Becoming an Investment Banker

So, you think you want to be an Investment Banker. The world of investing is large and complicated, and many people out there know they should invest, but have no idea how to do it in a way that will maximize their returns and minimize their potential risks.

Investment banking is all about understanding the world of investing and using that knowledge to help your clients determine their best strategies, then facilitating putting those strategies into practice.

Investment bankers act as underwriters for securities like bonds municipalities need to raise capital. They also have a role in helping companies with things like making public stock offerings and mergers and acquisitions.

In order to be effective in their roles, these professionals need to have an excellent understanding of financial markets and a decent grasp of economics, in the bargain. The question is, what steps do you need to take to learn how to do all that? Let’s take a look at the things that will help you move down that path.

Education

While people do enter the industry from various walks of life, if you know this is the field you want to go into, it’s a good idea to start by tailoring your studies to your final goals. Having a solid background in math or the math of money is a good choice. Common college majors for future investment bankers include accounting, business, mathematics, economics, and finance.

It’s a good idea to take classes on micro- and macroeconomics, classes that relate to tax law or business law, or classes that relate to international business. If you’re not sure, starting out, what areas appeal to you the most; you can always start by taking the introductory-level courses and then take more in-depth classes based on what you feel will be the most useful for you.

While some experts say that planning on obtaining a graduate degree in business is vital, others believe it to be less so. If you do pursue an MBA, bear in mind that where you choose to do your studies has a large impact on the degree’s usefulness.

Major investment banks do their recruiting from the top MBA programs around the country and pursuing a degree from a program that isn’t among the best may not give you the access you’re hoping for.

In some cases it may be useful to pursue obtaining an MBA, but not in all cases. If you come from a non-financial background and have a little work experience, but you want to make a career change, then this is a sensible option. If you are already working in the field, and the company that employs you requires an MBA for advancement, that’s also a sensible option.

In most other circumstances, planning to go straight to grad school may not be in your best interests given that obtaining your MBA is pricey, and will offer a relatively low return on the time and money you invest in earning it. The most important thing is to actually get into the field, which brings us the next point.

Pursue Summer Internships

Looking for appropriate summer internships while you’re still in college accomplishes a couple of things, which are inter-related.

Firstly, it gives you a practical means of making a decision about whether IB is the field for you. Secondly, if you can find an internship with an investment bank, it will give you the opportunity to start gathering some personal knowledge and experience in the field and can only serve to make you more attractive to recruiters when you graduate.

Many large investment banks have extensive, if highly competitive; internship programs and a lot of the smaller banks in IB also have such programs, if on a somewhat smaller scale. If you can’t get an internship specifically in an investment bank, finding a summer placement in another bank is almost as useful in terms of gaining experience and beginning to establish credibility.

Any internship you do have the added benefit of being a means to start building your professional network for after you graduate.

Get Your First Job in the Field

After completing your bachelor’s degree, you have enough education to pursue your first job in the field. In fact, it’s highly recommended that you spend at least a year or two working before giving consideration to whether graduate studies are appropriate.

This is the time when any networking you’ve done while in school or taking internships really pays off, as it gives you more access to knowledge about where you might your first position in investment banking. Many investment banks hire new graduates who have previously worked with them as interns and done well.

The majority of entry-level jobs in IB involve working as financial analysts, examining the market’s behaviour and creating reports on your findings for executives who make the major financial decisions.

Additional Qualifications

In order to work in IB, you need to register with the Financial Industry Regulation Authority (FINRA), which provides general oversight for the industry. When you get a job dealing with securities you must be registered to perform your duties. There is also a set of licensing exams the ‘series tests’ which legally qualify you to be involved with the sales of various securities.

For example, the series 7 and series 24 tests allow brokers to sell stocks and bonds, and the series 3 and series 31 covers the sales of commodities. The specific tests you need to take would be determined by your employer and the specifics of your position.

In addition to FINRA registration and the appropriate series exams, some investment banks also obtain a voluntary certification, such as becoming a Chartered Financial Analyst (CFA). In order to obtain the CFA certification, you have to have four years of experience in the field and undertake a three-part training course.

In terms of job prospects, the opportunities in the financial industry have been growing, and once you’re in the field there’s room for promotion, but the competition for top jobs is fierce. Thousands of students graduate with degrees in finance every year, far more than there are jobs for, but if you keep the above tips in mind, they’ll help you get a competitive edge.