Buy Side Vs Sell Side
Investment bankers work for many types of investment banking companies, ranging from bulge bracket global banks to boutique investing firms. These banks have two main functions: a sell side and a buy side.
Investment bankers are best known for the part of their business that sells securities, or the sell-side, says Johnson. This function of the investment bank is responsible for finding investors to buy the securities being sold, which raises the money needed by businesses and governments to grow and prosper.
On the buy side, investment bankers assist in advising purchasing and transactions. Johnson continues, Serving in its role on the buy side, the investment bank can offer suggestions to large institutional investors like mutual funds, pension plans, or endowments on which securities may be appropriate for it to buy in order to meet its return targets.
How Do I Become An Investment Banker
Investment bankers lead an exciting life that not everyone can handle. The life of an investment banker can also be very high-strung and stressful, as investment bankers must closely analyze stock prices to make decisions in mere seconds. Buying or selling shares of stock in mere moments is the task of any investment banker, because his or her job is to increase the value of a clients portfolio. The investment banker earns a percentage of the increase in earnings of any portfolio, so it is in the bankers best interest to increase the value to its maximum amount. The major cities to be an investment banker in are New York City, Chicago, Miami and Los Angeles. Maybe you have wondered, How do I become an investment banker? When you want to become an investment banker, it is essential for you to invest in your education and make as many connections as possible in the banking world.
Whats it like to be an investment banker?
Education Requirements
Salary & How to Get a Job
References:
Pursue An Investment Banking Course
There are several institutes which help candidates in learning the core of investment Banking. They help candidates from scratch of learning the nuances of Investment Banking till the time of securing a high profile job in the same industry.
The WallStreet School is one of those institutes. It has designed a course specifically for budding students who are aspiring to enter into Investment Banking Industry.
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How Much Money Do Investment Bankers Make A Year
The is â¹5,97,078 per year. Your salary may vary depending on your location, experience and other factors. Generally, investment bankers who have graduated from prestigious colleges or work in large banks may have higher base salaries and receive good bonuses.
Please note that none of the companies mentioned in this article are affiliated with Indeed.
Salary figures reflect data listed on Indeed Salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate’s experience, academic background and location.
You Had An Internship Last Summer That Was Somewhat Related To Investment Banking
If youre in this bucket, you might have had an internship in something closely related to investment banking like equity research, private equity, a hedge fund, credit analysis, etc.
So you still have a chance.
If you were lucky, maybe you got an offer to stay on full-time.
If its a buy-side gig, you did great and should just hop right to the buy-side. No need for investment banking at that point unless you want to work for one of the bigger private equity firms or hedge funds.
For now, just keep that offer in the back of your pocket and keep your options open.
You can try applying to some of the full-time bulge bracket positions, but that might be tough. Its a competitive career path.
If you network well enough, you should be able to get into boutique investment banks.
Worst case, you take a job in a field somewhat related to investment banking like I mentioned in the previous sub-segment. If so, you have a good shot of transitioning into a banking after a year or two of experience.
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What Is Investment Banking
Investment banking is a service in which a financial institution helps an organization get capital. Investment banks primarily underwrite debt and equity securities for companies in the form of stocks, bonds, or options. They manage the relationship between a company and its investors and advise clients on how to navigate business negotiations, mergers and acquisitions, and other large, complex financial transactions. They are also responsible for identifying risks based on the economic climate, meeting legal requirements, and saving the company money. Overall, investment bankers aid businesses in managing their finances, obtaining funds for large projects, and earning profits.
Related:
You Still Have No Internship Or No Relevant Experience
If youre in this bucket, you clearly slacked off really hard, or maybe had some personal / family issues that set you back.
So the first question is:
Are you sure you really want to become an investment banker?
Lets be real for a second:
Its going to be dramatically harder to get in at this point. Unless you are extremely proficient with the technical work and have a decent GPA, its going to take a lot of work.
Heres a quote of a great example that happened:
It seems unbelievable, but most of the resumes we got were poorly formatted and had typos. What are they thinking? Also, it was shocking to me how many people had no idea about basic business and accounting concepts like enterprise value and working capital. Even more shocking was how many students claimed their ignorance was understandable because their university did not have a business program.
Point being that if youre incapable of doing something like making your resume look pretty for investment banks and have no clue about even the simplest technical questions, youre in trouble.
So lets segment one more time:
If you have the knowledge, theres still a chance you could potentially land something at boutique investment banks out of school.
You still need something to add to your resume to prove you have that knowledge though. If you do actually know your stuff, Id assume you have something to put there.
