According to the Graduate Management Admission Council (GMAC), 29% of millennial and 36% of Gen Z prospective b-school students are interested in a career in investment banking after they graduate. This makes it one of the most popular career choices among areas like consulting, tech, and financial services.
But is investment banking a good career path?
Investment banking | pros & cons
A major advantage of launching a career in investment banking is the significant responsibility you’ll take on early on in your journey. Starting out in the industry is often compared to drinking from a fire hose.
“When you're given responsibility, that’s a vote of confidence. It means you're the one driving the business, so all the decisions come from you,” says Farooq Rohaizat, EM rates trading associate at Morgan Stanley and graduate of Imperial College Business School's MSc in Finance.
But the investment banking career path isn't easy, gaining early responsibility comes with increased risks and higher pressure. When he first started as an EM Rates trading analyst, Farooq immediately took on a great deal of responsibility, handling clients, trades, and completing ad hoc tasks, all while learning the complex world of investment banking.
“When I was new to the job a lot of my day was spent trying to figure things out. What is the next trade? And what if this happens? And how do I get out of the trade if this happens?” he explains.
Nadia Zaman, vice president in investment banking at Evercore and a Cornell MBA grad, says a major challenge of the investment banking industry is the unpredictability and frequent late nights.
“Analysts and associates, tend to start around 10. There are days when they might only work two hours, but there are days that they can be up working until 2 am. So, it's very volatile in that sense,” she says.
“It's the uncertainty you have to manage. You have to be okay with having your plans and your idea of how the day looks change at the last minute.”
But, that hard work makes completing deals a particular highlight of the job, she adds. Especially when that involves a closing dinner with the team and clients: “You go to a fancy restaurant, and order expensive meals and high-end alcohol.”
Investment banker salaries
A major perk of the investment banking career path is the considerable compensation you receive.
In the US, according to Glassdoor, investment banking roles command an average base salary of $137k. Investment banking analysts earn an average salary of over $95k and associates earn an average salary of over $124k. That's before bonuses and additional payment schemes are added in, which can take these figures significantly higher.
However, salaries can also vary considerably from firm to firm. According to Glassdoor, the average associate salary at top investment banks, including JP Morgan Chase & Co., Citi, and Bank of America, is between $172k and $177k.
Average US Salary For Investment Banking Employees
Investment banking jobs for b-school grads
The investment banking sector requires a unique and advanced skill set. An MBA or Master's in Finance, for example, could equip you with the knowledge base to launch your career in this competitive arena.
Due to their educational experience, graduates coming from an MBA typically find themselves hired into the more senior role of associate, rather than analyst.
"You come in as a fresh associate, you have zero investment banking background, but you have an MBA. And you're working with these analysts who sometimes have been working at the bank for two or three years already,” says Conrad Lochovsky vice president in investment banking at Morgan Stanley and an INSEAD MBA alum.
While investment banking is a relatively narrow sector in terms of different job roles, there are variations in focus depending on the bank you opt for.
For example, while the big banks in the US—such as JP Morgan Chase & Co., Morgan Stanley, Bank of America, Citigroup, and Wells Fargo–offer a wide range of services, they tend to vary in specialties.
Morgan Stanley may have a slightly higher market capitalization, while Wells Fargo holds considerably more consolidated assets, for example.
Boutique investment banks often specialize in specific areas. For example, Rothschild specializes in global mergers and acquisitions advisory, and Cain Brothers focuses on the healthcare industry.
Investment banking career progression
Career progression throughout the investment banking world is relatively well-charted. Jobs typically fall into a well-trodden path moving within a hierarchical structure from junior to senior.
This is the case for Farooq: “I started as an analyst and now I am an associate, after which comes VP. In the next three years, I plan to try and become a vice president.”
However, the intensity and high-stress nature of investment banking means that some employees use their experience to move into other, less demanding career paths.
This is something Nadia has seen often with analysts and associates who become overwhelmed by the demands and use the experience they've built to switch industries.
“With investment banking, it is possible to make the jump at any time. Because for a lot of people, the trade-off is, you get a little bit less pay, but you kind of get a better work-life balance.”
Key skills for investment banking careers
The intensity and competitiveness of the investment banking career path means you must hone your skillset to have the best chance of entering a top company and making a good impression while you are there.
Communication skills are essential in the industry, with the constant need to be clear and concise when communicating with colleagues, clients, and other stakeholders.
Nadia says the demanding level of work placed on associates also requires the ability to manage people's expectations effectively.
“Projects are going to have competing deadlines all coming at the same time. So you need to be able to overly communicate, saying, ‘I have this other project going on, I can get to this at this time,’” she explains.
Considering the heavy workload and the number of deadlines, efficiency and time management are essential.
“You need to be very disciplined. There's no such thing as waking up late and turning up two hours later," Farooq says.
For Nadia, who is further along in her career, public speaking skills are also essential in the job, alongside an ability to deal with high-pressure situations.
“I've developed my public speaking skills. Once your teams are aware of your skills, and they trust you, they'll throw you in the fire,” she says.
There are undeniable advantages to working in the investment banking sector. You are given clear career progression alongside strong compensation opportunities.
However, investment banking is not for the fainthearted. It takes hard work and a willingness to give up your evenings, weekends, and even holidays.
Succeeding in investment banking takes concentration, grit, and an ability to multitask. For those who have these qualities it is undeniably a rewarding and lucrative career, but make sure you are prepared for high-pressured situations.
If you are ready for an investment banking career, you can elevate your skillset and prepare for the high pressure by studying at business school, which can also provide access to connections within the industry and expert advice to help with your job search.
