What Does an Investment Banker Do? Your Answers Here
As more consumers continue to invest their money, analysts expect employment for investment bankers to grower higher than average at 25% through 2016. This is good news if this is a profession that interests you. In addition, the salary for an investment banker with less than one year of experience is around $75,000. That is based upon 2012 estimates, and it can vary depending on location, as well. You are probably wondering, what does an investment banker do?
Investment bankers should have strong interpersonal and communication skills. You are also expected to have a strong work ethic with the motivation for success. Investment bankers usually have a degree in business, finance or economics. Some employers prefer someone who has a Master of Business Administration. All investment bankers are subject to Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation. In addition, internships are beneficial as well as on-the-job training. Learn more by taking the Udemy course, Investment Banking – Industry Overview.
There are also exams that need to be taken and passed, such as the General Securities Registered Representative Examination, known as the Series 7 Exam and the Uniform Securities Agents State Law Examination, known as the Series 63 or 66 Examination. Most investment bankers have several licenses.
These are not traditional banks in the sense that they do not take deposits. The Dodd-Frank Act of 2010 requires a complete separation between investment banking and commercial banking. However, other industrialized countries do not always maintain as strict a separation.
If your company is involved in a merger or acquisition, an investment banker can usually offer advice and expertise. They also monitor the stock market to make suggestions for the best times to make a public stock offering. Moreover, if you need to raise debt or equity capital, they can help compile the best strategies for doing so. They help to move money from one holder to another. Of course, this is dependent on whether or not they believe your product or service is valuable enough to warrant investments.
Prepares Documents and Transactions
Investment bankers create documents to protect companies and their investors. These documents are called a private placement memorandum or PPM. They are legally designed to protect both sides from bad investments. Investment bankers also manage and execute transactions on behalf of clients. This can be an invaluable service for companies just starting out who can benefit from experienced guidance.
Ensures Government Compliance
Understanding all the legalese surrounding investments, mergers and acquisitions are enough to make your head spin. As a result, an investment banker can help to provide that all government regulations have been followed when raising capital or making filings. The last thing you want to do is violate any SEC or NASD rules, unknowingly. The consequences could be destabilizing.
Investment bankers also underwrite securities for corporations in financial markets. These securities can include stocks and bonds. They will work with your corporate team to select the securities that best fit your purposes.
Investment banking can provide for a very stressful work environment, but it also comes with a large amount of workplace satisfaction. Additionally, offices are usually very comfortable. Long hours, as well as nights and weekends, are not unheard of. In fact, they are quite common.
There is much pressure that comes along with larger mergers and acquisitions, as well as capital funding. Providing inaccurate analysis could be disastrous for a company and an investment banker’s career. Furthermore, clients can be located anywhere in the world so, travel is expected. However, once more experience is attained, the stress levels tend to decrease.
With great rewards, come great responsibility. Although investment banking is a lucrative, respected and sought-after career, it takes someone who can successful juggle multiple roles. Because you are dealing with diverse clients, you need to have a sales personality.
Yes, you are providing the expertise they seek, but you also have to do it with top notch customer service. Especially if you want them to come back or recommend you to their friends. You also have to be detail-oriented and have the ability to think quickly in order to handle complex mathematical and legal concepts.
Your job is to make as much money as possible for your firm. This means larger and more complex deals as you move forward with your career. Moreover, you are only as good as your last deal. It is crucial not to rest on your laurels. Investment banking is a fast-paced world. If you do not keep up, you will get left behind. You might handle millions or billions of dollars, which makes the stakes very high.
You should have excellent computer and typing skills. Having a comprehensive understanding of Excel spreadsheets and how to work with VBA macros is imperative. You might also need to have knowledge of various financial software and accounting programs to help you perform your role more efficiently. This can include stock tracking software and data analysis applications.
Where to Start
Even with an MBA, getting hired at a top-tier investment firm is highly competitive. Normally, investment bankers begin with internships. Once you get an internship, it is important to do your best and build relationships. Not to mention, you want to stay in touch with anyone you met during your internship, specifically if you hope to get hired for a full-time position.
Firms want to hire someone resilient. Clients will reject you, the will present objections. Investment banks want someone who can roll with the punches and keep moving forward. Not to mention, they want someone who can think outside the box without breaking any regulations. Lastly, a pleasant and friendly personality might help get you very far.
Once you have made it into the field, and have experienced some level of success, the job security is quite high. It is a good feeling to know that you can count on having this career for years to come. If you need help figuring out the stock market, you should check out Stock Market for Beginners. Learn to Trade. Here is another excellent course that would help with investment banking, Corporate Finance – Business Finance. To help you get ready for your interview, check out this article, Investment Banking Interview Questions and Answers.
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