Investment banking is not a new career position. While it was one of the main corporate posts for two decades, the financial crisis in the late 2000s has made it recovering ever since. Although the market of corporate and enterprises’ financial development and meeting their investment needs is still on the rise, recently it is heading in the exceptionally right direction and now it is the best time to rise with it.
Therefore, if you’re seeing investment banking as a career, here are some basic things you should know about the industry and to help you understand the fundamentals of this career.
Nowadays, the summary of wholesale clients that want more sophisticated financial products than mere intermediating between them and investors is slightly shapeshifting the definition of job – to a more engaging and creative outlook.
Back in the day, investment banking was just a go-between government, corporations, and institutions that needed capital raising and investors who have the money to invest. Now, it can involve brokership, but also mergers and acquisitions, and offering general financial guidance to their clients.
Financial advising doesn’t just mean they help their clients boost money – there is also delivering stock, making sure bonds are buoyant, acquisition bargaining, or regulating the sale of the client’s company as well.
Financial Degree Doesn’t Matter
All this smart-talking in terms sounds like this job is reserved only for people from the finance field or anyone good with numbers and money but, very recently, it is discovered that students from non-target schools without perfect GPAs are actually battering Ivy League students. And if you’ve ever wondered how to become an investment banker, the odds are more than in your favor. These factors are valuable to consider, throughout your education, in order to smoothly step into investment banking:
- A network you build – the connections you make with high-ranking positions (peers, faculty professionals, managing directors, or vice presidents) in the industry.
- School you attend – sure, big investment banks only recruit from the best schools, but it doesn’t necessarily mean that you’re not going to be appreciated.
- Experience you gather – if you know how to do the job because you’ve done enough internships, it’s what officially counts.
- The resume you make – a properly structural, analytical, and investment-based resume that transmits the right information is a must.
In this industry, tenacity is key.
From working with major companies, or even governments to dealing with financial moguls – physical stamina is needed, but not as much as a mental one. The investment banker has to be persistent, accessible, enthusiastic, prompt, and sharp.
These merits are thought from the start – when looking for the job opportunity, all the researching, resuming, networking, building connections, teach patience and perseverance, while continuing the search and looking for a starting place.
Large companies, businesses, and even governments are trading and investing in each other, making something that is called “a global market”. And investment banking is swimmingly working its way between different currencies, investment regulations, and spending diversities.
Besides, if you enjoy traveling, foreign relations and generally working internationally, with different people, speaking different languages – this is definitely a positive feature and the right industry for you.
Support and Reliability
One of the associations with Wall Street is definitely corruption and unethical behavior and, although it cannot be completely averted, the majority of banks are now showing zero-tolerance to this kind of behavior. Seeing their candidate or employee is loyal and hardworking, building trust and support between their clients, has become the most important factor for them when hiring a candidate or moving them down the line of more important clients, cases, and professional advancement.
This practice is creating a much better work environment and getting more businesses to support and trust investment banking.
Flexible and Growing Industry
Investment banking is an industry, an area that has been around since the first need of negotiating between a retail demand and supply.
Recently, the industry has also experienced growth thanks to pandemics and increased wholesale needs. The adjustments to new job requirements such as adaptation to home working conditions, no on-location due diligence, virtually carried out tours, and remotely done negotiations… has just shown how much is investment banking a resilient industry and how it continues to grow.
Very often, there is a certain perplexity between investment banking and the investment banking division (IBD) but not only that those are different areas of the bank, but one has a more extensive range of services than the other. Although you can expect raising capital and assisting in the negotiation by any IBD, investment banks, on the other hand, offer:
- Increasing capital by selling stocks and bonds to buyers. This function, known as “underwriting”, serves the primary market.
- Negotiation of M&As (mergers and acquisitions) between the seller and investor, closely following the whole process.
- Sales and trading of the client’s own capital serves the second market.
- The “coverage” or equity research is based on researching the market and help investors to make investing decisions.
- Lastly, managing investments for a wide range of investors, or asset management.
Conflict of Interest
Since this industry is bound to have some kind of criticism and thanks to its very intermediary nature, the possibility for conflicts of interest is at the very center. How large corporations, brokerage firms, investment, and retail banks maintain confidentiality between the different sectors within them? By creating ethical boundaries between these departments.
The self-regulating business involves a literal virtual barrier expected to prevent the exchange of information between different units, especially if data is ethically or legally uncertain or controversial.
Unfortunately, the demographic structure of investment banking was, and still is, overshadowed by white men. On every job position in the industry and on the board of seniors, there’s a largely male, predominantly white, and economically privileged troop.
Fortunately, the banks are aware of this social imbalance and many of them are already leading and supporting diversity programs that actively enlist promising diverse categories to the field – female, LGBT population, African-American, Hispanic, or disabled.
The industry’s future and past are steadily and heartily meet, intertwine and renew.
Although its top jobs are still dominated by white men – women and minorities are slowly but firmly getting their pieces of cake of this adaptable and ever-changing industry, which is full of possibilities to learn, grow, earn and see the world.