Is Investment Banking a Good Fit for You?
Answering the Fit question
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The Fit Question
Investment banking is an exciting and lucrative career, but it isn’t right for everyone. You may have a desire to earn over $100,000 a year as a first-year analyst in New York City, but you need to remember that investment banking is not just a high-paying job, but is also a high-stakes, high-pressure job. This guide will help you assess if investment banking is a good fit for you.
A survey carried out by a private equity recruitment firm found that 44% of graduates who joined the sector straight out of university left within three years. Some of these individuals may have left to join private equity firms, but the investment banking industry exacts a heavy physical and mental toll on its workers.
Many investment bankers are Type A personalities, which means they are ambitious and driven. Young bankers are inducted into a stressful lifestyle from the get-go. They are encouraged to work long hours with very little free time to fit in socializing or relaxation. Many turn to caffeine and drugs to help them cope. Alcohol abuse is also rife in the investment banking sector.
Investment banking is very well paid, but sign-on bonuses and a healthy pay packet come at a price. To survive as an investment banker, you need to have a high stress threshold. You also need to be willing to say goodbye to your social life for a few years.
What Skills and Traits Make a Good Fit?
To make sure you’re a good fit for investment banking, here is a list of traits that are considered important in the industry:
- Willingness to work extremely long hours (80+ per week)
- High attention to detail
- Ability to take direction well
- Team player
- Great at Excel, Word, and PowerPoint
- Strong accounting and finance knowledge
- Excellent financial modeling skills
Career Progression
The career progression in investment banking is as follows:
- Analyst
- Associate
- Vice President
- Director
- Managing DIrector
Learn more about how you might fit into the typical hierarchy in investment banking.
Undergraduates are typically recruited straight out of university into a two-year analyst training scheme. This is the most junior job in an investment bank and you can expect to be an analyst for two years. If you last for two years, the top analysts are asked to complete the third year. The cream of the crop is then promoted to associate level.
It is possible to jump straight into an Associate role at an investment bank, but you will need to have an MBA or be an MBA student. Most banks require that aspiring analysts with their eye on an associate role complete an MBA first.
Day-to-Day Life in Investment Banking
Analysts do most of the work in investment banking. Much of your workday will be spent putting together presentations for clients. This requires a lot of attention to detail and can be rather boring. You will also be asked (and expected!) to do admin work such as organizing conference calls and travel. Lastly, your job is to analyze data, so strong analytical skills are essential. Again, this can be very tedious, but it is an important part of your training.
Associates perform the same tasks as an analyst, but they are also expected to act as a conduit between senior bankers and analysts. Associates typically assign work to analysts and check the final work product.
Financial modeling skills, and being able to perform valuation analysis, is a major requirement for the job. Analysts and Associates must be willing to spend long hours in Excel, toiling away on spreadsheets.
Essential Qualities for an Investment Banker
Aside from a high tolerance for stress, you also need to have an aptitude for math and a keen interest in the financial markets. For example, if you’ve built financial models and attempted to value companies on your own, this will stand you in good stead at the interview stage.
Finally, would-be investment bankers need to be self-motivated, good communicators, natural leaders, and team players, too. You also need to have a strong sense of professionalism at all times.
Additional Resources
Thank you for reading the CFI guide to assessing if investment banking is a good fit for you. To keep learning and advancing your career, these additional resources will be helpful:
