: How to become an associate investment banker
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|How to become an associate investment banker|
|How to become an associate investment banker|
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How to become an associate investment banker -
How would you describe your experience working as an investment banking associate at BlackArch?Working as an associate at BlackArch has been a challenging and rewarding experience so far. The learning curve is steep at first, but the position is truly unique in the breadth of opportunities available from the very beginning to get hands-on, real experience on a transaction.
Has the experience matched your expectations for working in middle market investment banking?I transitioned to investment banking from a career in law that I enjoyed quite a bit, so I had high expectations in terms of the quality of work and the opportunity to meaningfully interact with management teams (which was my favorite part of practicing law). The job has not disappointed. Coming from a field where I primarily drafted and negotiated agreements and performed due diligence, I have enjoyed the focus on analytical skills and the engaging discussions with management teams, as well as strategic buyers and private equity groups. M&A has always been inherently exciting to me, so it’s been fun to manage the “ground-level” operations in the investment banking process.
Can you describe a typical work day / work week?Every week (and likely day) is going to be different, which I think is one of the best aspects of this job. The pitch process is time-intensive and involves heavy research, presentation drafting and valuation analysis. The marketing materials drafting phase is heavy on internal due diligence and creative thinking around positioning and messaging. The deal marketing phase involves detailed discussions with potential buyers regarding all aspects of the client. Finally, the due diligence / negotiation phase is concentrated around populating and sharing a full data room, participating in buyer diligence calls and weighing in during the purchase agreement negotiations. Because each transaction phase is so different, every associate is likely to find aspects that they really enjoy.
What skills are the most important to possess or build upon to be successful as an investment banking associate?Attention to detail and organizational / time-management skills are at the forefront of required expertise for an associate. Excellent communication skills (both internally among team members and in an external presentation environment) and the ability to write concisely and professionally are also key. Good associates will be adept at understanding their analysts’ strengths and weaknesses and playing to the strengths, while also helping them to improve in all other aspects. An associate can have a large impact on the demeanor and morale of a team, so a positive and encouraging attitude goes a long way. Leadership, especially by example, is important, and I think it’s imperative for an associate to understand and be able to perform all tasks that an analyst may typically perform, both from a teaching perspective as well as being able to step in when needed.
How would you describe the culture in investment banking at BlackArch?The culture at BlackArch is one of my favorite aspects of the job, especially working with other associates and analysts in the “bullpen.” It’s a collegial environment. We’re all in close proximity together, which facilitates learning from each other (both by asking questions and by listening to how others handle various issues) and building meaningful relationships. It also makes the nights where we need to stay late much easier. I’ve also enjoyed working with and learning from the officers at BlackArch, who have always been willing to explain complex issues and get down in the weeds to help. BlackArch is a special place, and I couldn’t imagine a better environment to begin a career in banking.
Tired of a Dead-End Career Path? You Too Can Make a Mid-Career Transition Into Investment Banking
Is it possible to transition from a laboratory scientist to an investment banker with a top 5 MBA? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Jonathan Jones, Head of Investment Talent Development at Point72 Asset Management, on Quora:
The general question here is: "Can I get into investment banking via a leading MBA program if my professional experience to date is in an unrelated field?"
And the answer is yes.
Not only that, do you know what theleastcommon pre-MBA career background is for newly minted MBAs entering the investment banking industry as associates?
Well, it might nottechnicallybe the least common background - I'm pretty sure that former professional beer tasters are less well represented - but the point is that almost everyone going into investment banking out of an MBA program is a career switcher in some sense. Former investment bankers who pursue MBAs are almost invariably doing so specifically for the purpose ofleavingthe investment banking industry - not to jump back into it more or lesswhere they left off (except with their pockets lighter by two years' worth of tuition, living expenses and foregone income).
So you're in good company, in short, because almost every one of your MBA classmates who will be pursuing investment banking opportunities alongside you will be, generally speaking, in a similar position to yours.
How about schools?
If your intention would be to pursue an MBA in a top-5 program, that would certainly the right impulse; if you can't get into a highly ranked program I would think very carefully about whether the whole scheme makes sense. It's going to involve a substantial investment of time and money on your part, and if it doesn't yield the result you want (a position in a well regarded investment banking firm), that could be a costly and disappointing outcome.
