When a company needs money to launch, continue operating, or plan for expansion, investment bankers help them find funders. These professionals connect investors with promising ventures that match their needs and facilitate the sale of stocks. They also assist clients with mergers and acquisitions. Investment banking offers an exciting and potentially lucrative career path for those interested in the world of finance. According to PayScale, investment bankers earn a median annual salary of $100,000.
Investment bankers work in the financial industry, typically for banks and investment corporations. The job requires analytical skills to assess company assets; customer service and communication skills to work with clients; and a willingness to travel.
This guide provides in-depth information about investment bankers, including day-to-day tasks, necessary skills, and detailed salary data.
What Does an Investment Banker Do?
Investment bankers strategize with client corporations to determine the best route for funding new projects or continuing operations. Often working with a team, they analyze financial data to form a proposal for selling bonds or stocks. They may also suggest taking on loan debt or combine these solutions into a comprehensive plan. Once they decide on a strategy, the investment banker creates a full company profile and shifts to the sales side of the job.
Entry-level investment bankers usually participate in post-hire training that can last several months. They plan with clients, analyze data, write reports, and facilitate sales, building experience at each stage of the process. Within 2-3 years of working for a company, investment bankers can advance to lead teams and oversee client accounts.
Successful investment bankers need the educational background to assess an organization's financial standing and the tenacity to engage in high-level sales. Aspiring professionals should consider the competitive nature of the field and make sure to network extensively. The section below outlines some important skills for investment bankers.
- Key Soft Skills for Investment Bankers
- Decision-Making: Investment bankers must make decisions about the value of a company's stock. They also decide which investors to approach.
- Interpersonal Skills: Investment bankers work with clients, investors, and colleagues on an ongoing basis. They must listen well, express themselves clearly, and engage in sales-related activities that require first-rate interactions with others.
- Detail Orientation: When assessing the needs of a client organization, investment bankers sift through each detail of the company's financial data. They explore every bit of data to better serve the client and potential investors.
- Initiative: Investment banking tasks include securing new corporate clients and reaching out to new investors. Successful investment bankers must engage in self-motivated work and demonstrate confidence.
- Key Hard Skills for Investment Bankers
- Mathematics: Investment bankers need superior math skills to perform the in-depth financial analysis their clients require. They apply high-level algebra, calculus, and statistics to their daily tasks.
- Economics and Accounting: Employers often expect investment bankers to understand economics and accounting at an MBA level. These professionals use knowledge of financial markets, banking, and accounting foundations regularly.
- Tech Savvy: Investment bankers use many different financial analysis software programs, such as Bloomberg Professional and Triple Point Commodity XL. They must also demonstrate proficiency with Microsoft Excel.
- Risk Analysis: Funders rely on investment bankers to help balance the uncertainty of investments against their potential return. Investment bankers use their knowledge of the market and financial analysis to provide this information.
A Day in the Life of an Investment Banker
Daily tasks for an investment banker can shift regularly. With client projects in various stages, a typical day may include some work on analysis and some on sales. Alternatively, an investment banker may engage in business travel to work with clients for days or weeks at a time.
A typical day includes communicating with clients and team members, conducting research, and meeting with team members. Investment bankers can work 50-plus hours per week, performing the following:
- Communicating with active clients through email and phone calls
- Traveling for meetings and conducting in-depth financial assessments
- Researching market trends related to client needs and researching potential investors
- Meeting with team members to assemble plans and strategies
- Drawing up comprehensive models for financial planning or mergers and acquisitions
- Negotiating contracts
- Pitching opportunities to potential investors and facilitating sales
Typical Investment Banker Daily Tasks
Consultant, Stacy Blackman Consulting
Puja Dhanraj is a higher education consultant with Stacy Blackman Consulting, a leading MBA admissions advisory firm. She graduated from the University of Pennsylvania and Wharton School with a BA in international studies and a BS in economics, respectively. She was one of only eight undergraduate students selected to matriculate directly into the graduate program at the Wharton School, where she also earned her MBA.
Since graduating from Wharton, Puja has spent over 12 years in financial services. She began her career at UBS Investment Bank as a real estate investment banker. She then joined Warburg Pincus, a global private equity firm, where she helped raise over $44 billion for their private equity funds as a director in the fundraising and investor relations group.
- Why did you become an investment banker? What initially interested you about the field?
- I began to work towards an investment banking career after earning my MBA from Wharton because the idea of working on large corporate deals was intellectually exciting to me. The prospect of applying my strong quantitative foundation, along with the ability to interface directly with clients, was extremely appealing.
