Exploring this Job
Participate in information interviews with investment bankers. Your business teacher or a school counselor can help arrange interviews. Ask these and other questions:
- What do you like most and least about your career?
- What’s the best way to land a job in investment banking?
- How are job duties changing for investment bankers, and what can I do in college to prepare for these changes?
Join school finance and business clubs to learn about business concepts, and become a member of the speech team to develop your communication skills. Visit the Web sites of major investment banks to learn more about career paths, internships, analyst training programs, and the interview process. Goldman Sachs offers a particularly useful Web site, https://www.goldmansachs.com/careers, where you can read a career blog and learn about exploratory programs and internships. Finally, the following resources will provide more information about investment banking:
- The Economist-Investment Banking: https://www.economist.com/topics/investment-banking
- Wall Street Oasis: https://www.wallstreetoasis.com
- Job Search Digest: https://www.jobsearchdigest.com
Investment bankers work at several levels. Vice presidents, who are one step above associates, manage client relationships on a daily basis and oversee the work of associates and analysts (including making sure that financial models and PowerPoint presentations are being prepared correctly). Above vice presidents, some banks have the position of director, while others only have the position of managing director. Directors and managing directors cultivate client relationships, win new business, and open and close deals (usually within a specific industry). They travel frequently to meet with clients and drum up business. In these positions—especially managing director—there is a lot of pressure to bring in revenues.
Investment bankers perform a wide range of duties to assist clients and help their employers make money. Three of their most common duties are helping clients raise money; sell bonds and shares; and buy or merge with other organizations.
Raise Money. If a multinational organization, for example, wants to expand its operations, the investment banker matches this company with another organization that has funds to invest. The multinational then borrows the money with a promise to pay the funds back with interest (this is known as issuing debt). On the other hand, an investment banker may decide that the best course of action is for the multinational to sell one or more of its divisions or some of its intellectual property to raise funds for the expansion (this is called issuing equity). The investment banker works with his or her team of associates, analysts, accountants, lawyers, etc. to identify aspects of the business that can be sold to raise money, while not damaging its core business.
Sell Bonds and Shares. Together, shares and bonds are known as securities and they are sold on the stock market. A client that wants to sell securities to raise funds will hire investment bankers to help with this very complicated process. Investment bankers help the client establish important criteria such as interest rates and exchange rates, create an investor prospectus that aims to convince investors to purchase the security, and work with regulators to ensure that the new product complies with federal and state laws. Once the product is approved, the investment bank’s traders help sell it on various stock markets. During the course of raising capital, the investment also typically undertakes the underwriting of the deal. This means that they take on the risk associated with the transaction, buying the securities at one price and then marking them up before sale to reflect the level of risk involved in the transaction. The investment banker often reaches out to other investment bankers to help underwrite the offering the securities to spread the degree of risk. This group of investment bankers is called a syndicate.
Advise on Mergers and Acquisitions. Many organizations want to grow and increase profits by either joining up with a competitor (known as a merger) to share its money and customers, or buying a smaller company (known as an acquisition) to take advantage of its market dominance in a particular geographic region, its intellectual property, or some other component that allows the larger company to make more money. Investment bankers play a key role in these complicated transactions by crunching numbers, performing due diligence, arranging financing, and structuring the deal. Many merger and acquisition deals are completed within a very tight timeline and under extreme secrecy.