Investment Banker Job Description, Skills, and Salary
Get to know about the duties, responsibilities, qualifications, and skills requirements of an investment banker. Feel free to use our Investment Banker job description template to produce your own. We also provide you with information about the salary you can earn as an investment banker.
Who is an Investment Banker?
An investment banker, also known as an investment banking analyst, assists businesses and individuals in raising funds through the capital markets. Their tasks include financial advising, mergers and acquisitions help, and private equity settlement oversight.
An investment banker is a financial institution employee whose primary responsibility is to raise funds for firms, governments, and other organizations.
An investment banker is a person who works for a financial institution and is responsible for generating funds for startups, established businesses, governments, and other organizations. They may be in charge of several responsibilities, depending on their client’s business objectives. An investment banker might be underwriting deals, negotiating a merger, or managing an initial public offering on any given day (IPO). Because the investment industry is heavily regulated, investment bankers usually require college degrees and financial certifications. Investment bankers are frequently employed by investment banks.
An overview of the Roles of the Investment Banker
Investment bankers assist corporations and governments with a variety of financial transactions. The primary types of deals they are involved in are listed below.
Making finance available
A huge corporation that wants to develop a factory is unlikely to have the funds to do it. It may elect to issue a bond to raise funds for the project. The bond will be paid back with the extra production that the new facility would create.
A government may be forced to fund the construction of an airport, a motorway, or any other big municipal project. If it issues the bond, it can finish the work now and repay the bond with future tax receipts.
In any case, an investment banker may be employed to assist with the funding. The investment banker would arrange the bond issuance, price it appropriately, complete the Securities and Exchange Commission (SEC) documentation necessary to issue the bonds, and finally aid in the bond marketing to buyers.
Helps in the sale of stock or equity Financing
Companies can either issue bonds or shares to fund their growth and expansion at the most cost-effective rate. The investment banker is also involved when it comes to stock sales or equity financing.
Let’s say a startup wishes to raise funds for expansion by issuing an initial public offering, or IPO. It would first employ an investment banker to draught a prospectus for potential investors that explains the conditions of the offering as well as the dangers involved.
The offering must then be handled via the processes of marketing to investors, explaining the offering to the media, and obtaining SEC approval (SEC).
It is critical to price the product. If the shares are priced too high, the public may be unwilling to purchase them, and the IPO will be a huge failure. If the shares are overpriced, the investment banker is squandering money that could have been made for the customer.
Throughout the entire process, the investment banker plays a key role.
Providing security for Deals
Investment bankers frequently undertake the underwriting of projects for their clients while arranging capital markets financing. This entails taking up a large portion of the risk by purchasing the shares directly from the issuers and then selling them to the general public or institutional investors.
Investment bankers profit by selling their employer’s stock at a higher price. The underwriting spread is the difference between the purchase price and the markup price.
A lead investment banker typically works with a syndicate of investment bankers to underwrite an issuance so that the risk is spread out among numerous parties.
In certain circumstances, the investment banker only serves as a middleman, marketing the transaction but not taking on the underwriting risk. In this situation, the investment bankers might sell some of the securities and be compensated on a commission basis.
Preparing Private Placements
Not every business wants to go public. Clients that prefer to raise capital through private placements rather than the stock or bond markets can also benefit from investment banking services. In these situations, the investment banker is expected to have the necessary contacts and credibility to close the deal.
For example, a corporation could sell its whole bond offering to a single institutional investor, such as an insurance firm or a pension fund. Because the placement does not need to be registered with the SEC, this can be a quicker and easier way to raise funds. Because the government deems institutional investors to be more intelligent than ordinary investors, private placements are subject to fewer rules.
Bargaining Mergers and Acquisitions
Buying or merging with another company normally takes a long time to plan and negotiate. Investment bankers frequently serve as counselors in this process, particularly when determining a reasonable sale price.
Long debates with investment bankers on both sides of the table analyzing a succession of offers and counter-offers can accompany mergers and acquisitions.
Clash of Interest Issues
Investment bankers undoubtedly contribute to the smooth operation of capital markets, but they have also come under fire for it. Much of the criticism revolves around the possibility of conflicts of interest.