Frankly, though, 'top-5' may be a littletooselective - depending on how successful you are in the MBA admissions process and what your options therefore end up being. You could probably expand the list out to 10-12 schools and be well positioned to get consideration from leading investment banking firms.
As you go about selecting schools, make a point of looking at their placement statistics. Which of them seem to send the largest proportion of their graduating class into the investment banking industry? That will give you a sense for which of them likely has a curriculum that will help prepare you most effectively - and which of them is therefore likely to attract the most recruiting interest from investment banks.
Preparing for the investment banking recruiting process.
Ok, so you've gained admission to a top MBA program and have a few months before the program begins. However, while it may be tempting to take it easy for a little while and recharge the batteries after all the exertion of writing application essays, studying for the GMAT and chasing down letters of recommendation, you have a lot of work to do before you even get to school if you want to put yourself in a position to land that investment banking job.
Why is that?
Simple: if you wait until you arrive on campus to begin preparing for the recruitment process, then you're already too late. The leading investment banks place great reliance on their summer associate programs to identify and vet prospective new MBA associates. Your defining goal as a first year MBA who wants to become an investment banker is therefore to land a top quality summer internship for the summer between your first and second year of business school. Firms dedicate 95% of their recruiting energies towards hiring interns, with the goal of then offering the best of them (typically 70% or so) the opportunity to rejoin full-time following graduation. Many of the top firms won't even hire second year MBAs on a full-time basis if they haven't been through that firm's own summer associate program. And even if you can find a firm that will hire you directly as a second year, if you haven't at least completed a summer internship in investment banking (albeit at another firm), you have pretty much no shot at being hired. Life as an associate in investment banking is no cakewalk, and firms simply aren't going to book the risk that you'll succeed and stay the course if you have no basis for knowing what you're opting into.
So it's all about the pursuit of the internship.
And here's the problem: the investment banking recruiting train will roll onto campus so soon after you arrive that you'll scarcely have unpacked your bags before you have to start impressing recruiters who are, at some level, keeping score.
And while having a non-banking background will be typical among those classmates pursuing investment banking opportunities along with you, you will nonetheless have to convey your interest in the field effectively. And that interest will need to be well-reasoned, thoughtful, andinformed. Yet you've only been there for five minutes... and most of the finance courses don't come up on the schedule for several more months anyway.
You see the problem?
So as soon as you know where you're going to school, and preferably well before that, you need to begin working all the angles to develop that informed interest so you're as prepared as possible when you arrive on campus. I'll come back to this in a moment.
There's another good reason to invest time and energy in getting smart on the investment banking industry early:
You might find it doesn't interest you to the extent you expected.
And that's a problem, because the recruitment process for banking will place such great demands on your time that you simply won't have time to explore a variety of career tracks in parallel, with a plan to make your mind up later. Between the company presentations, endless cocktail receptions, recruitment dinners, informational interviews, company visits and the like (all multiplied by however many firms you want to be considered by), you'll have your hands quite full enough just maintaining your academic performance, let alone doing all the above across a range of industries.
And if you happen to be a woman, or a member of an underrepresented minority group, you'll find there's a whole extra layer of events just for you - the result of the banks' considerable efforts to diversify their incoming classes. While these events are typically smaller, allowing higher quality exposure to professionals from firms you're interested in, and therefore potentially valuable on several levels, they are nonetheless an additional burden on your already limited time.
So given all this, you'll see why it is that you need to have a lot of things extensively figured out before you even arrive on campus.
So, how to prepare?
- Get yourself an education on valuation and financial modeling techniques. Know what DCF means? WACC? If not, invest some time before you get to school getting up to speed. There are providers out there such as Wall Street Prep (Financial Modeling Courses and Investment Banking Training) and others that offer such training. Remember - you probably won't get to this material in your curriculum until after you need to know enough about it to be dangerous in the recruiting game. Prepare now.
- Network like crazy with people you know who have actually been bankers. That will become easier once you get to school, but you can't wait until then. Figure out who those people in your network are and connect with them. Have them tell you what they do. What theyreallydo.
