Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges. Aspiring finance professionals may wish to examine whether a career in investment banking is worth it.
key takeaways
- While the compensation is high, so are the pressures in the investment banking profession.
- Investment bankers sometimes work long hours, and often under time pressure to close a deal.
- Despite the traditional culture of conspicuous work, many investment banks are reassessing workloads and encouraging employees to maintain less stressful schedules.
Investment Banker Work Environment
An investment banker works with companies and government entities that raise capital, and bankers also provide advice regarding mergers, acquisitions, and reorganizations. Traditionally, investment bankers work long hours, sometimes as many as 100 hours per week. Bankers are often under time pressure as many projects have tight deadlines.
However, the banking culture also values and admires people who work long hours, and many firms have a culture of conspicuous work. This term refers to a corporate culture in which each employee notices the hours worked by everyone else, and this situation creates a competition to take on more work at all costs.
Reliable bankers are given more work, and that leads to a work schedule that can become unmanageable. The work environment can take a physical and emotional toll on many people who work in the industry.
Changes in the Industry
In 2015, two young investment bankers took their own lives. Shortly before their deaths, both workers suffered from lack of sleep, and both workers reached out to family members to explain how much they were working.
Those tragedies led many firms to change their company policy on work hours. Some firms now enforce a protected weekend policy, which means that bankers cannot work on specific weekends. Nearly all companies now ask workers to say no to additional work if that work will result in too many hours at the office.
Ironically, recent studies have shown that overwork leaves bankers less productive, which means that more hours are not generating the same level of quality work. A common rule of thumb is that a banker should not work on more than two banking deals at one time, or the workload is not manageable.
$82,027
The typical base starting salary of an investment banker, not counting signing or performance bonuses.
Traits of Successful Bankers
Finance professionals should consider whether they have the personal traits needed to succeed in investment banking. In addition to the potential for long hours, a banker must be able to handle stress well and work on multiple deadlines at once.
Investment bankers must be able to initiate projects on their own and manage time well. Financial modeling and the use of Microsoft Excel are often important skills that many investment banks must master.
Investment bankers should be able to speak out and turn away work if the existing workload is too demanding.
Alternatives to Investment Banking
Investing banking firms traditionally hire new associates from the best MBA programs in the country. But, many of these students are no longer considering banking as a career. Elite MBA programs, such as the Harvard Business School, are seeing more graduates moving into tech startups and other fields, such as private equity and corporate finance.
This shift has also pushed banking firms to assess the number of hours each banker works, and if those hours are justified, given client demands. Alternative career paths to investment banking can include asset management, corporate finance, or equity research.
The Bottom Line
If a professional is not willing to make these sacrifices and is not primarily driven by money, that worker may not succeed as an investment banker. Finance professionals who need a balance between work and personal life should not work in investment banking.
FAQs
Investment bankers are typically the highest-paid workers in the finance industry—high salaries are most prevalent even among younger employees. The starting salary for the typical investment banker exceeds that of most other finance positions, but working in this field has its challenges.
How valuable is investment banking experience? ›
Employers love seeing Investment Banking experience in candidates because they recognize that former analysts can get things done, solve problems, and work well in teams.
How to answer why you want to work in investment banking? ›
Answering the “why investment banking” interview question
- Fast-paced environment.
- Exposure to high profile transactions.
- Surround myself with intelligent and motivated people.
- Valuation & financial modeling work.
- Steep learning curve.
- Passion & love for finance.
When do investment bankers retire? This varies widely. But on average, the oldest full-time execs I saw were in their early to mid-50s. A banker's retirement age (much like that of any profession) really depends on what his motivations are.
Is it hard to find a job as an investment banker? ›
Investment banking recruiting is an extremely competitive process, so you'll want to do whatever you can to stand out during the recruitment process. Banks value the quality of your job experience, and the quality of your schools attended, and how hard you network or “hustle” for the role.
