Investment Banking as a career post MBA
What is investment banking?
An investment bank is a firm that provides financial service, and undertakes financial transactions on behalf of individuals, corporations, or governments. It helps in wealth creation and growth through investment strategies and risk management. This constitutes, what is commonly known as the Investment Banking Division.
There are other divisions in an investment banking firm that include:
- Equity research
- Banking and asset management, etc.
What are the services under investment banking?
The primary services include:
- Arranging finance: providing guidance and help plan financing when an entity (business or government) needs capital
- Underwriting: it essentially entails buying stocks of the business they are working for and selling those to other investors
- Mergers and Acquisitions: helping organizations to acquire or merge with other businesses
- Trading: they help to buy and sell securities, private equity funds, insurances, hedge funds
There can be many different industry sub-groups in an Investment Banking Division. Some of these are:
- Financial institutions
- Real Estate
What are the traits necessary to be a successful investment banking professional?
To be able to successfully perform the responsibilities of an investment banker, a person must have working knowledge of:
- Financial modeling
- Business development,
- Relationship management, etc.
Four important personal traits necessary are:
- Strong analytical skills
- Communication skills
- Someone who pays attention to detail
- Someone with a likeable persona
Hierarchy in an investment bank
A typical investment banking career includes the following hierarchy:
- Investment Banking Analyst: It is a post-college but pre-MBA position. It involves creating and revising Excel models and presentations based on feedback from seniors
- Investment Banking Associate: A post-MBA position. It is the next level in the banking hierarchy. Associates build financial models and presentations and also supervise the work of the various analysts
- Vice President: An associate with 3-4 years experience gets promoted to this role. Their main focus is client interaction
- Senior Vice President: A VP with 3-4 years experience
- Managing Director: they maintain relationships with corporate clients and firms. They create and pitch ideas to these clients. Everyone else executes their ideas.
How to be an investment banker?
You should ideally be an MBA (with at least 3-5 years relevant experience) from some of the top MBA global schools with major in finance. Some of the top names are:
- London Business School
- Chicago Booth
- Berkeley Haas
- IIM Ahmedabad
Being an intern in a top firm also helps in gaining the necessary exposure for a stint in an investment bank. Most importantly, you should network a lot.
Which are the top investment banking firms?
- Goldman Sachs
- KKR Investment (Kohlberg Kravis Roberts)
- JP Morgan Chase
- Bank of America Merrill Lynch
- Morgan Stanley
- Credit Suisse
- Barclays Capital
What is the life of an investment banker?
The investment banking domain has many positives:
- You gain in-depth knowledge in business and finance
- It is financially highly rewarding
- You move up the hierarchy fast if you are a top performer
- You have excellent networking that you can leverage in case you want to shift careers
Though this is a domain that is professionally highly rewarding, it is one of the roles where there are very high levels of stress and very little personal time resulting is poor work-life balance.