Investment banking career overview
The investment banking division (IBD) of an investment bank helps governments, corporations, and institutions raise capital and complete mergers and acquisitions (M&A). An investment banking career is extremely demanding with analysts frequently working 100 hour weeks. The competition for positions is intense, compensation is very high, and the work is very high profile. The tradeoff, however, is long hours, a military-like culture and a lot of grunt work.
The IBD of the bank is further divided into industry groups, such as the TMT investment banking group.
Personality in investment banking
- Highly ambitious
- Detail oriented
- Polished and presentable
See how the equity research field contrasts with IB.
Interview preparation is essential for landing an investment banking career. We’ve outlined several important steps to prepare for an interview in our guide to getting a job in IB, and have also provided an example of a real interview form used by an investment bank to hire analysts. Common questions include how would you value a business, walk me through the three financial statements, and how would you build a DCF model? It’s also common to be asked why you want to work in investment banking.
There are two main entry points into investment banking: analyst and associate.
Analysts are recruited from undergraduate (B.Com or B.A.) programs at target schools, or other highly regarded universities. An analyst is typically expected to stay for 2 to 3 years at which point they will either be promoted, go back to business school, or move on to something else.
Associates are recruited from MBA and/or other graduate student programs. Strong analysts can be promoted to associate roles, but typically analysts will be required to go back to school before being promoted. Associates have similar responsibilities as analysts but take on more responsibility quickly and are on the fast track for promotion. Both roles require extensive financial modeling and presentation building skills.
Analysts or associates typically go on to work in private equity (“PE”), equity research, in-house at a corporate, or do something entirely different. Most investment bankers dream of “graduating” to PE, and the banks are natural feeder systems for these firms. Corporate development (“corp dev”) is a pleasant stepping stone from IB and provides exposure to similar transactions, on the client side.
Financial Modeling Skills
Analysts and associates working in the IBD of a bank will spend a lot of time building financial models in Excel. Common examples of the types of financial models include three statement models, DCF models, M&A models, LBO models, and more.
The image above is from CFI’s Financial Modeling Courses.
Investment banking compensation
Below is a guideline of how much you can earn in IB. It should be noted that there can be a wide range based on the bank, the year, and the city you’re working in.
- Analyst: $100,000 to $150,000 (base salary plus bonus)
- Associate: $150,000 to $300,000 (base salary plus bonus)
- VP/Director/MD: $300,000 to $1,000,000+
For more information we have published a separate page on investment banking salaries.
Career prep for investment banking
Taking investment banking courses can be an invaluable way to learn what’s required on the job, before you get hired.
It’s important to start with a solid understanding of accounting fundamentals. Next, you should have a solid Excel crash course under your belt, which will teach you the basics including shortcuts, formulas, and functions. From there you can progress to financial modeling courses, which will be the basis of your day to day job in IB. By taking a few courses you’ll learn about various industries and see different types of model. If you want to save money, your best bet is CFI’s Full Access Bundle.