the selling side or the buying side of investments. Rating analysts, fund managers, risk analysts and portfolio managers are all types of financial analysts. The average yearly salary for financial analysts in May 2011 was about $88,000, according to the BLS. From 2010 to 2020, a 23% employment growth is expected in the field.
If you're looking at becoming an investment banker, you may also want to consider being a financial manager. As a financial manager, you're in charge of an organization's financial health. You'll develop plans and long-term goals for your organization's finances. This involves in choosing which investments to make and creating financial reports on how your company is doing. A 9% growth in employment is projected by the BLS for financial managers from 2010 to 2020. As of May 2011, financial managers made roughly $120,000 on average annually.