Considering a Career in Investment Banking? Here’s What You Need to Know

Thinking about an investment banker career path? Today we’ll break down the steps you can take to become an investment banker as well as what it’s like to be one.

The Skills You’ll Need

Of all the skills needed for investment banking, the most important is a really strong understanding of economics. We’re not just talking about the basics of supply and demand. You’ll need to be good at recognising how everything from market shifts to government policy could affect your investments.

That’s not to say you’ll need to be an expert in macroeconomics. For the most part your economic knowledge just needs to be broad and well founded in principles.

Where you will need depth is in a few core skills. These include financial modelling, accounting, and valuation. Put simply, you’ll need to be very good at making sure that the numbers do add up and know what to look out for when things are not going to plan.

How To Become an Investment Banker

If you want to become an investment banker, the standard path is a banking degree followed by an apprenticeship at one of the major firms.

But can you become an investment banker without a degree?

While it is technically possible, it’s unlikely and you wouldn’t be able to follow anything like a conventional career path. The main firms like J.P. Morgan or Barclays simply won’t accept anyone without an undergraduate degree. This is because there is already high demand for jobs. They’ve got a lot of candidates to choose from who already have degrees.

That said, you might have some luck with smaller firms, especially if you have experience and connections.

The bottom line is that the degree isn’t a legal requirement, it’s just there to prove competency. If you can find a way to prove that by other means then there are firms that may take interest however gaining that experience without a degree is not easy. If you have the option and you want to become an investment banker, then a degree is an excellent investment in your future.

Does Investment Banking Pay Well

Yes.

An investment banker salary is among the highest in the corporate world, particularly at large global firms. At entry level, analysts in major financial hubs can expect a strong base salary plus performance based bonuses. As you progress through the investment baking career path your earning potential increases significantly.

All that said, it’s not just about experience. Location has a huge role to play as well. In cities like New York, you’re looking at the high six figures and even seven figures in the right year.

Of course that brings us to one of the major risks of the job which is instability. It’s important to understand that investment banking pay is heavily tied to performance. While performance is often the result of making good deals, there’s no getting around the fact that the markets will always have their say.

In strong markets, bonuses can dramatically increase total earnings. In slower years, pay may be more conservative. So although investment bankers do earn a lot, it’s very hard to make precise predictions.

What’s It Like to Be an Investment Banker?

The lifestyle of an investment banker is demanding. Long hours are standard, particularly during live deals. It’s not unusual for junior bankers to work between 70 and 100 hours in a week during busy periods. Weekends are often interrupted and tight deadlines are part of the culture.

All told, it’s not for the faint of heart. Stress is just a part of the lifestyle.

With all that said, it’s also a rapid learning curve and those who survive often thrive. Those first few years may be brutal but they’re when you’ll make the important contacts that you’ll need for the rest of your career. You’ll learn valuable lessons and you’ll be setting yourself up for an incredibly high earning career in the long run.