If businesses and municipalities want to collect capital to fund their activities, they go to an investment bank for assistance. An investment banker works with these organizations to underwrite securities, such as bonds or shares, to raise the capital the organization needs. In addition to securities underwriting, investment bankers can use complex processes such as initial public offerings or mergers and acquisitions.
To do this successfully, they need to be well versed in financial market behavior and in the legal requirements that investment banks and their customers must meet for each process. As such, this is a highly specialized career. Investment bankers must hold specific knowledge to be able to do their jobs.
If you are interested in pursuing a career as an investment banker, this is the article for you! Continue reading to learn more about this profession. Specifically, we will tell you about the training and skills you will need.
Training And Education
Investment bankers come from a variety of backgrounds, but it is essential to have a strong foundation in mathematics. For example, prospective investment bankers may have bachelor’s degrees in finance, accounting, or mathematics but may also come from other fields such as informatics or physics.
Investment bankers receive much of their education through their employer. Recent Bachelor’s degree graduates typically start in analyst positions and complete a training program before beginning their job. Such training programs can last several weeks and introduce new analysts to accounting principles, risk, markets, reviewing financial statements, and financial modeling.
Completing an internship is the right way for those interested in the position to gain experience and make professional contacts before landing a job. Investment banks take on undergraduate and graduate interns regularly and provide guidance and mentorship to them.
Typically, interns perform the same kinds of duties analysts and associates perform, including collecting data, working with financial models, and interacting with customers.
Investment Banker Career Misconceptions
A common misconception is that anyone who is good with large numbers is well suited to be a banker. Although quantitative acumen is a fantastic trait to have, it does not in any way predict an investment banker’s success overall. In addition to being math whizzes, the best investment bankers are persuasive, aggressive, humorous, and have a great work ethic.
Skills And Duties
Investment bankers do multiple tasks for their customers. Each individual banker wears many hats. Raising money for customers is at the core of every investment banking role. This is primarily done in two ways: the issuing of debt and the selling of shares in the company.
Debt issuance means bond sales to investors. When an investor buys a corporate bond, they lend money, or capital, for a fixed number of years to the issuing company, usually at a fixed interest rate. The issuing company makes interest payments throughout the bond term. Then the company returns the principal to the lender when the bond term expires.
Alternatively, when a company sells shares, they receive money and in exchange, the buyer of the shares receives stake or stock in the company. This means, to a varying degree, they own part of the company.
Job Prospects And Career Outlook
Investment bankers frequently begin their careers at the analyst level, and progress to associate positions with experience and additional education. Others enter the field as partners after having worked in another profession and earning a degree, such as an MBA.
Associates can, with experience, become vice presidents at their banks, supervise analysts and associates and interact more directly with clients. Investment bankers can then become executives or managers at their bank after some time and further concentrate on building relationships with new and existing customers.
To land a job as an investment banker, while still in school, you need to focus heavily on networking. Large investment banks hire prospective analysts and associates from top business school. They often fill these roles with interns who worked as summer analysts or associates with them.
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