Is Investment Banking a Good Fit for You?
Answering the Fit question
Answering 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 what you need to remember is that investment banking is 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 will have left to join private equity firms, but the industry exacts a heavy toll on the physical and mental health of 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 for 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.
To make sure you’re a good fit for investment banking, here is a list of traits that are important in the industry:
The career progression in investment banking is as follows:
Learn more about 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 will then be 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. Many banks also require that aspiring analysts with their eye on an associate role complete an MBA first.
Analysts do most of the work in investment banking. Much of your working day will be spent putting together presentations for clients. This requires a lot of attention to detail and is rather boring. You will also be asked 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.
Aside from a high tolerance to 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. You also need to have a strong sense of professionalism at all times.
Thank you for reading this 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:
Advance your career in investment banking, private equity, FP&A, treasury, corporate development and other areas of corporate finance.
Get certified as a financial analyst with CFI’s FMVA Program.