How to Become an Investment Banker, According to a Career Coach and Former Banker was originally published on The Muse, a great place to research companies and careers. Click here to search for great jobs and companies near you.
So you think you want to be an investment banker?
As someone who began her career in banking and now supports clients in landing their dream jobs, I can attest to the fact that many are initially drawn to the world of investment banking for its lucrative salary and large (sometimes more than your salary!) bonuses. But it takes more than a love of the finer things in life to land a job and build a career in this field.
Yes, it’s true that you’ve got to have an affinity for numbers and can’t be afraid of hard work, long hours, and complete dedication to your job. But what exactly does an investment banker do? What does the typical investment banking track look like? And how does one land one of these super-competitive, highly coveted jobs? Read on for answers to those questions.
Simply put, investment bankers manage money. They are responsible for connecting organizations that need capital with investors who have it and are willing to invest. Bankers manage investments, buy and sell securities on behalf of their clients, and help companies secure capital through initial public offerings (IPOs), stock buybacks, and mergers and acquisitions.
A typical day starts with responding to emails and calls and working on financial analyses of a company or current project. Afternoons tend to be more hectic and focused on your one or two main deals, which could be anything from an IPO to a merger to a restructuring case. You’ll have dinner at the office and then continue working until late at night, with midnight or even 2 AM end times being normal for the industry.
The role requires a person to be good with numbers, but also to understand the banking industry and financial instruments (loans, bonds, stocks, etc.), be meticulous in their attention to detail, and have the ability to multitask and thrive in high-stress environments. While there is the potential to make six figures right from the start, you’ll work hard for that, as 90-100 hour weeks and 14-hour days are the norm.
“Much of the work of an investment banker focuses on financial modeling, particularly in the area of valuation. Expertise in financial statement analysis is a must,” says Robert R. Johnson, PhD, CFA, CAIA, and co-author of Investment Banking for Dummies. But that’s not enough. “Because investment bankers work with clients and in teams, both oral and written communication skills—particularly the power to persuade—are desirable.”
Unlike in many professions, where a mid-career pivot is not unusual, the career path for an investment banker follows a more predictable (read: strict) trajectory. Diversions from this path make it much more difficult, if not impossible, to land an investment banking role.
The journey to investment banker begins with earning a relevant undergraduate degree (such as in finance or economics)—or a graduate degree for career changers (such as an MBA or master’s in finance)—and at least one internship.
From there, your first role will likely be a financial analyst, followed roughly two years later by an associate position (what most actually mean when they say “investment banker”). After that, if you decide to stay in banking, the next step is vice president and then managing director.
If post associate role you’re ready for something new, you’ve got plenty of other options. As for me, I parlayed my investment banking experience into a career in financial consulting and then, after another career change, launched my own business as a career coach and talent consultant.
I have clients who have moved on to roles in the financial and/or business development departments of corporations and nonprofits, some even choosing to work for former clients. Many former bankers opt to go into private equity, hedge funds, or financial technology (fintech). Others have decided to use their hard-earned savings from their time in banking to launch their own business or pursue more creative endeavors.
It’s worth noting that as with any career option—especially one that requires as much commitment as investment banking—it’s a great idea to move beyond online research and hearsay, and actually talk to people who are, or have been, bankers. This will help ensure that you understand the current, ever-changing banking environment, the differences between career paths at various firms, and more.
Don’t know anyone? See below for networking tips to find and connect with the right people. The wealth of knowledge you’ll gain from just a handful of these conversations will not only equate to a deeper understanding of what the role entails and what it will mean for your lifestyle, but it will also help you feel more confident in your decision to pursue (or not pursue) this career path. Plus, you’ll be building relationships from the beginning!
Once you’ve gotten a better understanding of the investment banker role and career path—and are still an enthusiastic “Yes!” for this job—there are several steps you can take to actually make it happen.
The following steps are not meant to be followed in a linear way. They work best when done in tandem and consistently from the time you’re in school to when you land your internship and until you land your full-time banking job (and even beyond!).
1. Get the Right Education
In many professions, it’s common to have a degree in an unrelated field. That is definitely not the case in investment banking, where earning a four-year degree in finance, accounting, economics, or some other field with a quantitative and/or business focus is table stakes.
In such a highly competitive market, you’ll need to go beyond just solid grades to stand out. Here are a few ways to do so:
- Rank top of your class.
- Pursue a related minor (any of the above disciplines).
- Take additional classes (e.g. financial modeling).
- Obtain letters of recommendation from experts in the field.
- Go beyond undergraduate education to earn an advanced degree (e.g. master’s in finance or MBA) or get a Chartered Financial Analyst (CFA) designation. This last one is especially true for career changers who may not have earned a relevant undergraduate degree.
Beyond formal education it’s important to stay on top of industry news, markets, and trends. Great resources to have on your daily reading list include DealBook, The Financial Times, The Wall Street Journal, and MarketWatch.