- Develop some focus on an industry or two. Depending on exactly what you've done up to this point, there is a good likelihood that you have a natural connection to a particular industry. If you've been doinglab work, for example, you may have a connection to the pharmaceutical (healthcare), energy or industrials sectors. Whichever one it is, that 'inside' perspective is useful if you're going to be an investment banking associate. It gives you a basis to understand a particular industry in a way that others, who haven't worked within it, will not. So double down on that. Spend time researching companies in that industry as extensively as you can. This will probably require you to step back from the vantage point you had in your prior role and examine the industry from above. How do the various players fit together? If there have been significant transactions in recent months (e.g., a large merger or acquisition), read about it. Understand why it made sense and what the organizations involved were trying to accomplish. You get the idea. If your plan, by the way, is to focus on a totally different area than the one you previously worked in - think carefully before going down that road. Your knowledge of that industry is part of your competitive advantage as a candidate. Don't abandon it lightly.
- Once you get to school, time will be somewhat short but make sure to sign up for the right pre-professional clubs. These are the conduits through which the employers you want to meet will connect with potential recruits. And network with students in their second year who have completed summer MBA programs in banking. There's plenty they can tell you about how they got there, what it was like, and what they wish they had known before. (By the way, pay attention to the issue of whether the 2nd years you speak to actually received and accepted offers to rejoin their summer employers full-time. You'll probably get a different point of view from those who did than from those who didn't. On the other hand, you can feel more free to ask all the 'dumb' questions you want to ask if the person you're asking isn't holding a contract from a firm you'd like to work at - since they won't be providing that firm with any feedback on you)
So that's the playbook. Good luck!
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The vast majority of “day in the life” stories are about Analysts.
There’s always been less information about Associates, VPs, Directors, and MDs, and that hasn’t changed much over time.
That’s partially because more senior bankers aim to stay in the field for the long term.
And if they do leave, they’re more likely to take a corporate finance job at a normal company or do something else “corporate,” where writing a tell-all account is not an option.
So, in light of this continued dearth of information, here’s our full run-down on investment banking associates, from the job description to exit opportunities:
The Investment Banking Associate Job Description
In the investment banking career path, Associates are one rung above Analysts in the hierarchy.
While Analysts are usually recruited from top undergraduate universities, Associates are promoted internally or recruited from top MBA programs.
Just like Analysts, Associates also spend time on:
- Excel-based financial models and valuations.
- PowerPoint-based pitch books and client presentations.
- Confidential Information Memoranda (CIMs) and other marketing documents for clients.
- Questions from clients and other team members.
- Office politics and surviving abusive/crazy senior bankers.
So, what’s the difference?
If you’re an Associate at a large bank, the main differences are:
- More “Checking” and Less “Doing” – You will spend more time checking Analysts’ work in Excel and PowerPoint, and less time doing it yourself.
- More Communication and Project Management – You will also process instructions from the VPs, Directors, and MDs, and relay them to the Analysts; on deals, you’ll have more responsibility for following up with different parties and making sure the documents are in order for each step of the process.
- More Client Interaction – You’re more likely to attend meetings with clients and potential clients (pitches), and when a client has questions about the details of a model or presentation, they’ll go to you.
- More PowerPoint and Less Excel – And when you do the work, you’ll be in PowerPoint more often, drafting and editing presentations. You may still do some Excel work, particularly for more complex models, but you’ll almost certainly spend more time in PowerPoint.
The Associate role also varies significantly based on bank size, group, and seniority.
For example, if you’re at a regional boutique bank where the deal team consists of you and a single MD, you will act more like an Analyst, and you’ll start and finish the models and presentations.
But if you’re a third-year Associate at a bulge bracket bank, and the deal team consists of you, an Analyst, a VP, and an MD, you’ll be more like a “project manager.”
The bank knows that you can do the work; now they’re assessing how well you can manage teams and work with clients before they promote you to the VP level.
Investment Banking Associate Hours
Associates have somewhat better lives than Analysts, but “somewhat better” means 65-80 hours per week rather than 70-80+ hours.
If you’re in a capital markets group, the hours might be reduced by 10-15%.
You will still be on call 24/7, and you’ll still have to respond to urgent requests, but you have it a bit better than Analysts because urgent requests usually go to them first.
Yes, banks now offer “protected weekends” and other lifestyle improvements, but it’s still a demanding job that will minimize your social life, hobbies, and activities for at least a few years.
