Transitioning into Investment Banking from A Non-Finance Background

What it means to be an investment banker.

In recent times, the world has witnessed a lot of new and exciting trends sweeping across the business terrain, we have seen many firms and companies merge in multi-billion-dollar deals. The Investment banking industry remains a major catalyst in accelerating growth and development across various sectors and businesses. No wonder it’s one of the most prestigious and rewarding jobs in the finance industry. Careers in the Investment banking industry are extremely competitive yet very demanding. On average, entry-level investment bankers work between 70-90 hours a week performing research, financial modelling and building presentations. Being an investment banker requires strong quantitative abilities combined with excellent sales skills, a willingness to work hard, excellent people skills, and a competitive nature.

Do you need a finance-related degree necessary to break into investment banking?

Unlike another high-profile career, there is no specific degree needed to become an investment banker, nowadays investment banks are increasingly hiring graduates from most subject areas. However, transferable skills from degrees like economics, business, mathematics and finance can give you an advantage. According to a comment made by Anthony Angelis on Quora,

Why are investment banks hiring Graduates from other Subject Areas?

Diversity is critical to the future of the investment management industry. According to the CFA Institute’s definition of diversity and inclusion, diversity is the spectrum of human attributes, perspectives, identities, and backgrounds. When we talk of human attributes and perspective, we mean having people with unique perspectives and intuition, that can either be based on gender, race, sexual orientation or background. Imagine that everyone who works in the business side of an investment bank had finance majors or backgrounds; opinions and ideas will tend to be skewed towards a particular direction and that might limit innovation. A rapidly evolving investment banking industry demands new capabilities and a more diverse workforce and inclusive workplace cultures.

Transitioning to investment banking from a non-finance background.

Getting into investment banking without relevant work experience can be daunting and challenging as there are thousands of other candidates out there flaunting their finance internships and previous job experience at bulge bracket banks. A typical investment banker works with the smartest people in the financial services industry and he works on interesting deals. There are numerous students out there who have a genuine passion for finance and love for numbers but do not have a finance background. This set of students in most cases have no option but to compete with graduates of ivy league business schools. You may be wondering, “how can one transition into this industry despite the stiff competition?” Those who transition into finance possess certain non-finance skills, such as the ability to communicate well, interpersonal skills, a love of problem-solving and the ability to handle numbers and details effectively. To ensure that a career in investment banking is good for you, a great first step is to assess your personality traits and skills set. In most cases, the vast majority of people wanting to go into investment banking or finance have some level of quantitative experience and for them to be successful, they must have a good understanding of what the role is all about and be able to articulate what they bring to it, matching their experience and skills, even if it’s not in the same industry.

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Skills needed to succeed as an investment banker

  • Numerical and Analytical Skills: being able to effectively work and deal with numbers is a valuable skill every investment banker ought to have. However, the level of complexity depends on the type of job. As such you shouldn’t be intimidated by the numbers. For example, analysis in the equity research department needs this quality when they have to value companies by using different methods like DCF and market comparables. Analytical skills on the other hand entail the logical thinking ability of an individual, these skills cannot be learned through reading books but have to be acquired through experience and a solid foundation.
  • Confidence, communication and negotiation skills: these are key soft skills you should consider building on, the good thing is that you still have enough time to practice, investment bankers do a lot of presentations that require confidence, involve communication and requires convincing, I am sure you wouldn’t want to stand clueless in front of your bank’s board of directors or a high-net-worth investor.
  • Good Teamwork spirit and Ability to work in a fast-paced environment: If you are not a team type of person, investment banking isn’t for you. Your early years as a junior analyst in an investment banking firm will mandate you to work in teams to conduct research and make presentations. The investment banking environment is also fast-paced, meaning things happen at a rapid pace. As an investment banker, you should be able to juggle multiple projects or tasks at once and be prepared to take on something new with only a moment’s notice.
  • Time Management Skills: According to Andrew Gutmann, a former investment banker and author of How to Be an Investment Banker: Recruiting, Interviewing, and Landing the Job, the typical investment banking associate or analyst “can routinely expect to work 90-100 hours per week or even more. A typical workday during the week might be 10:00 a.m. until 2:00 a.m.” Managing and balancing work with personal life is an indispensable skill every investment banker ought to have.
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Tips on how to successfully transition into investment banking.

Now that you have known the relevant skills needed to become an investment banker, let me share with you some useful tips on how you can transition to investment banking.

1. Take Online courses: The fact that you don’t need to have a finance-related degree doesn’t mean you don’t need the knowledge. You should be able to prove to your employee that you are truly interested in what you are signing up for and the best way to do that is to show that you have invested your time in amassing relevant industry knowledge. There are several free online Prep courses you can take on the Corporate Finance Institute learning platform, The Banking Offer (TBO) also offers some very interesting and engaging video modules that can help you prepare ahead of your career.

2. Subscribe to Finance news and stay up to date with the latest happenings: One of the most common questions usually asked in investment banking interviews is “Tell me about the current news you have been following and why you are interested in it”. Following up on news updates will not only make you current and informed but will also help you learn more about financial jargons you ordinarily wouldn’t have heard of. Some reputable news media I will recommend you subscribe to include Bloomberg, Harvard Business Review, and Financial Times; the list is endless.

3. Take part in internships: internships are a proven way to gain practical skills and knowledge, most investment banks offer an investment banking internship program each year, hiring several summer Analysts and Associates to work for 9-12 weeks in their offices. These programs are great for both parties; the interns get phenomenal experience and get to see what it is like working at the firm, and the banks get to see the interns skills, work ethic, and personality fit first hand, before deciding if they want to hire them full time.

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4. Join online communities for finance and investment banking professionals: If you want to succeed in any career path, you must be ready to learn from the successes and failures of others. Professional communities offer to mentor and networking opportunities to students who have no prior industry experience or encounter. I will recommend The Banking offer (TBO) community to all aspiring investment bankers. The banking offer is a community organization focused on helping students like you accelerate their career development in the financial services industry. They help students in their early college experience understand their different career options, build strong professional networks and succeed in undergraduate recruiting cycles for some of the most competitive careers on Wall Street.

The myth that you can only practice what you study in college is no longer feasible in this modern world. The job landscape Is rapidly changing and jobs we never thought would exist now do. The investment banking industry is not left out of this trend as the ever-increasing need for innovation and more efficiency in carrying out its activities has led to a more robust and accommodative environment. The need for skills and competence has overridden the relevance of certificates and honours. Transitioning into investment banking from a non-finance background requires nothing more than passion, strategic planning, practice and perseverance.

References

1. Investment Banking Internship Programs, Corporate Finance Institute, https://corporatefinanceinstitute.com/resources/careers/jobs/investment-banking-internship-programs/

2. Sean Ross, A Day in the Life of an Investment Banker, Investopedia, 25th April 2020, https://www.investopedia.com/articles/professionals/111715/day-life-investment-banker.asp

3. Inclusion & Diversity in Finance, CFA Institute, https://www.cfainstitute.org/en/research/inclusion-diversity

4. Anthony DeAngelis, can one with no finance background become an investment banker? Quora, May 2020, https://www.quora.com/Can-one-with-no-finance-background-become-an-investment-banker.

5. How to become an investment banker, BellerbysCollege, https://www.bellerbys.com/guides/careers/how-to-become-investment-banker

6. Mark Kolakowski, what does an investment banker do? The Balance Careers, July 26th 2019, https://www.thebalancecareers.com/investment-banker-1287141