Analysts have been accused of being pressured by investment bankers to favorably grade securities to please customers and generate additional investment banking business.
Another potential conflict of interest arises when investment bankers share sensitive information about their clients’ businesses and prospects with their firm’s traders. Traders can gain an unfair edge by using insider information.
Investment Banker Job Description
Below are the Investment Banker job description examples you can use to develop your resume or write an investment banker job description for your employee. Employers can also use it to sieve out job seekers when choosing candidates for interviews.
The duties and responsibilities of an investment banker include the following:
- Conduct research, evaluate new businesses, and examine financial statements and market shifts.
- Create and deploy financial models for evaluating deals and ascertaining investment probability.
- Lead and assist clients in expanding their businesses, both corporate and personal.
- Prepare legal paperwork and financial data to finalize investments, purchases, and acquisitions of firms.
- Provide clients with strategic assistance and uncover new and more profitable business opportunities.
- Work closely with financial teams and allied professionals such as accountants, lawyers, and public relations executives.
- Collaborate with other professionals to structure and negotiate agreement conditions.
- Develop numerous financial models for valuing debt and equity in mergers and acquisitions, as well as capital raising processes.
- Use a variety of valuation techniques, such as comparable companies, precedents, and DCF.
- Develop product offers, private equity transactions, mergers and acquisitions, and valuations suggestions.
- Prepare and review client-financing materials, such as investment memoranda, management presentations, and pitchbooks.
- Develop partnerships with new and existing clientele to grow the business.
- Perform research and analyze financial data and market trends.
- Create and implement financial models to assess deals and estimate profitability.
- Oversee purchases and mergers.
- Monitor initial public offerings (IPOs) and private equity settlements.
- Lead and support clients as they expand their businesses, both corporate and personal.
- Prepare legal and financial paperwork to execute investments, acquisitions, and purchases.
- Examine all potential hazards and provide financial guidance.
- Locate and contact possible investors.
- Maintain a thorough understanding of financial industry regulatory and legal issues.
The basic requirements for this role are as follows:
- MBA (Associate job) or similar education, training, and work experience are required.
- Bachelor’s degree (Analyst job) or equivalent from a target school.
- Three or more years of experience (Associate position) in finance or business, with a strong quantitative component.
- Ability to operate with little supervision in a fast-paced, team-based setting.
- Basic understanding of transaction structuring and closing principles.
- Excellent research, quantitative, and analytical abilities, particularly when it comes to understanding market happenings.
- Proven expertise with Microsoft Office programs, particularly Excel and VBA.
The essential skills required to function in this role are outlined below:
- Brainpower: This is probably the most obvious feature. Many of the job requirements can be met with a strong mind focused on analytics, mathematics, finance, and economics. But it goes beyond these fundamental skills. Investment banking also necessitates an intellectual curiosity that allows you to branch out from your silo of work to grasp how a colleague’s job or other aspects fit into the larger image.
Investment bankers have a strong ambition to solve complicated challenges and develop novel solutions. Mathematics, science, such as physics, economics, engineering, and finance/accounting, as well as post-graduate degree programs like the Chartered Financial Analyst, are areas of study that often foster intellectual skills and propel this type of problem-solving and curiosity (CFA).
- Strictness: Investment bankers’ high incomes are frequently reported in the media, but little is spoken concerning the long hours, hard effort, diligence, and self-discipline that go into earning such high wages. Investment bankers, from entry-level analysts to managing directors, work in a high-pressure workplace and must be able to execute under duress. These characteristics are generally natural, but they can also be gained throughout life in a variety of ways, such as by committing to and completing a difficult goal, such as graduating from the law or medical school, or by athletic achievements, such as playing on a collegiate sports team.
- Creativity and innovation: Surprisingly, despite the discipline and structure of investment banking, creativity and invention are highly valued abilities. Top-performing bankers can approach a problem or deliver a solution in a novel way, potentially paving the way for new goods and services. Individuals have an intangible quality that urges them to approach a subject from a fresh perspective, and while academics may support this, it is often natural. University classes, such as entrepreneurial business classes and some science and social science classes, might help students think more creatively.
