Investment banking and MBAs have always had an interesting love affair; they’re on, they’re off, they’re hot, they’re cold. Truth be told, in recent years, fewer MBAs are going into investment banking and investment banks are hiring fewer MBAs. Instead, MBAs are choosing a broad range of career paths including entrepreneurship, and investment banks are hiring Masters in Finance students and graduates.
However, that’s not to say that MBAs aren’t interested in investment banking. In 2014, 5 percent of Harvard’s MBAs, 14.2 percent of Wharton’s class and 16 percent of Columbia’s MBA went into investment banking. And, when Korn Ferry conducted an executive search for a senior level investment banker only two of their top 25 candidates didn’t have an MBA, according to CNBC.
So, what exactly does it take to be an Investment Banker and what do they do?
Investment Banker Job Description
Investment Bankers work long hours. That’s the first thing you always hear, and it’s true. In fact, that’s exactly what an analyst at a European bank told efinancialcareers. “There are no limits on working hours here,” he said. “We usually work every weekday from around 9:30 a.m. until around midnight or 12:30 a.m. It’s a minimum 75-hour week.”
But, there’s more to being an Investment Banker than the work-focused lifestyle. It’s a strenuous and intense field that requires people to handle pressure well and to react quickly to constantly changing stock market prices. And, at its heart, an investment banker’s job is to help their clients raise money by issuing debt or selling equity in companies.
So, what does it take to be an investment banker? It’s not all about numbers. While quantitative acumen is essential; it’s just as important to be “persuasive, aggressive, quick-witted and [to] have unflappable work ethics,” according to Investopedia. And of course, to be an investment banker you have to pass the Series 7, Series 79 and Series 63 exams to obtain your various securities licenses. And while the tests are not considered as difficult as getting your CPA or passing the bar, they still take time and effort.
In the end, it comes down to five skills:
- Intellect: In particular, intelligence in the areas of analytics, mathematics, finances and economics is very important.
- Discipline: It takes a lot of long hours, hard work, diligence and self-discipline to be a successful investment banker.
- Entrepreneurial: “Top performing bankers are able to approach a task or provide a solution in a way that may be new, pioneering an avenue for products and services,” explains Investopedia.
- Global: Investment banking is an international business, and so understanding the global perspective is key to success.
- Relationship Building: Investment banking isn’t a solo career. You have to be able to deal with a wide variety of people in intense and stressful situations.
Investment Banker Salary
According to the Wall Street Playboys, working as an Investment Banker straight out of an MBA is a lucrative career move. Directly after graduation, you should be making around $125,000 for your base, and on top of that, you should expect a $30-45,000 bonus. In total, Investment Bankers should expect to earn a $150,000 total their first year; $175,000 their second and $200,000 their third.
Working as an Investment Banker
So, what does a day in the life of an Investment Banker look like? For Brian DeChesare of Mergers and Acquisitions, it’s a career with a lot of ups and downs.
“Some days you’ll be so busy that you have to discreetly use a bottle under your desk if you need to go to the bathroom. Other days you’ll have so little to do that you can take three-hour lunch breaks and download different themes for Windows Solitaire. Doing investment banking is like doing drugs: on your good trips, you dance in clouds of marshmallows, surrounded by beautiful women (or men) serving you fruit in canopies. On your bad trips, you scratch your eyes out and jump off buildings.”
Do You Need an MBA?
As for an MBA, while we’ve already said that fewer and fewer MBAs are heading into investment banking, that’s not to say that an MBA isn’t necessary for the career field. According to Bloomberg, when the resumes of 17,000 people with at least ten years of experience in investment banking were analyzed, it was discovered that over 18 percent of managing directors had an MBA.
The key to going into a career in investment banking after an MBA is to earn that MBA from a top tier school. Period. Investment banks only recruit from the top schools in the world, so you’ll have to start there. As for why an MBA is valuable?
“As an analyst, an MBA will help provide a framework to understand how businesses operate and it will put you in the recruiting pool for top investment-banking associate roles,” explained CNBC. “An MBA will provide the case study fundamentals by which to analyze, sell and/or run a business. An MBA inculcates you into the language and strategy of buying, selling, analyzing and managing a business.”