Do you want to venture into investment banking? If this is your dream career, there are a few things you need to prepare yourself for.
Investment banking is a difficult career to get into. You need your college degree and determination to make the best of this difficult career path.
Is it worth it? Yes!
It’s a great job opportunity for analytical students with mathematical skills. But you must present an excellent brand in person and on paper to impress recruiters.
And that’s just enough to get you to the door.
You must remain dedicated to your work and be the best at what you do. After all, the positions available are inversely proportional to the number of applicants, which is understandable.
So, how hard is it to venture into investment banking? I’ll look into what it takes to pursue a career in investment banking.
Let’s dive in.
How to Get into Investment Banking?
There are four main ways to get you into investment banking:
- At undergraduate level
It’s the easiest way to enter the investment banking industry. However, you must decide as early as 1st or 2nd year of your college degree.
- As a recent graduate
Some graduates accept roles related to investment banking and then move to investment banking in due time. If your current job has nothing to do with investment banking, consider doing an MBA in finance.
- At MBA level
Maybe you became interested in investment banking after graduation. In that case, you may have to pursue an MBA program and use it to venture into the industry. It gives you a greater chance of getting an investment banking job.
- Beyond the MBA level
You might not have a decent chance of getting into investment banking if you’re above the MBA level. Also, a mid-level management position with more than ten years of experience doesn’t work in your favor.
The best option is to get promoted to a senior position and then try to switch to finance from that point.
Now you understand what qualifications you need to guarantee yourself a chance at investment banking. Next, I’ll cover the steps to help you find your way into the job of your dreams.
Steps to Finding Your Way into Investment Banking
Once you’ve figured out your path, here’s what you need to do to get into investment banking:
Step 1: Apply for internships or jobs
You must apply for internships or jobs related to investment banking. Breaking into investment banking without relevant experience is nearly impossible.
You need stepping-stone positions such as corporate banking and search funds to improve your profile.
Step 2: Write your story
When you have the needed experience, you’ll have to tailor your career story responding to the “Walk me through your resume” or “Tell us about yourself” questions in an interview. It’s the most crucial question in an interview and what you use when networking with other bankers.
Step 3: Craft a winning resume
Interviewers skim through your resume and identify:
- Your GPA score
- The university you attended to know how reputable it is
- Work experience and the reputation of organizations you’ve worked with
However you present your resume, ensure it sells you to your potential employer.
Step 4: Network to get offers
With relevant experience, an exciting story, and a good resume, the next best thing is to network for investment banking jobs.
Reaching out to alums at the start of the process is advisable.
Find them on your school’s database or Linkedin and email them to ask for advice on the recruitment process. Ideally, you should begin networking as soon as possible after graduating.
You must take those steps to succeed in the career your heart desires. Now let’s look into the roles you can assume working as an investment banker.
What Are the Different Types of Roles in Investment Banking?
There are several investment banking positions you can choose from. Some involve working directly with clients, while others are more analytical.
Tellers are the face of the bank. They are the first point of contact when customers enter an investment bank and possess customer service skills. Becoming a teller is easy with the right qualifications.
- Client associate
They track money movement and help with daily operations like managing schedules and filing documents.
Bankers oversee investment portfolio management and advise clients based on needs and risk tolerance. Becoming a banker and rising to managerial positions requires you to have a competitive edge.
- Branch manager
They manage bank operations and set up, train, and supervise all employees. They ensure all customers get high-quality customer service.
- Financial associate
They help customers settle on the best financial products. They know all areas of investment banking, including loan services and deposits.
They evaluate and analyze an investment bank’s financial performance. They examine market trends and make recommendations based on their findings.
- Portfolio analyst
They evaluate and analyze an investment bank’s stock portfolio. They focus mainly on potential stock purchases and sales analysis, including long and short trading.
- Financial planner
They help customers manage their money and perfect their financial plans. They use economics, financial, and communications skills to guide customers through all investment areas.
- Financial advisor
They provide financial advice and guidance to customers. They review portfolios, offer investment recommendations, and make other recommendations.
- Equity analyst
They evaluate an investment bank’s stock price and make recommendations. They research current market trends and review an organization’s financials to determine its worth.
They evaluate an investment bank’s financial position and prospects. They evaluate mergers, acquisitions, and other major transactions.
- Private equity associate
Assist clients in purchasing equity securities and advise them on the best investment strategy and structure.
Given the different roles available, you’re spoiled for choice and are at liberty to find the right fit.
Predictably, you’re bound to face challenges as you venture into this field. Let’s look into some of the challenges you’re likely to encounter.
What Are the Biggest Challenges Faced by Entry-Level Investment Bankers?
While investment banking is a prestigious career, here are some majorly known challenges you’re likely to face at entry-level:
- Having the right educational background
Although you don’t have to have a specific degree to qualify as an investment banker, most times, a degree and MBA in finance is most preferred.
Also, you need a solid resume to get into top investment banks like JP Morgan Chase and Morgan Stanley.
- Constant upskilling
The competition you’ll face when venturing into and growing in investment banking is very stiff. It’s beneficial to have investment banking qualifications such as a Certificate in Investment Management (IMC) and a Chartered Financial Analyst (CFA) program, among many others.