Why Would You Want to Be an IB Associate?
Remember that ancient meme about “What People Think I Do / What I Really Do”?
The logic in that meme applies readily to IB Associate roles:
- Why Banks Want to Hire You as an Associate – They want you to be a long-term employee and move up the ladder within investment banking. In exchange for your long hours, they’ll pay you well, train you, and groom you for the senior levels.
- Why You Actually Want to Be an Associate – Many students and professionals who recruit for Associate roles do it for the exit opportunities in private equity and hedge funds – directly contradicting what banks want.
- Why You Should Want to Be an Associate – You should want to do it because 1) You want to stay in IB long term; or 2) Because you’re interested in another role that’s a more viable exit opportunity, such as corporate development at a normal company.
The usual “exit opportunity” logic is: “Well, I missed investment banking right out of undergrad, but I want to get into private equity… so I’ll just do investment banking post-MBA and then move into PE from there!”
But the results from this strategy are mixed, as you can see at this article on IB Associate Exit Opportunities, so don’t get your hopes up.
And yes, you get paid well as an Associate, but if that’s your main reason for pursuing the role, you need to re-think your life.
The cost of an MBA program, plus the opportunity cost of leaving your current job, plus the time and money required for networking and interview prep mean that it’s not worth it unless you plan to stay in finance for at least 5-10 years.
Investment Banking Associate Salary (and Bonus)
At large banks in the U.S., Associates tend to earn between $250K and $400K USD for total compensation, with base salaries progressing up from $140K to $180K.
Bonuses are significantly lower at smaller banks such as regional boutiques, so expect total compensation that’s 20-25% lower.
Pay is also lower outside the U.S., even in other financial centers such as London.
For more on this topic, please see our article on investment banker salaries.
A Day in the Life: What Does an Investment Banking Associate Do?
To illustrate the differences between the Associate vs. Analyst roles, let’s walk through the same day detailed in the Investment Banking Analyst article, but from the perspective of an Associate:
8:30 AM – 10:30 AM: You arrive at the office, meet with a VP to discuss an upcoming M&A pitch, and answer some of his questions/concerns about a new Analyst in your group.
Then, you review an Analyst’s status report on potential buyers in an M&A deal, make a few changes, and ask the Analyst to update the document and send it out.
10:30 AM – 12:00 PM: You join a meeting with a Director and Managing Director, who are speaking with a private equity firm about a potential sale of one of their portfolio companies.
Your job is to look intelligent, take notes, and occasionally answer questions about the market research you completed on potential buyers.
12:00 PM – 12:30 PM: You eat at your desk as you join due diligence calls for another deal; the Analyst is monitoring the entire session, so you only stick around for one call in the beginning.
12:30 PM – 3:00 PM: You start drafting the M&A pitch book that you discussed with the VP this morning.
You outline the structure and write text on some of the slides, but you leave out the parts that will require Excel paste-ins – the new Analyst will handle those.
3:00 PM – 5:00 PM: A Managing Director is on the road and needs hundreds of pages of briefing materials ASAP. You read the email and forward it to the Analyst on the team. It’s someone else’s problem now!
Right after that, a client calls you, upset about the management presentation your team is drafting for them.
She feels it doesn’t emphasize the company’s growth opportunities well enough, and she spends 30 minutes walking through all the changes she wants to make. You start making the changes.
5:00 PM – 5:30 PM: You review a CIM with an Analyst and explain how you want to change around the financial summary and market sections, handing off your printed version.
5:30 PM – 7:00 PM: The office’s Head MD and staffer call you into a room for a meeting.
They want your impressions of the new classes of Analysts and Associates; you’ve been here for over two years, so they value your input.
You try to strike a balance between giving useful comments to the MD and not sabotaging anyone’s new job.
7:00 PM – 10:00 PM: It looks like you might get to leave “early” – but then one of the VPs decides to have your team re-do an entire IPO pitch book.
Most of the work goes to the Analyst, but you need to stay there answering questions and outlining parts of the new presentation.
10:00 PM – 11:00 PM: You review the new IPO pitch book, make a few small tweaks, approve the qualitative/market slides, and leave the office right after that.
