The primary objective of an investment bank serves to underwrite new securities issued by its clients. Apart from that, it can provide other services as well, such as mergers and acquisitions advice, private wealth management, and many types of professional help.
An investment banking career is a difficult one. You need college degrees, extracurricular activities, and determination to make the best out of a difficult job. On top of that, it also requires dedication and being the best at what you do because the number of posts is inversely proportional to the number of applicants.
However, it's one of the most rewarding jobs out there, not only in the finance sector but on the whole as well. It's extremely well paid and will bring you a lot of satisfaction. To help you, here is your definitive guide on how to get into investment banking.
When applying for a job with an investment bank, it's good to know right off the bat what departments there are. Your job tasks, working hours, and salary will all differ depending on the department you are in. Here are what they are.
There is also a metric used to divide investment banks among themselves, called a 'tier.' Building on it, there are 'tier 1' and 'tier 2' investment banks.
The distinction is usually made by how big they are. The big banks, also called bulge bracket firms, are included in the first tier, while every other bank falls into the second category.
Here is a detailed description of the difference between bulge and boutique bracket investment banks, as provided by mergersandincquisitions.com.
In short, the Bulge Bracket is a term used to define huge banks. They are:
On specification is required here, though – tiering only applies to these types of banks, but not specialist small ones or fund managers.
Investment bankers and financial analyst careers are structured. As far as investment banks go, there are three departments.
a. Front office
This is considered to be the role that generates all the revenue in a bank. It comprises two main areas:
Investment banking - since the main job of an investment bank is to give financial advice to its clients – largest organizations in the world – and since the people that do that can be found in the front office, you can understand why it's the most important cog in the mechanism. It's also the most prestigious department in any bank and the one that generates the highest salaries.
Markets are further on split into the subcategories mentioned above. Even though an average investment banker will make a lot more than an average trader, the best trader will still make a lot more than the best investment banker there is.
b. Middle office
Here you can find the risk management jobs. The middle office analyses and evaluates the risks taken by the front office employees. They do that by imposing some limits on them, such as giving them access to limited funds to trade with. It's considered to comprise more cost-cutting roles.
c. Back office
This department includes mostly operational roles. It also houses the technology division. The employees here do transfers daily and generally, make sure there are no errors in all the processes.
As shown above, investment banking comprises a series of departments, sub-departments, roles, and positions. Given they are different, they each require a special set of skills and academic background.
Therefore, it's possible to enter an investment bank as an employee following a series of studies. Examples include Finance and Economics, Politics, and even Geography.
Finance and Sales positions incorporate tend to accept all sorts of degrees, even Arts.
In the same way, trading and quant positions will require you to have a strong mathematical background. This means your degree should say Mathematics, Economics, Physics, Chemistry, Business Studies, Engineering, and evidently, Accounting and Finance.
As far as degree classifications go, all the banks usually expect you to have achieved 2.1 honors, no matter the discipline. However, preference will be given to top-class graduates, so make sure to study hard and finish first or second.
It's a known fact that top tier banks hire the most outstanding individuals.
This extends to academia as well. The better you were in college, the more likely you are to secure a position with one of the best banks out there.
Having cleared up the requirements, let's delve further into how you can get into an investment bank as far as education goes.
Read on to see what you need to do if you have no experience, no internship, no finance degree, if you want to do it after your MBA, or if you have a degree such as engineering.
This is a very delicate subject in the world of investment banking. The reason is that there are very few entry-level positions available at all times on this market and that 'no experience' has double entendre.
As far as entry-level positions go, this is terrible news. There are less than 20 000 job openings for beginners every year globally.
This is a staggeringly low number when you also find out that there are usually ten times more applicants than jobs. That means nine other people are competing for the job you want. Being the best suddenly makes a lot more sense in this context.
Apart from that, banks don't even advertise their jobs very much out in the open. First of all, because the investment banking world is a somewhat closed circuit and because they just don't have to.
Candidates come to them all the time in huge numbers. Another thing is that, if you're at the entry-level position, you probably won't get a job with one of the best banks.
As stated above, 'no experience' has a double entendre. Some applicants have come straight from the University.
They have studied in a related field, and they have probably, already done some internships and extracurricular activities while still in college. And then some have no experience.
Their diplomas come from different fields, and they haven't yet had any contact with this world.
The best idea here is for you to evaluate yourself as objectively and correctly as possible and see exactly where you stand as far as 'entry-level' goes. This will make it a lot easier to figure out your next steps.
Here are a few tips on how to land a job in investment banking when you have no experience.
As shown above, it's possible to get a job in investment banking even if you haven't graduated from a target school. Depending on the department, they open positions in, banks target all sorts of people. That's because some jobs in a bank require more skills than actual academic knowledge. So, what can you do to secure a job in investment without a finance diploma?
As an engineering graduate who wants to break into the world of financing, the most important thing is to know that you will be in a battle for that position, who are your opponents, what are their weaknesses and what are your strengths.
You will be going against the following categories:
But one major thing you need to bank on as a person with an engineering background is that none of these people can do math and numbers as well as you do. Therefore, when building your resume and applying for a job in an investment bank, stop focusing on the word 'engineer' and start focusing on what it represents. And that's a person who can crunch numbers like no one else.
Remember, your main challenge is your communication skills. Unfortunately, the world runs on the misconception that individuals who are good with numbers aren't good with people and the other way round. At the interview, make sure you show them you have real communication skills.
Do you have a shot at a job in an investment bank if you didn't go through an internship? Yes, you do.
You must understand from the beginning, though, that you will have a harder time than your fellow applicants. That's because, given they have college degrees, internships, and training to back them up; they're considered a safer investment. It's not impossible for you. Here are a few things you can do to up your chances and secure a job.
Another interesting question about the finance world is - will an MBA get you into investment banking? The answer is it will help, but it's not a golden ticket to it.
This means that you cannot and should not rely solely on your MBA degree. But it does help you a lot and here's how you can use it.
After detailing all aspects of education needed to secure a job in an investment job, here are a few pointers on top of that. They regard getting into a top-tiered bank, and the example we've chosen is Goldman Sachs.
As you can well see, investment banking is a fascinating field to work in. It will give you the chance to study, work hard, earn a lot of money, travel, and meet many interesting people. It's no wonder getting in is rather tricky!