Why would anyone do investment banking?
Investment banking offers the opportunity to become an expert at building large, complex financial models at the earliest stage of your career. While bankers aren't necessarily great investors, they do spend a lot of time on valuation work, and this can be an excellent way to start your career.
Investment banks act as intermediaries between a corporation and the financial markets and help corporations issue shares of stock in an IPO. They arrange debt financing for corporations by finding large-scale investors for corporate bonds.
Investment banking hours are much longer than those in other jobs because of four main reasons: Huge Clients Pay Your Bank Huge Fees: When a company is paying your bank $50 million, $10 million, or even $1 million to advise on a deal, you have to do whatever it wants at any time of the day.
Advantages of Investment Banking include:
They provide guidance on a variety of complex financial issues. They assist their clients in evaluating the possibilities of various initiatives before the development phase begins.
Bankers have detailed financial knowledge that they share with clients who want to save or invest their money. These professionals assist customers by answering their questions and advising them on financial issues.
Investment banks earn commissions and fees on underwriting new issues of securities via bond offerings or stock IPOs. Investment banks often serve as asset managers for their clients as well.
Investment banks' clients include corporations, pension funds, other financial institutions, governments, and hedge funds. The best investment banks are usually the largest. The more connections the bank has within the market, the more likely it is to profit.
Have you ever heard of Goldman Sachs' 15-minute rule at Goldman Sachs? It means you have to respond to an email in 15 minutes or less no matter what. It doesn't matter if you: - showering - hiking in the mountains - attending your son's wedding - saving someone from a drowning vehicle Unreasonable?
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%.
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.
Why do people love investment banking?
Specifically, investment banking interests me because it offers the opportunity to develop substantive analytical skills, while developing a close network of colleagues. While working long hours is scary to some, to me, it is in a strange way exciting.
Hours: Without question one of the biggest drawbacks are the hours that Investment Bankers work. It is not unusual to be expected to work through the night when deal flow is high. Working weekends is also common when deals are close to being struck. The markets might be closed but the Investment Bank is open 24/7.
Statistics indicate that acceptance rates for top investment banks, such as JP Morgan and Goldman Sachs, typically range between a mere 3% to 5%. JP Morgan is renowned for its rigorous recruitment process, resulting in extremely low acceptance rates.
You will make more than any other career path
If you stay on as a banker for life, you can go from making $150K per year as an Analyst, to $300K per year as an Associate, to $450K per year as a VP and then much more if you can continue to get promoted.
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.
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).
Investment Banking Managing Director Salary + Bonus: Base salaries are in the mid-six-figure range, with total compensation in the high six figures to low seven figures. An MD doing decently should earn between $1 and $3 million per year, and sometimes a low multiple of that (as of 2022).
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.
Investment bankers are enterprising and conventional
If you are one or both of these archetypes, you may be well suited to be an investment banker.
Investment bankers are financial advisors who work with corporations, governments, and other large entities. They assist clients with raising capital, often through stock offerings or floating a bond issue. They can also assist with major financial transactions such as mergers, acquisitions, or the sale of a company.
How many hours do investment bankers work?
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.
Companies Considered Too Big to Fail
Bank of America Corp. The Bank of New York Mellon Corp. Citigroup Inc. The Goldman Sachs Group Inc.
On 1 May 2022, Goldman Sachs introduced a new global “flexible vacation” scheme that allows partners and managing directors to take time off when needed, without a fixed vacation day entitlement.
Alfred Feld, a wealth manager who was Goldman Sachs's longest-serving employee and whose career tracked the investment bank's rise to predominance on Wall Street, has died, Goldman's top executives said in a memo on Tuesday. He was 98.
The career is challenging, often demanding analysts or associates work over 80 hours per week. Most investment bankers are very ambitious and competitive because the jobs are prestigious and earnings have the potential to be enormous.