2. Secure an Internship (or Two or Three)
In addition to having the right education, it’s important to get hands-on experience through an internship, which will not only be a training ground and help build your resume, but will also give you a taste of what it’s like working in an investment banking environment—and help you confirm that it’s right for you before investing any more time, energy, and money.
If you do a stellar job and make a great impression, your internship may very well be your gateway into a full-time role. Working efficiently, meeting deadlines, handling criticism well, avoiding mistakes on even the most tedious tasks, and showing you’re a team player are all a given. And beyond that, the relationships you build are just as, if not more, important than the experience you’ll gain.
Depending on the firm and project, internships can range in length from as little as three months to as much as two years. Many banks start recruiting over a year before their summer internships begin (e.g. February of this year for next summer). Because of the long timeline, you’ll want to secure a more general finance internship in the summer after your first year of college, but even before that begins, it is advisable to lock down your banking internship for the summer after your second year. This is why networking from day one is a must.
3. Always Be Networking
Savvy future bankers network from the very beginning of their school career and make it a part of their normal routines. There are a lot of ways to grow your network and strategically connect with those at your top firms. Be sure to leverage campus recruiting events, your school’s alumni, connections you make through your internship(s), industry groups, and even online platforms like LinkedIn.
Networking doesn’t have to be hard or awkward. The goal is to learn and to build a relationship—not ask for a job right out of the gate. A simple way to start is to focus on professionals that are at your target firms and ask to connect with a note that shares a little about you and why you’d like to talk.
From there, take it to a conversation, informational interview style. After that initial conversation, keep in touch and find ways to add value—whether through sharing an industry event, a new resource, or even something related to a personal fact you learned about them in your conversation.
This advice holds true even if you’re from a top-tier school. Between the impact COVID-19 has had on in-person meetings and a long overdue focus on diversity, gone are the days when coming from a top school made you a shoo-in for the job. “Without the constraints of physically being able to only go to a limited number of campuses, firms are considering candidates from a broader set of schools,” says Matthew Spencer, former banker and Chief Human Capital Officer at Houlihan Lokey who went on to become the cofounder of Suited, Inc., an A.I.-powered assessment-driven recruiting network. “Additionally, the increased focus on hiring a diverse pool of candidates is causing firms to break from the way they have always recruited.”
Translation: While it’s great that more students will have access to these opportunities, that means networking will be even more important than before.
4. Build an Aligned, Banking-Specific Online Presence
In today’s world where everyone Googles you before you have a conversation, it’s important to make sure your online presence precedes you well. It is your responsibility to show—both through your conversations and through what people find out about you online—that you’re the perfect fit for an investment banking role at your desired firms.
Online presence includes everything someone finds about you online, including social media (yep, even your personal accounts if they’re not private) and your website or blog, if you have one. For investment bankers, I recommend starting with LinkedIn. The key is to think of your profile page as your online billboard to land the job. (New to LinkedIn, or haven’t touched your profile in ages? You can access a free training here.)
Building your online presence starts with listing your education, internship(s), relevant projects, and volunteer work. Beyond the basics, it’s important to take the time to craft your career story, or personal brand—how you connect the dots of your education, skills, unique background, etc. to demonstrate the value you add and what differentiates you from other aspiring bankers.
Taking the time to intentionally and strategically present yourself online will also help in your networking, because doing so forces you to really think about—and clearly articulate—why you’re drawn to banking, what you’ve done so far to get there, and how you’re addressing any perceived gaps in education and experience.
Want to stand out even more? Be part of the conversation! Share banking and finance-relevant articles and conversation topics a couple times a week to further establish yourself as a leader among your peers and stay top of mind for all those amazing connections you’re making. This might mean posting a recent WSJ article with a comment on LinkedIn or even just sharing and commenting on a tweet from your favorite investment banking mogul.
5. Repeat and Refine as You Go
As you make networking a normal part of your routine, you will gain clarity around the firms you’re interested in and the type of investment banking work you want to do. You’ll also learn how your story (the way you talk about yourself) and online presence are landing with recruiters and future employers and perhaps what training or experience you’re missing that would make you an even better candidate. You can use this newfound clarity to adjust and refine your strategy and get even more targeted in your networking.
It’s also worth noting that it pays to stay open to alternative pathways to investment banking. “For candidates who have done all of these things and are still having a hard time, it may be helpful to begin looking at tangential industries, trying to get as close to the transactions as possible,” Spencer says. “For example, transaction advisory services involve conducting due diligence accounting and valuation services to support mergers and acquisitions transactions. Interning in these practice areas will actually prepare you quite a bit for a future role in investment banking.”
Keep working the process in this way until you land the internship or full-time job you’re after. Then it’s time to celebrate and get in some rest and relaxation before you start the wild and rewarding ride that is investment banking.