This was a ~14-hour day, which is on the long side, but not unreasonable for something in the Monday – Thursday period.
The same factors that create “bad days” for Analysts also create them for Associates: multiple live deals, big pitches, and last-minute emergencies.
However, office politics often contribute to bad days at this level as well – especially when meetings pull you away from work, as they did to the Associate here.
How to Break into Investment Banking as an Associate
The two main entry points into Associate roles are:
- Out of Top MBA Programs – This path is more common in the U.S.; if you’re a career changer who wants to switch into IB, an MBA degree from a top program is, by far, your best chance of breaking in.
- Direct Promotions from Analyst Roles – If you perform well as an IB Analyst for 2-3 years, you could get a promotion. Outside the U.S., this is the path most Associates follow because MBA-level recruiting is less developed in other regions.
It is very rare to get hired as an Associate if you’re coming from a completely different industry and you also haven’t completed an MBA.
Yes, you can find exceptions and cases where it has happened, but those stories should be viewed as outliers at best.
If you use a top MBA program to get in, you need to start preparing long before you arrive on campus, with networking, interview prep, and perhaps a “steppingstone role” right before the program begins.
In some cases, it might make more sense to complete a part-time or executive MBA program so you don’t have to quit your current job and so you have more time to prepare.
It tends to be extremely difficult to win offers from a non-target MBA program, though it is possible. However, you’ll most likely have to focus on smaller banks to pull this off.
For more, see the “MBA Path” part of our article on how to get into investment banking.
Investment banking interview questions at the Associate level are not that different: you still need to know accounting, valuation, and financial modeling, you still need a solid “story,” supporting mini-stories for the fit questions, and answers to the key objections, as well as deals you can discuss.
The main difference in is that interviewers often test for slightly different qualities, such as:
- Ethics – You’ll be working with clients more directly, so “ethical dilemma” questions are common.
- Humility – Bankers do not like over-confident MBAs who think they’re rulers of the known universe. And over-confidence is quite common in MBA programs.
- Case Studies – Many interviews turn into “verbal case studies” where the interviewer describes a company or deal, and you have to walk through the analysis and answer questions about how you would advise the client.
- Your Family and “Extracurricular” Commitments – It’s illegal to ask about your family or age directly, but bankers can indirectly ask about these topics with questions like “How do you spend your time outside of work?” To stay safe, you should give relatively vague answers.
The IB Associate Job: Right for You?
As with the Investment Banking Analyst role, the real question here is not, “Is the Associate job right for you?”
The real questions are:
- If you’re currently an Analyst and you’ve performed well, should you stick around for a direct promotion? Or should you leave for a different industry?
- If you’re a career changer, should you pay for a top MBA program so you can get this job?
For the first question, you should look at our coverage of exit opportunities to decide.
In short: if you truly want to be an investor or do something else that’s more creative/intellectual, or you hate banking and don’t care about the money anymore, then you should leave.
If not, or you’re on the fence about IB, but you have no better ideas and don’t mind the hours/lifestyle, you might as well stay and see where it goes.
As for the second question: if you have the right profile and you can put in the time and effort required and you understand that you don’t have a great shot of winning private equity or hedge fund roles, sure, go for it.
Going back to that “What People Think I Do / What I Really Do” meme , many MBA students recruit for IB jobs, believing that they can easily win buy-side roles from them.
While that does happen sometimes, it’s far easier to win these roles as an Analyst.
At the Associate level, more likely exit opportunities are corporate finance, corporate development, corporate strategy, and maybe less-competitive buy-side roles such as venture capital.
If you want to make the transition, you need to move quickly and tactfully and recruit in a good hiring market (see: IB associate exits).
That doesn’t make the Investment Banking Associate role a bad one.
But it does mean that you need to read the fine print carefully before jumping in – or you might end up the subject of the next great meme.
About the Author
Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.
Everything You Need To Know About Becoming an Investment Banking Analyst
The finance industry has many opportunities for those who are mathematically skilled, adept at critical thinking and effective with research. One of these opportunities is becoming an investment banking analyst, which is one of the first steps in a successful financial career. Learning what this position does and what steps you have to take to pursue it can help you determine if it's the right career move for your goals. In this article, we explore what an investment banking analyst is, how much they make, the skills needed for the role and how to become one.
