Answering the Fit question
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The Fit Question
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. This guide will help you assess if investment banking is a good fit for you.
A survey carried out by a private equity recruitment firm found that 44% of graduates who joined the sector straight out of university left within three years. Some of these individuals may have left to join private equity firms, but the investment banking industry exacts a heavy physical and mental toll on its workers.
Many investment bankers are Type A personalities, which means they are ambitious and driven. Young bankers are inducted into a stressful lifestyle from the get-go. They are encouraged to work long hours with very little free time to fit in socializing or relaxation. Many turn to caffeine and drugs to help them cope. Alcohol abuse is also rife in the investment banking sector.
Investment banking is very well paid, but sign-on bonuses and a healthy pay packet come at a price. To survive as an investment banker, you need to have a high stress threshold. You also need to be willing to say goodbye to your social life for a few years.
What Skills and Traits Make a Good Fit?
To make sure you’re a good fit for investment banking, here is a list of traits that are considered important in the industry:
- 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
- Excellentfinancial modeling skills
Career Progression
The career progression in investment banking is as follows:
- Analyst
- Associate
- Vice President
- Director
- Managing DIrector
Learn more about how you might fit into the typical hierarchy in investment banking.
Undergraduates are typically recruited straight out of university into a two-year analyst training scheme. This is the most junior job in an investment bank and you can expect to be an analyst for two years. If you last for two years, the top analysts are asked to complete the third year. The cream of the crop is then promoted to associate level.
It is possible to jump straight into an Associate role at an investment bank, but you will need to have an MBA or be an MBA student. Most banks require that aspiring analysts with their eye on an associate role complete an MBA first.
Day-to-Day Life in Investment Banking
Analysts do most of the work in investment banking. Much of your workday will be spent putting together presentations for clients. This requires a lot of attention to detail and can be rather boring. You will also be asked (and expected!) to do admin work such as organizing conference calls and travel. Lastly, your job is to analyze data, so strong analytical skills are essential. Again, this can be very tedious, but it is an important part of your training.
Associates perform the same tasks as an analyst, but they are also expected to act as a conduit between senior bankers and analysts. Associates typically assign work to analysts and check the final work product.
Financial modelingskills, and being able to performvaluation analysis, is a major requirementfor the job. Analysts and Associates must be willing to spend long hours in Excel, toiling away on spreadsheets.
Essential Qualities for an Investment Banker
Aside from a high tolerance for stress, you also need to have an aptitude for math and a keen interest in the financial markets. For example, if you’ve built financial models and attempted to value companies on your own, this will stand you in good stead at the interview stage.
Finally, would-be investment bankers need to be self-motivated, good communicators, natural leaders, and team players, too. You also need to have a strong sense of professionalism at all times.
Additional Resources
Thank you for reading the CFI guide to assessing if investment banking is a good fit for you. To keep learning and advancing your career, these additional resources will be helpful:
- What Investment Bankers Do
- Banking Courses
- Financial Modeling Guide
- Investment Banking Interview Questions
- See all career resources
FAQs
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.
How do I know if investment banking is right for me? ›
To make sure you're a good fit for investment banking, here is a list of traits that are considered important in the industry: Willingness to work extremely long hours (80+ per week) High attention to detail. Ability to take direction well.
Is investment banking a good career choice? ›
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.
Can you be healthy as an investment banker? ›
You can also set boundaries and delegate tasks when possible. Don't let stress overwhelm you or affect your performance. To manage stress as a busy investment banker in the later stages of your career, prioritize self-care practices such as regular exercise, adequate sleep, and healthy eating habits.
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.
What is the best personality type for an investment banker? ›
The top personality traits of investment bankers are extraversion and conscientiousness. Investment bankers score highly on extraversion, meaning that they rely on external stimuli to be happy, such as people or exciting surroundings.
Why investment banking isn't for you? ›
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.
What are the odds of getting an investment banking job? ›
The lucrative and fast-paced career of an investment banker is a highly competitive one. For instance, in a recent year, 236,000 applicants competed for roughly 3,500 internships at Goldman Sachs. This is common across the industry where acceptance rates for programs are typically less than 2%.
Why is it so hard to get a job in investment banking? ›
Obviously, any investment bank that is going to hire you is going to want to know that you have enough technical knowledge to do the job. At a high level, this means you have to be well-versed on the following topics: 1) accounting, 2) valuation methodologies, 3) M&A, and 4) LBO.
Is investment banking a lot of math? ›
Investment banking is a quantitative field, and having a strong foundation in mathematics is essential. If you're considering a career in investment banking, it's important to have a deep understanding of mathematical concepts such as calculus, probability, and statistics.
Becoming an investment banker requires several years of higher education in addition to licensure. 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.
Can I survive investment banking? ›
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.
Does investment banking still pay well? ›
Total compensation is often in the $150K – $250K range (as of 2022). Investment Banking Analyst Hours: You'll be in the office for 70-85 hours per week, but you won't be working for that entire time. Investment banking hours are long, but there's also significant “downtime.”
Do investment bankers make 500K a year? ›
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).
Why are investment bankers so rich? ›
Investment bankers make money through the fees charged to their clients. As discussed above, this includes underwriting fees for arranging the sale of securities and advisory fees for providing strategic guidance.
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.
Is a 3.7 good enough for investment banking? ›
Bulge bracket banks and almost all other investment banks will look at your GPA when applying for a job and you should include it in your resume. Typically banks screen resumes based on GPA and will often remove anyone below 3.5.
Am I an investment banker? ›
Investment bankers are basically financial advisors that work for large and small firms to raise money for their clients. Their job descriptions often have broad responsibilities and require highly specific skills.
How hard is it to get into investment banking? ›
Investment banking is extremely competitive with way more applicants than available positions each year. You will often be up against students from Ivy League universities, with a high GPAs and multiple internships under their belts.
