Investment bankers advise governments and corporations on how to effectively raise capital by issuing
securities and providing financial advice on mergers and acquisitions (M&A). Investment banks are
typically divided into two main areas: corporate finance and capital markets. The corporate finance
division helps companies raise capital and provides advice on M&A, while the capital markets sector
helps companies and governments issue securities and provides liquidity to the financial markets.
Investment bankers work with clients to identify their financial needs and develop strategies to
meet those needs, such as by underwriting and selling securities or assisting with M&A transactions.
Investment bankers also play a role in trading securities and providing liquidity to financial
markets. Investment bankers command a significantly above average salary relative to other careers
in the finance industry.
Many students go into investment banking with the plan to exit after a couple of years. For those
that work up the ladder, the succession goes as follows:
- Investment banking analyst: Investment banking analysts are entry-level positions that typically
last for two to three years. They work closely with senior bankers to provide financial analysis
support on a variety of transactions, including M&A deals and initial public offerings (IPOs).
- Investment banking associate: After completing the analyst program, many investment bankers
associates. Associates have more responsibility and work more independently than analysts, and
may lead smaller deals and work on more complex transactions.
- Vice president: After several years as an associate, investment bankers may be promoted to vice
president (VP). VPs have significant responsibility and are typically in charge of leading deals
managing teams of analysts and associates.
- Director: Directors are senior-level investment bankers who have significant responsibility and
typically in charge of managing teams of VPs and associates. They may also be involved in
development and client relationship management.
- Managing director: Managing directors are the most senior level of investment bankers. They are
responsible for leading teams of directors and VPs and are often involved in setting the overall
strategy of the investment banking division.
Investment bankers enjoy the most flexibility upon leaving. They often leave the industry to pursue
other career opportunities after several years of experience. Some common exit opportunities for
investment bankers include:
- Private equity: Private equity firms buy and sell companies, often with the goal of improving their
operations and profitability. Investment bankers with M&A experience may be well-suited for careers
in private equity.
- Hedge funds: Hedge funds are investment vehicles that use a variety of strategies to generate
returns for their investors. Investment bankers with a background in finance and investment may be
interested in careers in hedge funds.
- Management consulting: Management consulting firms advise companies on a variety of business and
operational issues. Investment bankers with analytical skills and an interest in business strategy
may be well-suited for careers in management consulting.
- Corporate finance: Investment bankers with an interest in corporate finance may transition to roles
in the finance departments of companies, where they can work on financial planning, budgeting, and
other financial tasks.
- Entrepreneurship: Investment bankers with an entrepreneurial spirit may choose to start their own
businesses. Their financial skills and business acumen can be useful in starting and running a
- Teaching and academia: Investment bankers with an interest in teaching and research may choose to
pursue careers in academia.
- Other financial services: Investment bankers may also transition to other financial services roles,
such as wealth management or sales and trading.