Do investment bankers really work 100 hours? ›
Most former bankers have reported that it is quite uncommon for an analyst to hit the 100-hour mark. Apparently, this only happens occasionally (once a month) when an analyst is working on multiple live deals or poorly aligned international projects.
Why are investment bankers paid so well? ›
Investment banks often compete to attract and retain top talent, which drives up salaries. 2. High Levels of Responsibility: Investment bankers handle complex financial transactions, such as mergers and acquisitions, initial public offerings (IPOs), and large capital raising deals.
How do you stand out in an investment banking interview? ›
Preparing for Investment Banking Interviews: Dos and Don'ts
Interviews are an opportunity to demonstrate your knowledge, skills, and fit for the role. Prepare by researching the bank, reviewing technical skills, and practicing behavioral questions. Also, dress appropriately, make eye contact, and stay engaged.
Where do you see yourself in 5 years? ›
Answer for “Where do you see yourself in 5 years?” “In five years, I see myself as an integral part of the company who has helped contribute to the growth and success of the organization. I would like to continue developing my skills and knowledge in order to be able to take on more responsibility within the company.
How to introduce yourself in an investment banking interview? ›
Give the interviewer a story that shows your achievements and how everything fits together for you to be a successful investment banker. Make sure to point out how each job has let you take on more responsibility, or required you to acquire more finance/business knowledge than the one before it.
Investment Banking Career Path
Increasingly, analysts that do stay are getting promoted directly to associate (going "A to A") after two years. As an associate, compensation rises significantly. The next level up is Vice President, which can make upwards of 500k.
Is 25 too old for investment banking? ›
"Most people who get entry-level jobs in banking are aged 20 to 25 years-old," says one former trader. "Once you get beyond 28 years-old, it becomes a lot more difficult to get a front office job (in trading, sales or M&A) in a bank," he adds. "Of course, there will always be exceptions, but it's tough."
Is investment banking a declining career? ›
Banks don't break out investment banker headcount specifically, but data released last week by research firm Coalition, suggests investment banker headcount across the industry fell only 4% year-on-year in the first half, which is when many of the cuts at Goldman and Morgan Stanley took place.
What GPA is required for investment banking? ›
The typical investment banker has a graduate degree in business from an Ivy League school or other top-tier university and superior educational credentials [i.e., excellent grades (minimum 3.50 GPA), active participation in business and investment clubs, and participation in at least one internship or summer program at ...
What is JP Morgan acceptance rate? ›
JP Morgan is renowned for its rigorous recruitment process, resulting in extremely low acceptance rates. According to industry data, the acceptance rate for entry-level positions at JP Morgan stands at approximately 3%. Out of every 100 applicants, only three individuals successfully secure a position within the firm.
How do I know if I want to be an investment banker? ›
What Skills and Traits Make a Good Fit?
- Willingness to work extremely long hours (80+ per week)
- High attention to detail.
- Ability to take direction well.
- Team player.
- Great at Excel, Word, and PowerPoint.
- Strong accounting and finance knowledge.
- Excellent financial modeling skills.
That said, investment banking is a highly competitive field. Because the pay is so high and the job is so prestigious, particularly in cities such as New York, applicants far outnumber job openings every year.
Do investment bankers have a good life? ›
In the high-stakes and fast-paced world of finance, the work-life balance of Investment Bankers often teeters on a fine line. Known for their grueling hours and the high-pressure environment of financial markets, Investment Bankers are frequently at the mercy of market fluctuations and client demands.
Are investment bankers in high demand? ›
Salary. Due to high demand and a scarce talent pool, investment banks have significantly increased wages for investment bankers in order to secure and retain top talent. With wages rising even at the lower pay scales, entry-level investors can expect six-figure salaries at leading firms.
How many years of experience do you need to become an investment banker? ›
The path to starting a career in investment banking can be as short as just 4 years — the typical length of a bachelor's degree program. Depending on the specific job you want, more time may be needed to complete a master's degree program or professional registration exams.