Related:13 Entry-Level Financial Jobs To Start Your Career
What is an investment banking analyst?
An investment banking analyst is an entry-level finance professional who reviews investment transactions and recommends investment strategies for their clients or employers. Their primary goal is to assess client or employer needs, project the outcome of potential investments and find opportunities that help clients meet their financial goals.
Related:Top Job Paths for a Career in Investment Banking
What does an investment banking analyst do?
Investment banking analysts are responsible for:
- Meeting with clients or bank representatives to understand financial needs and goals
- Serving as an intermediary between investors and corporations looking for capital
- Using existing financial models and developing new ones
- Researching the historical and current performance of stocks, bonds and markets
- Collecting and analyzing financial data to review portfolios and opportunities
- Assisting investment bank representatives with creating new financial offerings
- Compiling reports on portfolios, transactions and projections using spreadsheet and other financial software
- Creating presentations to show financial projections or pitch investment opportunities
- Presenting for or against investing in certain opportunities, organizations or markets
- Performing administrative duties, such as scheduling meetings, as needed
Related:What Do Investment Banks Do? Definition and the Role of Investment Bankers
Skills necessary for investment banking analysts
These professionals need a combination of soft skills, technical abilities and industry knowledge in order to be effective on the job. Here are some of the skills they need and how they use them:
- Communication: Investment banking analysts may present in both formal and informal settings, so they must be able to adapt their vocabulary and presentation style. They may use more jargon with colleagues and have to explain industry concepts to less-informed clients.
- Active listening: These professionals use active listening to understand what clients or institution representatives need from their research, analysis and reporting.
- Public speaking: Since investment banking analysts frequently present their research and recommendations, they must be comfortable speaking in front of both small and large groups and creating organized presentations that effectively reveal information.
- Writing: These professionals may need to write reports to showcase their recommendations and findings, so being skilled in report writing is vital to this role.
- Organization: Investment banking analysts may work on multiple projects at once, so they need to organize research, reports and other information. They also need to have strong time management and prioritization skills to balance meetings, presentations and research tasks.
- Research: They must be able to find and use reliable resources, such as government-regulated financial reporting sites, as well as secure financial information about markets and corporations.
- Critical thinking: After conducting research and using models, investment banking analysts must draw conclusions from the data and determine the effects of that data on clients' or institutions' goals.
- Mathematics and statistics: These professionals use basic and advanced math skills to develop and use financial models, valuate investments and securities, review and draw conclusions from data and make projections to see the outcomes of certain investment decisions.
- Spreadsheet software: In addition to general computer literacy, these professionals also need to be comfortable using complex functions, formulas and visualization processes in spreadsheet software.
- Financial modeling: They need in-depth knowledge of common financial models and the ability to create new ones that manipulate data and show the most relevant projections.
- Industry regulations: To ensure their clients or institutions operate within federal laws, investment banking analysts must use their familiarity with up-to-date financial regulations to make recommendations and collect data.
Related:10 Skills Financial Analysts Need To Master
Average salary for investment banking analysts
The national average salary for investment banking analysts is $89,054 per year. Depending on the employer, these professionals may also earn bonuses. Earning potential for investment banking analysts can depend on many factors, including geographical location, level of education, years of experience, relevant certifications and employer size.
Job outlook for investment banking analysts
According to the U.S. Bureau of Labor Statistics, job opportunities for financial analysts, including investment analysts, are expected to grow by 5% from 2019 to 2029. This is slightly higher than the national average for all occupations, which is currently 4%.
Work environment for investment banking analysts
Investment banking analysts work for an investment bank or firm and often specialize in one particular industry, such as:
- Real estate
- Emerging markets
They commonly work over 40 hours per week, sometimes 70 to 80 hours, due to the depth and complexity of their tasks. In some organizations, they may also be on-call, needed to provide their colleagues or clients with up-to-date projections on market shifts.
Overall, they spend much of their time working in an office at their desk, though they may travel occasionally to present to clients.
How to become an investment banking analysts
Here are the most common steps you can take to pursue this finance career:
1. Earn a relevant bachelor's degree
Employers require at least a bachelor's degree, and some of the most common degrees include:
- Business administration
- Computer science
Coursework involves a combination of economics, advanced mathematics and statistics, corporate finance and accounting principles. In these classes, you learn how to use and create models, read and analyze reports, apply economic principles, conduct research and use many more vital job-ready skills.