Heres what Id recommend doing:
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Learn What The Recruiters Want
Traditional investment bank recruiting has generally focused on business and finance majors from top schools. But in recent years, the recruiting process has been diverse. Finding talented candidates from a wide range of schools and majors is the custom.
However, the candidate must still be able to show a strong interest in financial services and a complete understanding of the field. It should reflect the class or project.
Hopefully, you have an answer to your question, How to become an investment banker? But, are you aware that you can also get a job having no degree.
If you do not have a degree, you can still have a career as an investment banker. You have to:
Who Is An Investment Banker
An investment banker is a finance expert who manages the finances and investment decisions of a company, a bank, or a financial institute. It is one of those professions where merely having a degree does not suffice you need a knack for numbers and real-life experience. The job role incorporates duties like raising capital, administer securities, investments, and fundraising from the capital markets. Investment bankers also create vital financial strategies for mergers and acquisitions and asset management.
On the whole, an investment banker is responsible for most of the finance manager for an organisation. Their key goal is to raise the required funds for operations and growth, make investments and assure financial security, and improve the overall financial portfolio of the company. However, investment bankers are not liable for any decision-making they act as expert financial guides to the senior management.
Thus, investment bankers must possess a mélange of attributes, including the right educational qualifications, skill-set, foresight, network, and a tad more than sheer luck to succeed.
There are certain hard skills that are required to be an investment banker-
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Consider A Graduate Degree Or Mba
Many investment bankers complete their master’s degree in a financial field, including business administration, corporate finance or related financial fields. While you can enter this field as a financial analyst at an investment bank, many employers prefer associate bankers and others in mid-level roles to hold graduate degrees.
Do your research to find which graduate schools have a high hiring rate for their graduates. They have strong internships and networking already in place, so take advantage of those. A lesser-known program will still provide you with a Masterâs of Business Administration or an advanced math degree, but it may not be as impressive to future employers.
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M& a Advising And Underwriting
These two sides of an investment bank manifest themselves in the two core responsibilities that an investment banker can undertake: mergers and acquisitions advising or underwriting.
Underwriting, a function of the sell side, involves raising money for investors and companies. On the other hand, M& A advising, a part of the buy side, is helping companies interested in buying another company and facilitating the transaction.
M& A advising and underwriting include specific tasks such as:
- IPO process: transitioning a private company into a publicly traded company
- Book building: the process of determining how much an IPO will be priced at by asking investors to submit bids
- Prospectus drafting: creating a document that details an investment offering, including the risks and objectives of the investment
- Issuing and selling securities: creating and marketing tradeable assets, like bonds, stocks, and options
- Equity research: analyzing market information to better inform investor decisions
- Asset management: controlling an institution or individuals assets and advising them on financial decisions
- Corporate restructuring: consulting a company on how to change their financial plan to increase capital
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So What Does An Investment Banker Actually Do
Rather than working with individuals, investment banks primarily work with large corporations and government agencies. The role of an investment bank is two-fold either selling or buying. On the sales side, investment banks help clients to sell securities, which is basically the catch-all term for any tradable financial asset, from banknotes to stocks or bonds. This is generally called underwriting, the fancy financial term for the process by which banks are able to raise investment capital.
When it comes to buying, investment banks will provide their clients with advice on opportunities for safe, efficient investments. Investment banks make their profits by either charging fees for this advice or earning a commission on the sale of securities. Investment banking is in some ways like consulting. Working in a team, youre responsible for helping a client make and implement a big financial decision.
Like so much of the finance world, investment banks now do more than ever before. Beyond their more traditional work in underwriting, investment banks will now also have teams supporting clients with mergers and acquisition, risk management, wealth management and proprietary trading .
As with all financial services, the success of an investment bank will be closely tied to the twists and turns of the global economy.
Study For An Investment Banking Degree
Employers dedicate sizeable resources to training their staff in this area, but a Bachelors degree is normally expected for most investment banking graduate jobs. While this doesn’t necessarily have to be in a finance-related subject, it should have a strong maths focus – in a subject such as economics or business/management. A grade of 2:1 or above is typically required by the top investment banks.
If you’re contemplating applying for university and are already set on a career in the financial markets, there are a number of options when it comes to specialist investment banker qualifications.
Firstly, there’s the three-year full-time BSc Finance at the University of Reading, which is an affiliated Chartered Financial Analyst programme. The London Institute of Banking & Finance offers the industry-recognised BSc Finance, Investment and Risk, as well as the BSc Banking and Finance, which includes an optional one-year industry placement.
The CFA Society of the UK offers the entry-level Certificate in Investment Management award, delivering the threshold competency knowledge in research analysis, portfolio management and other key investment activities. You can either do this Level 4 qualification through self-study and by registering for the IMC exam yourself, or through a recognised training provider such as BPP or Kaplan.