- What does your typical work day look like?
- As an associate in UBS's real estate investment banking group, most of my day was geared towards advising our clients. That involved performing valuation analyses, creating financial models, working on sales or client memoranda with senior bankers, and attending client meetings. Additionally, I would spend days traveling to help our team perform company due diligence on live deals.
- What are some of the most rewarding aspects of working in investment banking? Some of the most challenging aspects?
The most rewarding aspect of being an investment banker was becoming a subject matter expert on the real estate industry and the companies that comprised it, both at a financial and operational level. Additionally, as an industry specialist within a larger investment banking division, I enjoyed partnering with other groups in the firm--such as M&A, restructuring, or capital markets--in order to complete a deal successfully for the end client.
Among the challenges, it is often said that investment banking can involve long hours and extensive travel, especially when trying to meet a deadline. However, I truly enjoyed my time as an investment banker, as it allowed me to form strong, lasting bonds with my colleagues and interface with clients directly at an early stage in my career. Additionally, the extensive financial modeling skills required is a necessary down payment, as it allows for a deeper insight into how a company operates. These skills were invaluable as I moved into the private equity industry at Warburg Pincus, where I spent the majority of my career.
- Why did you decide to pursue an MBA?
- I attended the Wharton School as an undergraduate because I was very interested in financial markets and investing. As I considered my future career plans as an investment banker, I saw that many of the successful business leaders that I admired had an MBA degree. In particular, I was excited to take graduate-level finance and management courses with an applied focus, while at the same building a valuable network of cohorts. With this in mind, I applied and was accepted into Wharton's submatriculation program as an undergraduate, which allowed me to earn both my undergraduate and MBA degrees within five years. After graduating from Wharton, I was recruited to join UBS Investment Bank in their real estate group.
- How did your MBA prepare you for your investment banking career?
My MBA prepared me for my investment banking career through both coursework and building my network. With respect to coursework, I chose to concentrate on finance, investment management and statistics courses. This was extremely beneficial in preparing me for the extensive quantitative work that investment banking requires. With respect to networking, it was incredibly helpful to be able to learn from the experiences that my fellow students had in investment banking prior to coming to business school.
Additionally, the deep friendships that I gained with my fellow MBA students gave me an inside view into the investment banking industry -- especially with respect to the different cultures of various firms -- which allowed me to be targeted in my career-search process.
- What was your career path that led you to this position? What do you think helped you most on your journey to become an investment banker?
As an undergraduate and graduate student at Wharton, I had several internships, both domestically and internationally, across consulting, investment management, and investment banking. As I considered the range of my experiences, I found that investment banking best spoke to my skills and interests.
Earning my MBA was the critical element in my decision to become an investment banker. Learning about investment banking from classmates that had taken this path prior to business school gave me a sense of the career progression, as well as the challenges. The rigorous coursework gave me the confidence that I had the quantitative and qualitative foundation needed to succeed in this field.
- What advice would you give to students considering pursuing careers as investment bankers?
- For students considering an investment banking career, I would advise them to first learn as much about the industry as possible. This includes networking with investment bankers across various functions and firms. It is also important that they understand their own personal skill sets and interests, as investment banking requires both a strong quantitative foundation coupled with the ability to interact with clients. Finally, an investment banking career is one of the best ways to start a career in finance, giving one the necessary skills to pursue a career in related areas such as private equity or venture capital.
Investment Banker Salary and Career Outlook
The Bureau of Labor Statistics (BLS) projects employment for sales agents in securities, commodities, and financial services -- including investment bankers -- to increase by 4% from 2018-2028, on pace with the national average for all occupations.
Businesses looking to expand need investment bankers to help assess the value of securities and seek out investors. With traditional pensions becoming less common, investors also look for opportunities to increase their holdings.
Prospective investment bankers can expect relatively fast advancement in the field, with most companies looking to promote new employees within 2-3 years. The section below discusses the potentially lucrative salary opportunities available to investment bankers based on experience, location, industry, and other crucial factors.
Salary Expectations for Investment Bankers
Multiple factors affect potential earnings, including the individual's level of experience, location, and education. While some employers hire investment bankers with a bachelor's degree, employees entering the field with an MBA can qualify for top jobs and faster advancement -- which often comes with higher salaries.
According to BLS data, financial agents in securities, commodities, and financial services -- including investment bankers, brokers, and sales agents -- earn the highest salaries in New York, Connecticut, Massachusetts, and Minnesota. In New York, for example, these professionals receive an annual mean wage of $153,800. High-paying industries include pipeline transportation of crude oil; management, scientific, and technical consulting services; and wholesale electronic markets and agents and brokers.