- Liberality: We all know that the world is becoming more globally connected, and business is no exception. Broad-mindedness broadens the ability to operate with and for foreign businesses by allowing for a greater grasp of culture and society. In investment banking, being able to combine that knowledge and comprehension with the ability to communicate in more than one language is a valuable asset. Academics with a focus on sociology or anthropology, as well as advanced linguistic skills (i.e. learning a second language like German or Mandarin), are in high demand. Participating in study abroad programs, for example, can help you develop these skills.
- People Skills: This third skill is likely the most intangible, yet it is regarded as crucial, especially as investment bankers advance in their careers. Bankers must have social and relationship-building abilities, such as the ability to deal with tough individuals in stressful situations, having high energy and a positive attitude that emanates power but also an “I understand your requirements” attitude, and cultivating and keeping client connections. At the end of the day, investment banks make money from the fees they charge their clients. So having a solid set of interpersonal skills can help you gain and keep clients.
- Flair for numbers or analytical skills: Have you ever been in a scenario where you needed to interpret facts and come up with a new idea? Recruiters are eager to administer such examinations to candidates interested in working as investment bankers. Their employment includes extensive research into their business plans and financial strategies for their clients. As a result, analytical expertise is a must-have talent, as it will be used to assess their computer and quantitative abilities.
- Leadership and management ability: Other skills required in the banking industry include leadership and management abilities. In investment banking, a strong understanding of business is essential. Not everyone is cut out to be a leader. Leadership necessitates the extensive practice of specific qualities, knowledge, and skills. As a result, the individual can attain the finest results possible. Candidates at the junior level, for example, will be expected to manage their workload, seek help from different divisions within the company, and form teams. As a result, leadership and management abilities are required.
- Networking abilities: Building meaningful relationships and associates is part of networking. There are some standards you must meet when creating contacts, such as keeping a high level of professionalism, maintaining good client relationships, persuasive skills, and focusing on approaches through the appropriate channels.
- Ability to communicate effectively: Aside from having excellent analytical skills, an investment banking expert should also be able to persuade and motivate others. Every task undertaken by the employee will concentrate on communication with clients and team members.
How to Become an Investment Banker
To become an investment banker you need to adopt these steps:
- Earn an undergraduate degree
To work as an investment banker, you typically require a bachelor’s or associate’s degree in business, finance, economics, accounting, or a related field. You should have a strong understanding of mathematics and market analysis, and you should also consider completing classes in your field of interest. If you wish to work in pharmaceutical investments, for example, science lessons may be useful.
Many companies and investment banking firms hire from universities or provide graduate programs and higher apprenticeships that allow you to obtain practical real-world experience while still in school or after graduating.
- Contemplate doing a Master’s Programme
Entry-level investment banking positions rarely require postgraduate education, while a Master’s degree can help you earn a higher salary or advance your career and move into leadership roles later. The following are some course options for higher education degrees:
- Acquire your License
Before starting work as an investment banker at any UK-based firm or organization, you must first register with the Financial Industry Regulatory Authority (FINRA). You can take the exam during your initial training period work. The registration process involves an exam focused on your specialized sector of investment banking. You can also research typical investment banking credentials, such as:
Investment Management Certificate (IMC)
Chartered Financial Analyst (CFA)
The first certification provides you with the understanding of UK regulations to follow, while the second is a globally recognized qualification that originated in the United States.
- Obtain relevant experience
Internships at financial institutions or work experience in the financial sector are examples of investment banking experience. Many organizations use summer programs to attract new employees. An internship allows you to expand your financial and investing expertise, such as tax laws, banking regulations, deal analysis, and financial modeling.
Where to Work as an Investment Banker
An investment banker works in the following places:
- investment banks
- corporate finance
- debt capital markets or equity capital markets.
Investment Banker Salary Scale
An investment banker’s annual basic compensation is around $83,660. A first-year banker, on the other hand, can dramatically increase this amount through bonuses, and the better they perform, the more they earn. In 2020, the top 10% of earners made over $160,000 per year, which is widely considered a reasonable total salary target for an investment banker. In the United Kingdom, for an entry-level, graduate, or junior investment banker, the beginning salary is between £23,000 and £35,000. For a senior investment banker, however, this wage range can be between £85,000 and £100,000.