- Effective networking
The ratio of jobs available to the number of applicants isn’t favorable to entry-level investment bankers. Networking becomes crucial in securing a job, so you must go out there to meet people in the industry.
- Demanding schedule
Investment banking is notorious for its hectic and arduous hours.
Now you know what’s likely to hold you back as an entry-level investment banker. But I hope everything I’ve highlighted makes you better positioned to deal with the challenges.
Next, we look at the must-have technical skills necessary for investment banking.
What Kind of Technical Skills Are Necessary for Investment Banking?
To succeed in investment banking, you need the following technical skills:
- Proficiency in financial statement analysis
You’ll encounter financial statement analysis in investment banking. You need skills such as ROCE, ROE, cash conversion cycles, ratio analysis, horizontal analysis, etc., to tackle it.
- Valuation skills
You need valuation skills in various contexts, including mergers and acquisitions, capital budgeting, investment analysis, litigation, etc.
- Financial modeling
You need financial modeling skills that involve forecasting an organization’s future while performing scenario analysis.
- Proficiency in excel
An investment banking analyst spends 10-16 hours daily performing financial modeling, financial statement analysis, valuations, etc., on Excel. So, you must ensure you become an Excel expert.
With the skills above, you’re definitely a cut above most of your competitors. Now let’s look at the common mistakes to dodge when getting into investment banking.
What Common Mistakes to Avoid When Trying to Get Into Investment Banking?
Here are the most common poor decisions you’re likely to make when trying to get into investment banking:
- Not taking time to network
- Applying for jobs at the wrong investment banks
- Not having an edge above the rest
- Not dressing the part
- Not understanding numbers well
You now know what mistakes to avoid as you venture into investment banking.
If you have secured your first interview at an investment bank, here’s how you should prepare for the interview.
How Do I Prepare for Investment Banking Interviews, and What Can I Expect in Terms of Questions?
You must do a few things when preparing for investment banking interviews.
- Understand the interview process
- Research the firm
- Prepare answers to common behavioral, technical, and business sense questions
- Practice out loud
- Do mock interviews
Introductory interview questions to anticipate include:
- Walk me through your resume.
- Why investment banking?
- Tell me about financial statements and why they are important.
- What is enterprise value vs. equity value?
- What is EBITDA?
- What is an IPO?
You must research your potential employer thoroughly to know what to anticipate. You should attend an interview well-prepared to increase your chances of getting the job.
How Hard Is It to Get Into Investment Banking? – Frequently Asked Questions
1. How do I make my resume stand out when applying to investment banks?
Your resume is the first interaction with your potential employer with your greatest selling points. So, the best investment banking resume must have the following:
- Have a winning cover letter accompanying it
- Show relevant information in the education section (especially for beginners)
- Show your relevant skills
- Have a powerful job description section
- Present a strong summary or career objective
- Have an easily scannable layout
2. What is the competition like for jobs in investment banking?
There are high competition levels in investment banking jobs. You might experience increased pressure to perform exceptionally well because the remuneration rate in the industry is lucrative.
3. How difficult is it to break into investment banking without a finance degree?
Unlike other high-profile careers, investment banking doesn’t need a specific degree or a finance degree. A finance background may be helpful, but strong quantitative and excellent sales skills are more valuable.
However, transferable skills from degrees like mathematics, business, finance, and economics can give you an added advantage.
4. Are internships necessary to get into investment banking?
Yes, an internship is necessary if you desire to get into investment banking. Referred to as ‘summer analyst programs’ by banks, internships offer hands-on training, experience, and a greater understanding of what jobs in investment banking entail.
5. How can networking help me get into investment banking?
Networking helps you make a good impression, foster personal relationships, and demonstrate to other investment bankers and potential bosses that you understand your craft.
Always appreciate the power of networking because building strong relationships pays off in the long run.
6. How important is GPA when trying to get into investment banking?
Your GPA matters when trying to get into investment banking. Bulge bracket banks and almost all other investment banks look at your GPA when shortlisting you for an interview.
Investment banks screen resumes based on the GPA and overlook anyone with a GPA less than 3.5.
7. What is the typical hiring process for investment banks?
Generally, once you have applied for your investment banker position, the banks contact you for a short phone screen interview. It’s a 30-minute one-on-one conversation with an interviewer from the bank or a recruiting firm.
They ask questions about your background and interest in working for the firm, followed by technical questions. If successful, you get invited to a “Superday” interview at the bank.
Superday interviews are between three to seven back-to-back interviews with different interviewers from the bank. Each interview session has a different focus, and the interview timelines vary and may span from a few days to a month.
8. Are there any certifications that can help me stand out when applying to investment banks?
The hiring process in investment banking is formulaic. So, the key is understanding what it takes to go through the process. While getting into investment banking is challenging, you need the right personality to succeed.
You must be a tenacious go-getter ready to dedicate over 80 hours weekly to your job. Unrivaled interpersonal skills, with specific presentation and persuasion skills, will keep you on top of your game. In short, you must be able to sell sawdust to a sawmill.
Overall, investment banking jobs are elite and highly lucrative for those with the right educational background and personality.