The graphic below uses data from PayScale to illustrate how experience relates to salary potential for investment bankers.
Average Annual Salary of Investment Bankers by Experience, 2020
Next Steps on the Career Path
Investment bankers typically work in junior-level positions for a maximum of 2-3 years before advancing. This industry-standard timeline allows employers to bring on new trainees regularly. An investment banker may begin at the analyst level and proceed to associate, upper management, and vice president.
After completing internships, new investment bankers often take entry-level positions as analysts. Investment banking analysts conduct research and perform financial analysis for their teams. Investment banking analysts earn a median salary of $68,000. After 2-3 years, most analysts advance to the associate level.
Investment banking associates participate more directly with clients by attending meetings and handling full portfolios. They may work to secure new clients and establish relationships with existing ones. According to PayScale, investment banking associates earn a median annual salary of $79,000.
At the vice president level, investment bankers maintain important client relationships, oversee full projects, coordinate marketing efforts, and supervise teams of analysts and associates. Vice presidents earn a median salary of $128,000.
Where Can I Work as an Investment Banker?
Investment bankers can find employment in many different industries. In addition to financial centers in the country's largest cities, these professionals work in smaller towns and rural communities. The sections below highlight some of the considerations an individual following this career path may wish to gauge before accepting a job.
Location can significantly influence the trajectory of an investment banker's career. As the table below demonstrates, urban centers like New York offer high salaries and employ the largest number of securities, commodities, and financial services sales agents in the country. The cost of living in New York, however, rises far above the cost of living in Kansas -- the fifth highest-paying state in the nation for this career.
Competition should also factor into your location search. New York and California may employ the most people, but their large populations mean more applicants competing for jobs.
|Top-Paying States||Annual Mean Wage|
|Top-Employing States||Number Employed|
Investment bankers working in different industries can specialize in knowledge specific to their field. Knowing where to secure funding for a particular industry and how that industry's models work will also help in the hiring process. Some industries may focus on mergers and acquisitions, while others specialize in setting up initial public offerings for clients to secure funding through investments.
Prospective investment bankers with a strong interest in a particular field might elect to pursue a related major in their bachelor's studies before completing an MBA.
The tables below illustrate salary potential and hiring statistics for financial services sales agents across various industries.
|Top-Paying Industries||Annual Mean Wage
|Pipeline transportation of crude oil||$159,890|
|Management, scientific, and technical consulting services||$130,030|
|Wholesale electronic markets and agents and brokers||$125,000|
|Securities, commodity contracts, and other financial investments and related activities||$123,330|
|Top-Employing Industries||Number Employed|
|Credit intermediation and related activities||197,050|
|Securities, commodity contracts, and other financial investments and related activities||180,160|
|Non-depository credit intermediation||24,120|
|Management of companies and enterprises
How to Become an Investment Banker
Entry-level investment bankers must hold a bachelor's degree, often in business or a related field. Many employers may require investment bankers to hold an MBA to advance or qualify for entry-level jobs. A typical bachelor's degree takes four years, whereas an MBA can take 1-3 years, depending on the program format.
Students should expect to complete internships to obtain crucial experience in the field, as most starting positions require some experience at the internship level.
Depending on the demands of a particular position, employers may require investment bankers to hold professional credentials like chartered financial analyst (CFA) certification, financial risk manager certification, or certified public accountant (CPA) certification.
Aspiring investment bankers can expedite the hiring process by completing an MBA early on, taking advantage of networking opportunities whenever possible, and participating in internships.
The Investment Banker Job Hunt
Professional organizations like the Association for Financial Professionals offer networking opportunities, career guidance, and mentorship. By serving on committees, participating in local chapters, and attending annual conferences, members can make important contacts in the field.
Students and graduates can also take advantage of their school's career center, where they can find information on job fairs, participate in alumni networking opportunities, and receive the support of professors and mentors.
Prospective investment bankers can also make use of excellent online job boards when looking for employment.
Financial professionals can access industry news, career advice, and an extensive job database searchable by location and sector through this site.
This resource offers a large job board divided by location and keyword. The site also provides career resources, including resume listings and news.
With job opportunities divided by industry, iHireBanking matches financial professionals with recruiting organizations. The site also offers resume scoring and career advice.
Glassdoor posts company reviews, salary reports, and CEO approval ratings to its wide-reaching job boards, allowing potential employees to research and select the company that matches their values.
