{"id":1136,"date":"2022-08-26T16:38:45","date_gmt":"2022-08-26T16:38:45","guid":{"rendered":"https:\/\/theforage.wpengine.com\/?p=1136"},"modified":"2024-07-23T13:01:21","modified_gmt":"2024-07-23T17:01:21","slug":"investment-banking-career-path","status":"publish","type":"post","link":"https:\/\/theforage.wpengine.com\/careers\/investment-banking-career-path","title":{"rendered":"Is Investment Banking a Good Career Path?"},"content":{"rendered":"\n

The investment banking career path can be rewarding, profitable, and challenging. In general, going into investment banking<\/a> can be a great choice if you love crunching numbers, working with clients, and helping others accomplish big (expensive) goals. Plus, working a few years in investment banking<\/a> can open up many job opportunities in other areas of financial services<\/a>, making it an appealing choice for those interested in a long-term career in finance<\/a>.<\/p>\n\n\n\n

What Is Investment Banking?<\/h2>\n\n\n\n

Investment banking is a branch of banking that involves raising money for large companies, governments, and investors. Investment banking companies<\/a> work to raise capital for their clients and assist in large corporate transactions, like mergers and acquisitions (M&As)<\/a> and initial public offerings (IPOs)<\/a>. The key player in an investment bank is the investment banker, a specialized type of financial analyst.<\/a> These bankers connect buyers and sellers, find ways to make their clients money, and perform in-depth research<\/a> to inform investing decisions for the bank and its clients. <\/p>\n\n\n\n

Investment bankers aren’t the only employees at these banks, though. Other roles include accountants<\/a>, actuaries<\/a>, brokers<\/a>, and investment managers<\/a>, as well as support roles in human resources, legal, and office management.<\/p>\n\n\n\n\t

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\n\t\t\t\t\t\"J.P.Morgan\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

JPMorgan Investment Banking<\/h2>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

Explore a day in the life of an investment banker and master in-demand skills with this free job simulation from JPMorgan. <\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t
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\n\t\t\t\t\t\tAvg. Time:<\/span>\n\t\t\t\t\t\t3 to 4 hours\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\tSkills you’ll build:<\/span>\n\t\t\t\t\t\tM&A screening, company analysis, financial modeling, DCF analysis, presentations, communication\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t<\/div>\n\t<\/div>\n\n\n\n\n

What Does Investment Banking Pay?<\/h2>\n\n\n\n

Investment banking is an industry focused on making clients money, so it makes sense that investment bankers also make a lot of money. The U.S. Bureau of Labor Statistics (BLS) reports that financial analysts<\/a> make an average of $112,950 per year<\/a>. However, investment bankers are just one type of financial analyst. Ultimately, salaries for these bankers can range from $80,000 to over $200,000 depending on the location, company, and level of experience. <\/p>\n\n\n\n

Compensation for investment bankers usually includes base salary, year-end performance bonuses, signing bonuses, stock-based bonuses, and stub-bonuses, which are a portion of the overall yearly bonus given to people who start mid-way through a fiscal year. <\/p>\n\n\n\n

Additionally, big banks, like JPMorgan<\/a> and Goldman Sachs<\/a>, typically offer high base salaries to attract top employees. For example, first-year investment banking analysts at many of the top banks are reported to have a base salary of $110,000<\/a>. <\/p>\n\n\n\n

Other roles at investment banks, like accountants, often have high salaries, too. Accountants and auditors make an average of $90,780 per year<\/a>, according to the BLS. <\/p>\n\n\n\n

>>MORE:<\/strong> Explore the best paying jobs at major banks for 2026<\/a>.<\/p>\n\n\n\n\t

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\n\t\t\t\t\t\"Citibank,\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

Citi Investment Banking<\/h2>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

See if you have what it takes to work in investment banking at one of the top banks in the world with this free job simulation from Citi.<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\t\t\tSkills you’ll build:<\/span>\n\t\t\t\t\t\tPowerPoint, enterprise value, company research, Excel, financial modeling, forecasting, valuation, comparison analysis, critical thinking, reading comprehension\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t<\/div>\n\t<\/div>\n\n\n\n\n

What Is the Investment Banking Career Path?<\/h2>\n\n\n\n

Entry-level investment banking positions require a bachelor’s degree, usually in a finance<\/a> or economics<\/a>-focused field. To move up the ranks of the investment banking career path, you may need a master in business administration (MBA) or specialized higher degree in something related to corporate finance. <\/p>\n\n\n\n

Many investment bankers begin with an internship<\/a> at an investment banking company, after which they may obtain a full-time offer and start as a full-time analyst after graduation. While you may qualify for an entry-level analyst role without an internship, internships are all but required for many companies, especially the top firms.<\/p>\n\n\n\n

>>MORE:<\/strong> Learn how to land an investment banking internship<\/a>. <\/p>\n\n\n\n

Beyond education or internships, the key to landing a job in investment banking is having core investment banking skills<\/a>, including financial modeling and business valuation<\/a> methods, like discounted cash flow (DCF) analysis<\/a>.<\/p>\n\n\n\n

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Prep for Superday<\/h2>\n\n\n\n

Get interview ready with our guide to Superday!<\/p>\n\n\n\n

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Get started<\/a><\/div>\n<\/div>\n<\/div>\n\n\n\n

Investment Banking Career Progression<\/h3>\n\n\n\n

Titles and levels may vary by company, but the progression through an investment banking career generally involves the following roles:<\/p>\n\n\n\n

Interns<\/strong> 
Since the point of an internship is to learn and gain experience, interns follow analysts and associates and support them in their day-to-day duties. Some interns may help create presentations or financial models alongside an analyst.<\/p>\n\n\n\n

