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What Is Investment Banking?

Investment Banking

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Investment banking is the division of financial services that works to raise money for individual investors, large corporations and governments. These types of banks provide underwriting services to raise capital and aid in mergers and acquisitions (M&As). Essentially, an investment bank is a middle-man for big, complex financial transactions, and investment banking facilitates these transactions. 

In this guide, we’ll go over:

What Investment Banks Do

Large investment banking companies, middle market, and boutique investment banks provide investment banking services. These services include:  

  • Assisting in mergers and acquisitions (M&As) between companies
  • Underwriting or raising money for their clients through the sale of debt or other tradeable assets, like stocks or options 
  • Providing investment advice and management to clients ranging from individuals to government organizations 
  • Facilitating initial public offerings (IPOs), wherein a privately owned company wants to become publicly traded
  • Market research and analysis to better inform investment decisions for the bank itself and its clients 
  • Risk assessment and management to ensure the bank is making safe financial decisions and to help clients understand the risks they may face in certain economic decisions 

Investment banks are typically split into two main functions: a buy side and a sell side. The buy side is mainly concerned with offering investment advice, like helping a company buy another company or helping an institution decide where and how to invest their funds. On the other hand, the sell side handles the sales of securities, or tradeable assets, like stocks and options.  

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Careers in Investment Banking 

While investment bankers are the most well-known roles at an investment bank, there are many careers in investment banking that help to ensure the bank can accurately, safely, and efficiently raise capital for companies and governments. Some careers in investment banking are:

Investment bankers
Investment bankers raise capital and give advice about financial decisions — they work with clients to underwrite securities, source and organize M&As, and create financial models to inform their client’s decisions. 

Brokers act as intermediaries between buyers and sellers. For example, in investment banking, they aid in finding investors to buy securities. 

Actuaries analyze the risk involved in financial decisions and make predictions about how various situations could affect a company’s finances. 

Accountants track and report a company’s financial performance and business transactions. 

Investment managers
Investment managers advise clients on how to invest and manage their portfolios to maximize returns. 

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There are a variety of other career paths in investment banking that aren’t finance-specific, though. As with any large organization, banks need support staff like engineers and information technology specialists to keep things running smoothly. Banks also need office managers, secretaries, and assistants to facilitate office workflow.

How to Get Into Investment Banking

Education and Certifications

Most careers in investment banking require at least a bachelor’s degree, and having a degree in finance can be beneficial — finance degrees can offer an excellent foundation for the economic concepts you’d be handling in an investment banking career. Investment bankers, in particular, may also need a Master’s of Business Administration (MBA) to be able to rise up the ranks. 

Beyond education, though, many investment banking careers require or benefit from having specific certifications. For example:

  • Accountants often need to pass a certified public accountant (CPA) certification exam.
  • Investment bankers usually need a chartered financial analyst (CFA) certification.
  • Risk assessment and management roles may require financial risk management (FRM) certifications.


Licensing is also crucial in many finance careers because giving financial and market advice is a regulated profession. For those in investment banking, most of the licensing requirements are facilitated by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). They provide exams and licensing in areas like: 

  • Securities industry essentials (SIE Exam)
  • Investment company and variable contracts (Exam Series 6)
  • General securities sales (Exam Series 7)
  • Investment banking representative (Exam Series 79)
  • Compliance officers (Exam Series 23)

When working in an investment bank, you may be encouraged or required to take any number of FINRA exams to ensure you know your job’s rules and regulations. 

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A finance degree and certifications can be helpful, but they aren’t the end-all-be-all for working in investment banking. Much of the work these banks do daily is based on hard skills and can be learned! Investment banking skills include:

  • Financial modeling: using Excel to create models of how a company’s finance would look after certain economic decisions, like if the company bought another company
  • Discounted cash flow (DCF) analysis: a method of evaluating the value of an investment based on potential future returns 
  • Book-building: determining how much an initial public offering (IPO) can be priced based on bids from investors
  • Knowledge of different financial statements: Companies use several documents to show their finances, including income statements, balance sheets, and cash flow statements. 
  • Understanding debt capital markets: involves understanding the types of debt, present and future value, project finance, and leveraged finance  

Thinking about a career in investment banking? Learn the skills you’ll need to succeed using Forage’s Investment Banking Skills Passport.

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