Related:11 Types of Banking Degrees and Certificates to Consider
2. Complete an internship in the finance sector
Apply for internships in investment banks or firms as an analyst or assistant to an analyst. Doing an internship while earning your undergraduate degree allows you to apply the knowledge and skills you learned in class in a real-world setting. You may help analysts develop models, make projections and prepare for presentations, or you might do these tasks under the supervision of an experienced analyst or banker. If you excel during your internship, your employer may offer you a full-time position after graduation.
3. Pursue industry certification
The Chartered Financial Analyst (CFA) certification demonstrates that a financial analyst, including an investment banking analyst, is knowledgeable of financial regulations and practices and is able to fulfill their role with integrity. Many in the industry consider the CFA to be the highest professional commendation, and it can help investment banking analysts better secure jobs and earn higher salaries.
To earn the CFA, you must first meet the preliminary requirements—be in the final year of a bachelor's degree program, have a bachelor's degree, have at least four years of professional experience or have a combination of experience and education that adds up to four years.
Then, you must pass three exams that assess your knowledge in accounting, ethics, financial management, security analysis and economics. You must take these exams in the correct order:
- Level I: This exam covers topics like professional ethics and standards, quantitative methods, economics, financial reporting, analysis and fixed income.
- Level II: This exam focuses on valuation processes and applying assessment tools in specific scenarios.
- Level III: This exam assesses you in advanced concepts related to various asset classes, including derivatives.
Since these exams are so advanced, candidates often find them to be very challenging and typically study many hours to prepare.
4. Get investment analyst experience
Though this is an entry-level position, larger or higher-profile employers may prefer candidates to have previous experience in an analyst role. After earning your degree and CFA, work in the industry to further refine your skills and confidence on the job, preparing you for more complex roles and those with leadership responsibilities.
5. Gain professional registration and licensing
All investment banking analysts must register with the Financial Industry Regulation Authority (FINRA) once they're hired. This registration ensures that you work with integrity and follow all rules regarding investments. Your employer must sponsor your registration, making you a representative of that institution or firm.
In addition to registration, you may also need to pass exams that license you to manage specific securities and investments. Those exams include:
- Series 63, which is a licensing exam that allows analysts to work in their specific state
- Series 79, also known as the Investment Banking Representative Exam, which covers role-specific functions and knowledge to ensure competence
6. Consider a master's degree
Though investment banking analyst is an entry-level role, some employers may prefer candidates to have a master's degree. In addition, those who are applying to investment banking analyst roles in large or high-profile banks and firms may need a master's degree to qualify or compete with other experienced candidates. Consider earning a master's degree after completing your bachelor's or after earning a few years of professional experience.
Master's degrees you might consider include:
- Master of Business Administration: This degree provides advanced and hands-on study in management, professional communication, accounting, corporate finance, marketing and other business disciplines. Some investment banking analyst candidates earn a general MBA or even one focused in accounting or finance.
- Master of Science in finance: This master's degree provides in-depth study into advanced finance principles and practices, like finance and investment management.
- Juris Doctor: While this degree enables you to pursue a career in law, some aspiring or current investment banking analysts choose this degree to learn more about the legal aspects of financial management and corporate contracts.
I sit within the Financial Sponsors group. My team and I help private-equity firms evaluate opportunities and investments in various portfolio companies. As the sponsor focuses on a corporate opportunity, we analyze how that industry and comparable companies operate.
We collaborate with the various industry and product teams within Morgan Stanley. For example, if we are evaluating a consumer company, we'll work closely with the consumer Investment Banking team. We would then work with the Global Capital Markets division—either with the Leveraged Finance Group, if the company is looking to borrow money, or with the Equity group, if the company wants to raise capital in the equity markets. Which group we partner with depends on the entry and exit strategy of the private equity investor for that particular company.
If the opportunity involves a leveraged buyout, which essentially means taking a company private by purchasing all outstanding stock from stockholders, we would pull together the necessary financing for the deal. We also help clients on the other side, as the sponsor considers how it will ultimately exit the investment—which might be through an initial public offering or an outright sale.