Operating in the financial services industry is both rewarding and challenging. The changing regulatory environment, market demands, and user preferences can pose serious hurdles. In contrast, the increasing user inflow, advanced technology, and diverse needs mean that you can explore profitability in various ways.
One way to capitalise on the significant money pools is to become an investment banker and serve top-notch clients. Such a business can create stable income streams from wealthy individuals, leading financial institutions, and multinational corporations.
Let’s explain how investment banks work and whether opening such a business is a good idea.
Investment bankers help companies, governments, and private institutions raise capital, execute strategic transactions, and explore financial well-being. These professionals act as advisors in high-stakes decisions, such as mergers and acquisitions, public offerings, and market expansions.
Compared to retail brokerage firms and operators that offer mere financial and banking services, you, as an investment banker, navigate complex markets and create tailored financial solutions for corporate clients.
As such, your success depends on strong analytical skills, deep market knowledge, and the ability to build and maintain strong client relationships.
The main responsibility of an investment banker is to find entities that need capital and connect them with those willing to invest. This process entails evaluating companies, structuring deals, facilitating buying and selling, and overseeing mergers.
Investment bankers may also advise startups going public or looking for a multi-million-dollar acquisition involving angel investors and venture capital firms.
In this lane, the banker makes financial projections, creates pitch decks, conducts due diligence, and arranges client meetings. This intermediary duty requires advanced persuasive communication and critical thinking skills to facilitate deals, ensure legal compliance, and satisfy all parties involved.
Therefore, you would use numerous financial tools to derive market insights and provide meaningful data that delivers results and maximises value for institutional clients.
The salary of investment banking divisions depends on the clientele, provided services, and the value of the underlying deals.
As such, you may typically look at an earning bracket between $100,000 and $125,000 per year at the entry-level. Associates and junior analysts can make around $150,000 to $200,000 annually, while vice presidents and managing directors can earn well over $200,000 per year.
These figures can reach seven figures when bonuses and profit sharing are included.
These financial professionals offer a range of services designed to help clients grow, restructure, or secure funding. Much of the responsibilities cater to raising capital, facilitating mergers and acquisitions, underwriting securities, and providing strategic advice. Let’s explain each of them.
Investment banks help clients raise capital through equity markets like initial public offerings (IPOs) or debt instruments like corporate bonds.
Therefore, you must have solid analytical skills to assess financial projections, evaluate businesses, and determine how much capital must be raised and what the firm is worth when going public.
These duties also involve communicating with potential investors and preparing investor presentations and pitchbooks. Ultimately, the investment banker must bring in deals that attract capital while minimising risk for both the client and investors, which requires strong market knowledge and timing.
Many investment banks act as strategic advisors during mergers and acquisitions, helping clients buy, sell, or merge with other companies.
As such, you must evaluate target firms, perform due diligence, and construct financial models to determine fair valuations. Whether you are advising a client on selling their business or identifying growth through acquisition, your role is to negotiate terms and ensure a smooth transaction.
Many acquisition deals are complex, often involving cross-border regulations, cultural considerations, and extensive legal documentation. Therefore, a skilled expert must manage multiple stakeholders and deliver outcomes aligned with client goals.
Security underwriting is the process of companies or governments issuing new securities, such as stocks and bonds, to raise capital.
During this process, you act as an intermediary between issuers and investors, preparing equity offerings or debt capital markets by purchasing securities from the client and selling them to institutional or retail investors.
This guarantees the client receives funds regardless of market demand while you assess risks, set the offering price, and create marketing materials.
The goal is to balance risk and reward to ensure a fair, successful offering while managing regulatory compliance, market timing, and investor relations.
Experienced investment bankers also advise investors on capital raising and helping pension funds and banks navigate corporate finance issues, restructure their organisations, and prepare for market entry.
This may involve assessing debt structures, evaluating investment opportunities, optimising financial ratios, and advising on dividend policies.
Unlike transactional work that finishes once the service/product is delivered, financial advisory can involve long-term relationships and ongoing consultancy.
Therefore, your insights must be backed by rigorous analysis, industry expertise, and up-to-date market intelligence to establish a sustainable income stream and position yourself as a trusted partner for continued growth.
Investment banker jobs differ in size, services, and client focus, providing multiple opportunities for launching your own investment bank.
These are the most significant global financial institutions, such as Goldman Sachs, JPMorgan, and Morgan Stanley. Such international investment banks typically handle multi-billion-dollar deals and offer full services, including mergers and acquisitions, capital markets, and bulk trading.
Working in this space offers great exposure to major clients and money companies. However, there is intense competition, and establishing your name may take multiple years.
These firms, like HSBC, Houlihan Lokey, and Piper Sandler, serve mid-sized companies and often operate within specific regions. They may perform similar activities to the aforementioned top-cap firms but on a smaller scale.
They provide comprehensive financial services but for a limited clientele or less extensive market reach. However, they offer better client interaction and potentially better work-life balance.
Boutique investment firms, like Evercore, Lazard, and Moelis, focus on niche areas like managing infrastructure funds and balancing assets and liabilities.
These banks may lack global scale but offer deeper industry expertise, closer client relationships, and faster promotions.
There are many ways to enter the investment banking industry. You can enter from related fields like corporate finance or consulting, or via graduate programmes, academic excellence, and networking. Here are the top three ways to become an operational investment banker.
Success in investment banking depends on crucial skills like analytical thinking, attention to detail, and time management. You must be quick-witted with numbers, confident using spreadsheets, and able to present ideas clearly to less tech-savvy stakeholders.
Flexibility and communication skills are also vital when interacting with clients and teams and handling intense workloads and deadlines.
A finance-related degree, like a CFA or business administration, from a top university is usually a sufficient basis for entry. However, you can significantly boost your credibility and prospects with economics, accounting, and statistics courses to increase your chances of success.
Most successful corporate investment bankers begin as analysts and then rise to senior management positions, such as executive associate, senior vice president, director, and managing director of an entire firm.
Therefore, top performance and professional networking play a big role in solidifying your client relationship and kicking off your career. Later, you can transition into hedge funds or equity capital markets that reward dedication, results, and leadership.
Stepping into investment banking services requires a strategic approach and early preparation. It is a competitive field, but you can set yourself apart and secure your place with the right approach. Here’s how you can start.
Investment banking is a high-risk, high-reward profession that demands commitment, intelligence, and drive. As such, investment bankers play a vital role in shaping financial markets, guiding companies through transformative deals, offering crucial consultancy, and unlocking value across industries.
Most of these firms offer full financial services for large commercial banks, specialised advisory for mid-size institutions, or guidance for startups that want to secure new funding channels or go public.
By equipping yourself with the right skills, gaining hands-on experience, and networking strategically, you can position yourself for success in this competitive field. Whether as a global partner or a niche financial consultant.