Analysts<\/strong>
Analysts handle a lot of presentation and Excel<\/a> work, supporting higher-ups in their efforts to win clients and close deals. As an analyst, you’d typically stay in this role for two to three years before being promoted or transitioning out of investment banking.<\/p>\n\n\n\n


>>MORE:<\/strong> Kick-start your career with the top investment banking job simulations on Forage<\/a>.<\/p>\n\n\n\n

Associates<\/strong>
Associates do similar work as analysts but have more responsibility (and pressure) to ensure everything runs smoothly. Outside of work, associates also often work on getting their master in business administration (MBA), so they’re in a better position for a promotion or moving into a more niche area of finance. <\/p>\n\n\n\n

Vice Presidents (VPs)<\/strong>
Vice presidents have more responsibility and more contact with clients. They need to balance their time between clients and being in charge of the analysts and associates below them, on top of pitching potential clients and managing deals. After three to four years of outstanding performance, VPs can be promoted or head-hunted to a more specialized position in finance, such as hedge fund management or private equity<\/a>.<\/p>\n\n\n\n

>>MORE:<\/strong>Private equity vs. investment banking \u2014 what’s the difference?<\/a><\/p>\n\n\n\n

Managing Directors (MDs)<\/strong>
Managing directors are the head of the team, and their only job is to make the bank and its clients money. They spend their days identifying potential clients, winning them over, and maintaining existing client relationships. The managing director assigns work to the lower positions and ensures that everything is done to keep clients happy. <\/p>\n\n\n\n\t

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\n\t\t\t\t\t\"Working\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

Bank of America Investment Banking<\/h2>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

Explore a career in investment banking with this free job simulation from Bank of America.<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t
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\n\t\t\t\t\t\tAvg. Time:<\/span>\n\t\t\t\t\t\t4 to 5 hours\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\tSkills you’ll build:<\/span>\n\t\t\t\t\t\tSWOT analysis, financial analysis, M&A screening, cross-team collaboration, ECM\/DCM, financial modeling, DCF, valuation, communication, presentation\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t<\/div>\n\t<\/div>\n\n\n\n\n

Pros and Cons of Investment Banking<\/h2>\n\n\n\n
Pros<\/strong><\/th>Cons<\/strong><\/th><\/tr><\/thead>
Good compensation packages<\/td>Long hours<\/td><\/tr>
Transferable skills<\/td>Stressful environment<\/td><\/tr>
Opportunities for growth<\/td>Competitive industry<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Pros<\/h3>\n\n\n\n

The biggest positive to the investment banking career path is how quickly you gain experience. Investment banking hours<\/a> are long and challenging, but the knowledge you learn is invaluable. <\/p>\n\n\n\n

“Within your two years as an analyst and associate, you really build up some core business skills that will make you valuable as an employee forevermore,” says Chris LaFerla, founder and CEO at software company Tatem and a former investment banker. “From there, the career opportunities are wide open: You can move into investing (private equity, hedge funds, venture capital<\/a>) or go take a job as an operator, which is becoming more and more popular these days.” <\/p>\n\n\n\n

>>MORE:<\/strong> Learn the differences between private equity and venture capital<\/a>.<\/p>\n\n\n\n

Beyond solid compensation, investment banking can open a lot of opportunities and give you great networking<\/a> connections.<\/p>\n\n\n\n

Cons<\/h3>\n\n\n\n

Investment bankers often cite long working hours as the main downside. They can work anywhere from 60 to 100 hours per week, and sometimes more, working for days on end if a big project is in the works. <\/p>\n\n\n\n

“People talk about how hard it is, but prospective bankers cannot really understand what it’s like until you’re in the office on a Thursday night, sitting at your desk at 2 a.m., waiting for comments on a presentation you’ve been working on non-stop for three days, knowing that you have to wake up at 7 a.m. to be back in the office for any last-minute changes and do it all over again,” LaFerla notes.<\/p>\n\n\n\n

The field is also incredibly competitive. For example, CNBC reports<\/a> that for a 2021 investment banking internship program, JPMorgan received nearly 50,000 applicants with only 400 open positions. That’s an acceptance rate of less than 1%. The competitive nature of the industry, plus long hours, can create a stressful work environment.<\/p>\n\n\n\n\t

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\n\t\t\t\t\t\"J.P.Morgan\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

JPMorgan Quantitative Research<\/h2>\n\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

Explore one of the most challenging areas of investment banking with this free quant job simulation from JPMorgan.<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t
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\n\t\t\t\t\t\tAvg. Time:<\/span>\n\t\t\t\t\t\t6 to 7 hours\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\tSkills you’ll build:<\/span>\n\t\t\t\t\t\tProgramming, data analysis, Python, derivatives, critical thinking, statistics, credit, dynamic programming\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\n\t\t\t\t\t\t\tEnroll now\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t<\/div>\n\t<\/div>\n\n\n\n\n

Bottom Line: Is It a Good Career Path?<\/h2>\n\n\n\n

Investment banking is a good career path if you’re passionate about finance and willing to work hard. You make great money, learn useful and transferable skills<\/a>, and connect with real decision-makers. Investment banking is a highly competitive field to break into, but there are really only two things you need to get started:<\/p>\n\n\n\n

“Drive and determination,” says LaFerla. “The rest can be learned. But you need to be hungry, want to learn, and be willing to sacrifice other areas in your personal life for the first year or two to succeed.”<\/p>\n\n\n\n

Think investment banking may be the right career path for you? Learn the skills you need to succeed with Forage’s free<\/strong> banking and financial services job simulations<\/a>. <\/p>\n\n\n