How To Become An Investment Banker

Becoming an investment banker requires education, certification and experience. These professionals provide financial advice, helping private and public organizations increase capital through investments and stock portfolios.

Though their work can occur in high-stress situations and environments, investment bankers can earn above-average salaries and often find their work fulfilling. This guide offers insight into how to get into investment banking, including key skills, typical pathways for education and certification requirements.

What Is an Investment Banker?

Investment bankers work in finance, making connections between companies that are looking to raise funding and the investors who possess capital. These professionals help businesses secure funding through initial public offerings (IPOs) and assist with purchasing and selling securities as consultants.

The term “investment banker” broadly applies to entry-level and executive positions. At all levels, these professionals perform demanding, high-stress work with long days and weeks. This role suits individuals who are data-driven, career-focused, analytical, self-assured and determined to help their clients succeed.

Salary and Job Outlook

This demanding role often entails workdays that are 12 or more hours long, adding up to 100-hour work weeks. However, it also delivers high salaries—even entry-level investment bankers may make six figures each year. Payscale data indicates that investment bankers earned an average annual salary of around $102,000 as of August 2022.

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The career’s outlook appears promising as well. The Bureau of Labor Statistics (BLS) reports a projected employment growth of 10% from 2021 to 2031 for securities, commodities and financial services sales agents. This category includes investment bankers. This is faster than the 5% projected growth rate for all occupations nationwide.

The BLS attributes this strong projected growth to an aging population and a resulting decline in traditional pensions. However, the agency also warns that consolidation occurring within the financial services industry—along with automatic trading systems—may slow growth for investment bankers as the decade progresses.

Responsibilities

Investment bankers use their knowledge of finance and markets to raise money for organizations, corporations, individuals and government entities.

Types of Investment Banking

Investment banking typically divides into two subsets: corporate finance and industry coverage. Within brokerages, companies assign investment bankers to work in these subsets. This section explores two types of investment banking.

Corporate Finance

In corporate finance, investment bankers help individuals and organizations raise capital through stocks, bonds and other investments. They oversee mergers, acquisitions and preparation for IPOs.

Industry Coverage

This subset of investment banking focuses on specific businesses or types of commerce. Professionals must remain up to date on any shifts or trends in their assigned business sector. Professionals working in industry coverage often report their findings to stakeholders.

Important Skills for Investment Bankers

Analytical Skills

Investment bankers need analytical skills to observe large sets of economic data and make conclusions from their findings.

Attention to Detail

In this high-stress work environment, even a small mistake can mean the difference between a business thriving after receiving capital and a business becoming insolvent. Investment bankers need strong attention to detail to match the high stakes of their work.

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Confidence

Investment bankers must project confidence to clients who provide or require significant amounts of funding. Remaining calm and assured in high-pressure situations can benefit professionals in this field.

Communication

These professionals interact with many different stakeholders on a daily basis, including coworkers, managers and clients. The ability to communicate clearly to various audiences is key for all investment bankers.

Decision-Making

Investment bankers must make critical decisions for clients. Individuals and organizations seek the guidance of investment bankers, who must know how to analyze trends and forecasts to determine wise investment decisions.

Math Skills

Investment banking requires acute math skills to crunch the numbers for funding opportunities. These professionals also need a strong working knowledge of economics.

Knowledge of Ethics and Compliance

These professionals must have a deep understanding of the regulations and laws that apply to investments. Some clients may want more ethical investments, so these bankers can benefit by identifying sustainable opportunities and striking while the iron is hot.

How to Become an Investment Banker

Earn a Bachelor’s Degree

A bachelor’s degree is the minimum education required to become an investment banker. Prospective professionals can seek a business administration bachelor’s degree or a bachelor’s degree in accounting. Other relevant majors include finance and economics. Aspiring investment bankers can also tailor their electives toward corporate finance.

Attending a school near a city with a thriving financial sector, like New York City, can present more opportunities for internships and networking.

Consider Graduate School

Employers typically seek investment bankers with MBA degrees or other master’s degrees for mid-level and advanced roles in the field. Though you can become an investment banker with only an undergraduate education, earning a master’s degree can help you stand out among the competition and receive more employment opportunities.

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Gain Experience

Along with developing on-the-job professional experience, students can get started in the workplace by completing internships. Interns can make lasting connections with employers and mentors for future job opportunities. Experience is also key for advancing into investment banking roles with more responsibilities.

Register with FINRA

Each candidate must register with the Financial Industry Regulatory Authority (FINRA) to get into the investment banking world. All prospective professionals working in securities must pass the Series 7 exam. Investment bankers must also pass the Series 79 exam to register with FINRA.

The Series 7 exam comprises 125 questions, which test-takers have three hours and 45 minutes to complete. Investment bankers taking the Series 79 exam must complete 75 questions in 2.5 hours. Prospective investment bankers typically spend 60 to 100 hours preparing for the Series 79.

FAQ About How to Become an Investment Banker