What are the cons of investment banking?
Long working hours, a high-pressure work environment, and a lack of work-life balance are common downsides of working in investment banking. The work can also be highly competitive, and the industry is known for its high turnover rates.
Long working hours, a high-pressure work environment, and a lack of work-life balance are common downsides of working in investment banking. The work can also be highly competitive, and the industry is known for its high turnover rates.
- Unpredictable workflow. Depending on the bank you work for, you might experience days with very few customers. ...
- Handling important transactions. A primary responsibility for bank tellers is limiting transaction errors. ...
- Quotas. ...
- Conflict resolution.
Difficult work-life balance in banking – the hours of investment banking are legendary and grueling; many roles offer better work life balance. Roles are designed to be temporary – most investment bankers leave after the two-year analyst program, which is designed to be two-years.
Investment banking is one of Wall Street's most coveted roles. It is also one of the hardest. It is no surprise that the average day in an investment banker's life is long and stressful. Those who manage to survive the adjustment period often go on to have long and financially rewarding careers.
Market risk, also known as macro risk, is unavoidable and, therefore, of the utmost concern for investment banks. Market risk can be defined as the risk of loss due to variables in the market. The variables include exchange rates, inflation, and interest rate risk.
It is a high risk, high reward career that demands a high degree of commitment, and a herculean ability to juggle your work-life balance.
Investment bankers typically earn salaries in the $200,000 to $700,000 range, with bonuses that can bring their total income up to several million dollars per year. To amass a million-dollar fortune, an investment banker would need to save and invest a large portion of their income over a period of many years.
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. Having the right skills and being able to display them is paramount for getting a foot in the door.
Investment bankers work notoriously long hours, with the typical work week filling in 60-80 hours per week, and the occasional high-intensity work week that can push a banker to 100+ hours.
Why are investment bankers paid so well?
Investment banks impose a high fee based on the amount of the offering (usually 2-8% of the total deal). They earn millions of dollars in commissions as a result. They are also paid for setting an appropriate price and assembling a solid network of enthusiastic investors about the company's long-term prospects.
After a few years of working as an investment banker, you may consider changing jobs to explore a different area of finance or investing. Depending on your current experience and aspirations, some options you have include working for a corporation or helping organisations and individuals manage their assets.
Private equity jobs are some of the most desirable in finance. They're also some of the most difficult to get into. Private equity funds are investors and they're in it for the long term.
Investment banking is an exciting and lucrative career, but it isn't right for everyone. You may have a desire to earn over $100,000 a year as a first-year analyst in New York City, but you need to remember that investment banking is not just a high-paying job, but is also a high-stakes, high-pressure job.
Even with education, experience, and enthusiasm, investment banking might not be for you. Investment bankers work long hours and often earn a high income. Lack of work-life balance is one reason to avoid becoming an investment banker. Investment bankers must also be able to manage high-pressure situations.
Age plays a huge factor in the decision-making process. Wall Street is an up-and-out industry. Unless the goal is senior management, most people in finance are out of there by age 50. That's not at just the biggest investment banks, either.
It also requires strong mathematical and analytical capabilities, which may be challenging for some people. In addition to a bachelor's degree, investment bankers may need a master's in finance or an M.B.A.
I would say that far more people apply for investment banking jobs than ought to. So in that sense, yes, it's overrated. The image of the investment banking industry in popular culture leads many people to be drawn to it for the wrong reasons: perceptions of glamor, prestige and the opportunity to make a lot of money.
Essentially, investment bankers are financial advisors to corporations and, in some cases, to governments. They help their clients raise money. That may mean issuing stock, floating a bond, negotiating the acquisition of a rival company, or arranging the sale of the company itself.
For those seeking a career in investment banking, a bachelor's degree in finance is a prerequisite. Other potential acceptable majors include bachelors in economics or bachelors in business supplemented with a minor in finance.
Do investment bankers work weekends?
Working on the weekends is considered a norm if you are an investment banker. It is not necessarily because banks require them to work on weekends, but it is mainly the sheer workload and the pressure investment bankers put onto each other. Stressful and competitive has long been the work culture for investment banks.
Ways to make a lot of money in this world
Sure, anybody can make a good living being a doctor or a lawyer or an investment banker where you can make ~$200-500K per year a few years after you finish with your studies, but you hit a ceiling very quickly unless you start your own practice (aka start your own business).
On average, a first-year investment banker makes a 5-digit salary, in the range of $70,000 – $90,000, while a 7-digit salary is considered above average and is difficult to achieve for most people in their careers.
Goldman Sachs, another prestigious investment bank, maintains similarly competitive acceptance rates. With intense competition for limited openings, the acceptance rate hovers around 5%. This means that out of every 100 applicants, only five individuals receive an offer from Goldman Sachs.