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Advantages Of Becoming An Investment Banker
As we mentioned before, investment banking is a lucrative career choice. This is the perfect fit for you if you can envision your typical day to look like this meeting with high profile clients, working on pitch books, preparing offers, running fiscal projections, and identifying newer avenues for wealth generation.
The average base salary for an Investment banker in India is 11,94,746. Investment bankers can expect a bonus of 40-80%, depending on their organisations financial performance per fiscal year. While the initial years in this profession are pretty rewarding, within 4-5 years, the potential of this job increases exponentially.
Aside from the immediate monetary benefits, there are several other advantages of becoming an investment banker.
Whats The Career Path Of An Investment Banker
Unlike in many professions, where a mid-career pivot is not unusual, the career path for an investment banker follows a more predictable 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 or a graduate degree for career changers 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 . After that, if you decide to stay in banking, the next step is vice president and then managing director.
If post associate role youre ready for something new, youve 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 . Others have decided to use their hard-earned savings from their time in banking to launch their own business or pursue more creative endeavors.
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What Qualifications Do I Need To Be An Investment Banker
Generally, you need at least a bachelor’s degree in finance, economics, accounting or business to get an entry-level position with an investment bank. You can improve your prospects with a master’s degree or a doctorate. It may also help to work on improving your communication and interpersonal skills.
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Investment Banking Managing Director
- Estimated Salary: £210,000+ in UK, $350,000+ in US
- Estimated Bonus: 100% to 200% of base salary
- Promotions: Can be promoted to head a product/sector group or to the company C-suite
- Exit Opportunities: Corporate Finance, Private Equity, Management Consulting, Hedge Funds, Venture Capital, FinTech, Entrepreneurship
To see how the team hierarchy works in practice and how the team interacts in an Investment Bank, access the free download to see a typical workflow when working on a Pitchbook. Directors may often ask their teams to put together a Pitchbook for an upcoming client meeting.
Note: Estimated salaries are subject to changing markets, and other factors e.g. bulge brackets tend to pay more than smaller boutiques.
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What Do Investment Bankers Do
Investment bankers and their peers in project management, venture capital and equity markets, tend to work in one of three big areas.
One of the biggest areas of investment banking is corporate finance. If a companys board decide the business would prosper by merging with another company, or acquiring it outright, they will need an investment banker to advise them.
Mergers and acquisitions can help a company increase its profits, protect its market share or diversify to ensure long-term growth or survival in changing market conditions. Investment bankers play a crucial role in actually managing the whole transaction process, from modelling the outcomes of potential deals to analysing the risks.
Other corporate investment banking specialisms include debt capital and equity capital. The former requires the investment banker to design and restructure a companys debt obligations in collaboration with lenders, credit rating agencies and other companies. The latter involves raising money for clients by issuing shares and sourcing buyers, either directly or through stock markets.
How To Become An Investment Banker In India
Investment Banking is one of the most trending term in the world of finance. Nowadays, many experienced professionals and graduates want to be an Investment Banker. It is one of the hardest, most lucrative and best paying jobs in the world.
As more and more people are aspiring to be an Investment Banker and jobs are limited in this domain, recruiters are picky and choosy in hiring the best talent. It makes slightly tough for any fresher to enter into this high profile industry.
Nonetheless, if you have analytical mind and you are very keen to make your career in Investment Banking then with the right education and right knowledge, you can successfully build your way in IB.
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Why Its Not Too Late To Get A Head Start On That Investment Banking Analyst Job
So if you read the first section as a freshman, and have transitioned into your sophomore year, great! Youre on track.
If youre a sophomore whos just getting started, thats okay, theres still plenty of time.
Read through the previous section on Freshman year, and make sure you start working on those tasks. You can easily catch up.
Sophomore year is, in my opinion, the most crucial year. Why?
Thats when you prepare to apply for the big investment banking internships for junior year summer.
Most investment banking blogs agree:
Summer internships are important because having one will dramatically increase your chances of getting full-time interviews and offers.
If the economy is bad, you might not even have a shot at full-time interviews if you havent had an internship and many bulge bracket investment banks fill their entire analyst classes with summer interns.
Even if the market is frothy, an internship still gives you a big advantage, and even more importantly, gives you more options than someone without an internship.
on your resume to help yourself stand out when you start applying for internships.
If you really want to become an investment banker, that experience is key.
The big bulge bracket investment banks open their applications in mid-July now. Its getting earlier and earlier every year.
This is what the investment banks will be looking at on your resume:
Heres how you should prioritize your sophomore year: