This is another post in our After the MBA series, in which we chronicle a variety of post-MBA career opportunities to give you a sense of which might be the best fit for you. Whether you're looking to make a career change or want to stay in your present field, this information will help guide you in your b-school decision-making process, as well as direct your studies once in school.
What It Is:
Investment banking is a demanding, intellectually stimulating career that requires a great deal of dedication, financial savvy, and time. Investment bankers serve a variety of functions, depending on their specific position. They advise clients on financial organization; underwrite, sell, and trade stocks and bonds; and manage assets, among other responsibilities.
If you are working in corporate finance, you will serve as a financial consultant for corporations. Often banks will assign bankers to work in a certain industry (health care, communications, finance, etc.); you’ll be responsible for helping firms execute financial strategies, analyzing their financial needs, determining valuations for new offerings, and underwriting equity and debt offerings, among other responsibilities. Mergers and acquisitions is related to corporate finance and sometimes serves as its own department; if you’re an M&A banker, you’ll give advice to companies that are merging with or being acquired by other companies. M&A requires a detail-oriented, strategic mind to ensure you’re able to work out all the specifics of the merger or acquisition deal.
If you are working in sales and trading, you will buy and sell securities and commodities; traders must keep track of the markets constantly while communicating with buyers and sellers.
Research analysts become experts in their given industry. They use their expertise and do continued research to predict the movement of stocks, usually either in fixed-income or equity. Traders rely on their educated advice. Research analysts do many different types of research on a company’s financials as well as economics trends in general.
Salaries for investment bankers vary depending on a variety of factors. According to one source, the salary range for associates with MBAs is $80,000 to $150,000, including bonuses. Stanford’s Graduate School of Business, for example, reported a median salary of $100,000 with a median bonus of $40,000 for investment bankers from the class of 2010. Dartmouth’s Tuck School of Business reported a median base salary, not including bonuses, of $95,000. Bonuses are determined at the end of the year and are based on a variety of factors: namely, the performance of the firm, the market, and the individual. According to some estimates, bonuses are typically anywhere from 10-50% of the yearly salary for first-year bankers, and increase markedly with seniority (often, a significant amount of the bonus will be in the form of equity). At regional or smaller banks, salaries will likely fall below those at major banks in major markets.
How to Get an Investment Banking Job:
If you are attending a top-50 MBA program, it is likely that representatives from banks will recruit at your school. If you are interested in a career in investment banking, be sure to attend these events. You should make a concentrated effort to do a summer internship with a bank after the first year of your MBA program; this will help you get your foot in the door and make contacts in the industry. Be sure to strike a balance in your interactions with recruiters: you want to be appear interested, but you do not want to monopolize the representative’s time and make a bad impression.
If investment banks do not recruit at your MBA program, use your networking skills to find contacts within the industry.
If you are fortunate enough to get an interview for an i-banking job, be sure to prepare answers to frequently asked interview questions, including:
- Why investment banking/why do you want to work here?
- Why should we hire you?
- What are your outside interests?
- Are you a risk-taker? What are some risks you’ve taken?
- What are your greatest strengths and weaknesses? How are these reflected in your resume?
- What questions do you have? (Make sure you have challenging, detailed questions prepared for this one.)
Furthermore, you should have a clear understanding of the industry and be up to date on industry trends, recent mergers, etc. in order to ensure you are competitive for an i-banking job.
Is I-Banking Right For You?
Investment banking is not a career to jump into blindly. It be very rewarding, intellectually and financially; however, it also requires a great deal of dedication and time. Try to evaluate whether your personality is a good fit for the banking lifestyle. You should be a strong communicator, enjoy taking on leadership roles, be an excellent problem solver, and not mind (and ideally enjoy) working under pressure.