What Do Investment Bankers Do? Ultimate Guide

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I'm sure most of us have heard the term, and maybe even assumed we knew the meaning, but when you really think about it, what do investment bankers do? There are many facets to the investment banker's job, and they have many roles within the financial industry. In this article, we will take a comprehensive look at the services provided by an investment banker, as well as what a career in investment banking might look like.

What Do Investment Bankers Do?

An investment banker isn't the typical banker you meet at a local bank that opens your checking account or extends you a car note. These are retail bankers, and while they serve a very important financial purpose, this is not the role of an investment banker. These bankers specialize in corporations. Specifically, they guide and advise businesses through three key areas: securing funds within capital markets, navigating their commercial clients through mergers and acquisitions, and giving sound and profitable financial advice throughout the life cycle of a corporation.

Securing Funds Within Capital Markets

When a corporation needs to raise additional funds to expand or take on a new project, they will typically turn to an investment banker. When asking what do investment bankers do, one of their primary responsibilities is to facilitate capital funding for corporate clients. This can be accomplished in several ways, and clients rely on the expertise of the investment banker to navigate them through this complicated process. The following are specific services provided by an investment banker to those seeking capital (or money to invest in their business).

Mergers And Acquisitions

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When asking, what do investment bankers do, another important aspect of this position is facilitating mergers and acquisitions for their corporate clients. They are a necessity for corporations who are planning to sell their business and businesses looking to expand by purchasing other companies. The following is a list of ways an investment banker will ensure your merger or acquisition is successful.

General Financial Advisors

Ideally, an investment banker's goal is to become their corporate client's one-stop-shop for their financial advisor needs. It isn't every day that a corporation needs funds for expansion or is looking to buy or sell a business. There are day-to-day investment decisions where using an investment banker is beneficial. The following are just a few of the many other hats a good investment banker will wear for their clients.

Becoming An Investment Banker

After taking a comprehensive look at investment banking, and learning "what do investment bankers do", you might have decided this could be the career for you. This is a decision that shouldn't be made lightly. While being an investment banker is one of the most prestigious of all Wall Street jobs, it is challenging, with long hours and demanding expectations. Below, we examine the requirements and expectations of a career in investment banking.

Education Requirements Of An Investment Banker

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One of the most appealing aspects of a career in investment banking is the starting salary potential. On average, new graduates with a bachelor's degree can earn from $75,000 to $90,000, and this does not include the hefty bonuses that usually come with the job. A bachelor's degree is required, and usually, this needs to be in the financial/business field. As you move along in your career, you will be expected to obtain a series of investment licenses, in particular, the Series 7, Series 79, and the Series 63.

While most investment banks will hire new graduates, you can propel your career opportunities by working as an intern analyst before graduation. This will give you valuable experience and also might open the door for a potential job after graduation. You will receive extensive, on-the-job training and education during your first year as an analyst, but there are other ways to ensure future promotions.

Working towards a master's degree, in particular, an MBA (Masters of Business Administration) will help you gain a promotion from an entry-level analyst to an associate with the firm. While their job descriptions are similar, the associates are superior to the analysts. Advanced degrees can be costly, especially from prestigious universities. There is a more affordable option to guarantee advancement as an investment banker, but it is not easier.

Getting a Chartered Financial Analyst (CFA) guaranteed avenue towards promotion. To complete this certification, you must pass three levels of examinations and have four years of qualified work experience. Those who have gone this route testify to the significant amount of study time involved in getting your CFA. Just to give you an idea of the difficulty, in July 2016 the CFA Institute reported that only 43% of test takers passed the first exam, only 46% passed the second test, and 54% passed the third.

If you complete your CFA, you will join an elite group. There are only 120,000 analysts holding this certification worldwide. While this is the more difficult of the two advancement options, the CFA typically turns out to be the most affordable. The total costs for the tests and study materials are typically around $12,000. This cost will be minor compared to the overall earning potential as an investment banker.

Conclusion

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Whether you are looking for advice when it comes to managing a corporation, or whether you are looking for an attractive career with limitless earning potential, it's important to know, what do investment bankers do. All in all, they play a vital role in the financial wheelhouse of our world. If you are looking for a meaningful career and you are gifted in financial analysis, then this could be the career for you.