Investment Banker Requirements
Investment banking requires specific skills, market expertise, and industry knowledge. Employers expect investment bankers to begin work with some background in the field before advancing through the ranks of their organization. Investment bankers need to complete certain educational requirements, professional certifications, and experience before entering and advancing in their chosen field.
Education Requirements for Investment Bankers
Employers expect each investment banker to complete a bachelor's degree at minimum, and most require an MBA -- if not at the entry level, then prior to advancement. Students who pursue a bachelor's degree unrelated to business may wish to complete an MBA immediately after graduation. Various majors may contribute to industry-specific knowledge, while business majors such as accounting, finance, and economics can lead more directly to entry-level jobs.
With an MBA, prospective employees can receive top consideration, secure faster advancement, and earn higher salaries. Some employers even offer financial aid for workers pursuing an MBA.
MBA graduates can demonstrate levels of knowledge and experience that employers appreciate. By selecting a concentration like finance or economics, students further hone their skills for a competitive job market. Employees need new hires with a strong ability to analyze financial data and understand current market trends, making these concentrations particularly useful.
Graduates who wish to work in certain industries can pursue related concentrations, such as healthcare management or real estate. Different industries can require very specific knowledge, and a strong understanding of the inner workings of the field can significantly boost a graduate's job prospects.
License and Certification Requirements for Investment Bankers
By securing professional credentials, aspiring investment bankers can elevate their careers. The Financial Industry Regulatory Authority certifies investment management professionals through the Series 79 Investment Banking Representative Exam. Though generally not required for entry-level work, some employers may mandate the certification before an employee can advance to the associate level.
The CFA institute also licenses financial professionals through the certificate in investment performance measurement (CIPM). The program lasts about 18 months and consists of two exams. By obtaining CIPM credentials, investment bankers can develop their skills and demonstrate proficiency in investment performance evaluation, manager selection, and investment reporting.
Required Experience for Investment Bankers
Employers often expect investment bankers to enter the field having completed some work as an intern. Internships often provide important networking opportunities that lead to potential job opportunities. Undergraduates and MBA students can take part in internships. A typical internship takes place over 8-10 weeks, often during the summer.
Investment banking follows a fairly rigid advancement structure. Employees can expect 2-3 years of entry-level work before advancing to the next level. With an MBA, a new investment banker may advance more quickly or qualify for further job opportunities. By pursuing an online MBA, students can gain crucial work experience and complete their studies at the same time.
Frequently Asked Questions
- How long does it take to become an investment banker?
- The educational requirements -- a four-year bachelor's degree plus a two-year MBA -- could take students six years or more to complete. Some students enroll in accelerated programs and graduate early, while others attend part time and graduate later.
- What degree is needed to be an investment banker?
- Aspiring investment bankers should complete a bachelor's degree in some area of business. Most employers also require workers to possess an MBA.
- Do I need a master's to become an investment banker?
- Many employers prefer to hire investment bankers with an MBA. Some bachelor's graduates may find entry-level work, but an MBA is often necessary for advancement.
- How much does an investment banker make?
- According to PayScale, investment bankers earn a median yearly salary of $100,000. Salary potential varies based on experience, location, and education.
- What requirements are there to become an investment banker?
- In addition to the educational requirements, some employers expect investment bankers to obtain professional credentials such as CPA, CIPM, or Series 7 certifications.
- Is it hard to become an investment banker?
- Investment bankers must demonstrate proficiency in math, strong knowledge of economics and market trends, and excellent attention to detail. Some students may find this more difficult than others.
- Is investment banking stressful?
- Investment banking careers can include long hours and high-pressure situations. Prospective investment bankers should consider their interest in sales, which is an important factor in the job. This aspect is exciting to some but stressful to others.
Professional Organizations for Investment Bankers
- American Association of Finance and Accounting Based in North America, AAFA helps recruiters and job seekers to connect with one another. The association hosts a network, hiring resources, and extensive job listings.
- American Bankers Association This community of banking experts provides members with professional resources, including policy advocacy, webinars, continuing education, and on-call expert assistance.
- American Finance Association The AFA devotes itself to the academic study of economics and connects financial scholars through an online directory, an annual conference, and an academic journal.
- Association for Financial Professionals This career-focused organization provides job resources, including training and certification, career advice, networking events, and coaching.
- Financial Management Association An international organization, FMA bridges the gap between financial scholarship and practicing professionals through publications, conferences, and an extensive library of online resources.
- Society of Financial Service Professionals FSP focuses on professional networking, connecting financial professionals with lawyers and insurance agents across industries. The organization hosts social events, provides a professional online library, and produces journals and newsletters.