Investment Banking as a Career
Are you considering a career in investment banking? Were you attracted by the swanky cars, lavish houses and the exuberant lifestyle shown in the movie wolf of wall street? You are not alone. Many people wish to become investment bankers due to the huge earning potential of an investment banker. A fresher in Investment Banking can easily earn anywhere between 3-6lakhs rupees per annum and even get three times the bonus of their salary. Business trips to exotic locations, flying in business class, staying in luxurious five-star hotels, meeting the top brass of companies and networking with highly influential and rich people are all perks of being an investment banker.
Getting hired as an investment banker
Entry into a career in investment banking has two options:
Analyst: Analysts usually have a bachelors degree in commerce or arts specializing in finance, economics, and commerce. Analysts are hired from the top colleges and after working as Analysts for two or three years they may get promoted as associates or return to college to get a masters degree
Associate: An associate will usually have a masters degree in finance from the top universities. Both associates and analysts will essentially be doing the same work but associates will be taking up more responsibility sooner and will be on a fast track path to promotions and higher bonuses.
To become an investment banker you need to be extremely smart but not in the academic sense. Even though you have scored above 90% in your bachelors and masters in finance you need to be well versed with your stuff and the current affairs of the world. You need to work hard and work smart in order to grow as an investment banker.
- You need to have a clear vision. Unless you have a clear vision all your efforts will be used as stepping stone to someone else’s success. So it is important to have clarity of what you are doing and where it will take you.
- You need to be highly ambitious. It is all about the money when it comes to working as an investment banker. You work for money where you deal with other people’s money to make it make more money. Unless you are motivated by money you will surely find investment banking dreadful
- You should be disciplined and detail oriented. As you will be dealing with the stakes of huge companies every minute detail of the company or offer will have to be pored over in detail to minimize the risks.
- You need to be well groomed. This is extremely important part of being an investment banker. You should look at your presentable best on all occasions. Your job profile requires you to work with the world’s richest people. Unless you show class in your dressing style, your behavior, overall demeanor and share their culture they will not be comfortable in trusting you with their money.
What do investment bankers do?
To put it simply investment bankers is a fancy term to describe financial advisors. An investment banker can give financial advice to individuals, corporates, and the government in all their financial decisions.
- Issuing Bonds
- Initial Public Offerings
- Institutional investor offering (Private placement)
If a company or the government wants to raise some funds by issuing bonds then it is the job of the investment banker to work on how to issue the bond, pricing the bond and work with the Securities board and exchange board to release the bonds in such a way so as to raise maximum funds.
A company can also decide to raise funds via equity financing. It is then the job of an investment banker to create a prospectus to be presented to the public explaining about the company, it’s performance and creating the financial behavior of the company in layman’s terms so that the public is attracted to buy the issue. The investment banker has to price the issue in a very attractive manner. Not too high such that not enough shares are bought or not too low such that a huge part of the company is traded for fewer funds.
An investment banker can help the companies raise funds faster if the offer is made to institutional investors like an insurance company or a retirement fund.
Mergers and Acquisitions
Investment bankers play a crucial role in mergers and acquisitions. When a company is planning to acquire another company which is on offer then the investment banker will have to evaluate the company thoroughly to come up with the right price and also take into consideration the risk factors involved.
On the other hand when a company had put itself up for acquisition also an investment banker will have to evaluate the right highest price a company can secure for itself.
Adviser on equity investment
As an investment banker, you will have to give advice to your clients on good investment options in the equity sector by buying the right shares at the right time and selling the shares which may be heading downwards and increase the profitability of their portfolio, essentially a stockbroker.
The Challenge to accelerate performance
Investment banking is a dog-eat-dog world. There is hardly any teamwork involved in investment banking so even though you will be dealing with clients and corporates you will essentially be all by yourself when it comes to executing the work. The bonus you earn will depend on how much you have contributed to the profitability and hence each person tries to land the best client and the most lucrative deal making it a ruthless and highly competitive environment. Investment banking is also a 24/7 type of a job as they say that money never sleeps. Since you will be dealing with high profile clients they will demand your attention and availability when they need your advice.
Investment banking is not everyone’s cup of tea. It certainly requires you to be good with numbers and have excellent interpersonal skills. Along with a zeal to work hard if you approach
investment banking with the right attitude then you can earn lots of money, enjoy exotic trips , fly business class and stay in luxurious hotels which are all part of being an investment banker.